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Coinbase has accused US banks of ignoring actuality by claiming stablecoins will drain deposits and constrain their capacity to lend, arguing that they increase the greenback’s world attain.
Coverage chief Faryar Shirzad stated on X that almost all stablecoin demand comes from exterior the US, boosting greenback dominance relatively than competing with home lenders.
“The ‘stablecoins will destroy financial institution lending’ narrative ignores actuality,” Shirzad stated. “Treating stablecoins as a risk misreads the second: they strengthen the greenback’s world position and unlock aggressive benefits that the US shouldn’t constrain.”
US banks have repeatedly expressed considerations that yield-bearing stablecoins will result in massive outflows from the standard monetary system, threatening lending that powers financial development. They’re urging Congress to clamp down on providers that supply yields on stablecoins.
Issues intensified after US President Donald Trump signed the GENIUS Act into legislation in July, offering regulatory readability over their standing and thus making them a extra imminent risk to conventional banks.
Their market capitalization has since surged to greater than $300 billion..
Stablecoin market cap (Supply: DefiLlama)
The GENIUS Act presently bans stablecoin issuers from providing yields to token holders instantly, nevertheless it doesn’t lengthen this prohibition to 3rd events or associates. As such, banking teams within the US are urging Congress to deal with this “loophole,” particularly since a number of stablecoins presently supply significantly better yields than the common financial savings account within the US.
Banks Have Extra Than Sufficient Liquidity For Lending
In his publish, Shirzad shared a snippet of a current report revealed by Coinbase Institute.
Coinbase stated within the report that banks presently maintain “huge reserves and secure belongings,” including that these establishments maintain $3 trillion in balances on the Federal Reserve and “further trillions” in Treasuries.
As such, the alternate stated that banks have “extra liquidity” that’s greater than “what is required for present lending exercise.”
“If banks can take up such reserves with out impairing credit score provide, it’s inconsistent to say that stablecoin development poses a systemic risk,” Coinbase stated.
Competitors For Higher Funds Is A Function, Not A Flaw
Coinbase additionally argued in its report that competitors within the funds area will likely be useful for customers, and that banks ought to relatively participate within the competitors as a substitute of making an attempt to outright stall stablecoin progress.
“If stablecoins ever did entice substantial balances from US depositors, it will imply that they had succeeded in providing sooner, cheaper, and extra programmable funds,” Coinbase stated, including that may be a “success” and never a threat.
The agency drew parallels between banks’ considerations with stablecoins and worries across the rise of cash market funds (MMFs) within the Nineteen Eighties.
“When MMFs provided market yields and near-instant entry, customers shifted deposits away from low-rate accounts,” the alternate stated. As an alternative of destabilizing the monetary system, MMFs “grew to become a everlasting and invaluable a part of the monetary ecosystem,” it stated.
“Stablecoins signify an analogous form of aggressive strain,” Coinbase stated. The agency stated the common rate of interest paid by US financial savings accounts is 0.5%, even whereas short-term Treasury yields supply roughly 5%. This, based on Coinbase, “displays inertia, frictions, and lack of alternate options.”
Stablecoins are doing for funds what cash market funds did for financial savings: forcing innovation via competitors. Sooner, cheaper, programmable transactions aren’t a risk—they’re overdue progress. Credit score is not vanishing, it is evolving and rising into non-public credit score, fintech,…
— Faryar Shirzad 🛡️ (@faryarshirzad) October 29, 2025
Like MMFs, stablecoins problem incumbents ”not by rising threat however by providing a greater deal to customers and companies,” it stated.
Some TradFi Corporations Have Began Shifting In On Stablecoins
TradFi corporations are also transferring into the stablecoin market. Funds large Visa has lately introduced that it’s going to add assist for 4 stablecoins throughout 4 blockchains to its current providing, citing sturdy development for its stablecoin merchandise prior to now 12 months.
Citi and several other main banks have additionally began exploring stablecoins, whereas experiences recommend that Mastercard is in superior talks to accumulate the stablecoin infrastructure agency Zero Hash.
Legacy agency Western Union additionally introduced earlier this week that it’s going to deploy its personal stablecoin on the Solana blockchain via Anchorage Digital.
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