Coinbase Dismisses ‘Deposit Erosion’ Fears, Calls Stablecoin Threat to Banks a Myth

Coinbase has issued a sharp rebuttal to claims that stablecoin market could weaken the U.S. banking system, arguing that concerns about “deposit erosion” lack evidence. In a detailed blog post released Tuesday, the crypto exchange said that stablecoins are payment tools, not savings accounts, and therefore do not drain funds from community banks.

Stablecoins as Payment Tools, Not Savings Accounts

The company disputed a recent U.S. Treasury Borrowing Advisory Committee report that projected $6 trillion in potential deposit flight by 2028, despite forecasting only a $2 trillion stablecoin market in the same period. “The math doesn’t add up,” Coinbase wrote, adding that buying stablecoins to pay an overseas supplier is not the same as moving money out of a savings account.

Coinbase also noted that banks already profit heavily from traditional payment systems, earning about $187 billion annually in swipe fees. Stablecoins, it argued, simply offer a faster and cheaper alternative for global transactions. Rather than threatening bank lending, stablecoins give consumers and businesses a competitive option for moving money across borders.

Global Stablecoin Use Strengthens the Dollar

Coinbase’s accompanying research paper emphasized that most stablecoin activity takes place outside the United States, especially in Asia, Latin America, and Africa, where financial infrastructure is weaker. Citing data from the International Monetary Fund, the report said over $1 trillion of the $2 trillion in stablecoin transactions during 2024 occurred internationally.

Because nearly all major stablecoins are pegged to the U.S. dollar, Coinbase argued their adoption reinforces dollar dominance abroad and does not meaningfully reduce domestic credit availability. 

The firm also highlighted that after the passage of the GENIUS Act, correlations between bank stocks and crypto companies like Coinbase and Circle remained positive, suggesting that banks and stablecoins can grow together rather than compete.

Industry voices have echoed Coinbase’s perspective. Bitwise investment chief Matt Hougan recently criticized U.S. banks for blaming stablecoins instead of offering more competitive interest rates, saying that low-yield deposit accounts have left customers eager for better alternatives.

Meanwhile, U.S. banking groups have urged Congress to amend the GENIUS Act to prevent stablecoin issuers from offering indirect yields through crypto exchanges. In contrast, the Crypto Council for Innovation and Blockchain Association warned lawmakers that such restrictions would unfairly favor traditional banks and stifle innovation in the fast-growing digital payments sector.