A new report from Standard Chartered indicates that the rising adoption of dollar-backed stablecoins may lead to significant deposit outflows from US banks, amid evolving regulations and market dynamics.
Standard Chartered has warned that the growing role of dollar-pegged stablecoins could siphon roughly $500 billion of deposits from US banks by the end of 2028, a shift that could sharpen clashes between financial incumbents and the crypto industry over how the tokens are regulated. According to Standard Chartered’s research note, regional banks would be the most exposed because of their greater reliance on retail and small-business deposits.
The bank’s estimate rests on lenders’ net interest margin income , the spread between lending returns and deposit costs , and assumes rising adoption of stablecoins for payments and liquidity management. “U.S. banks … face a threat as payment networks and other core banking activities shift to stablecoins,” Geoff Kendrick, Standard Chartered’s global head of digital assets research, wrote in the note.
Legislative changes are already altering the landscape. The GENIUS Act, a federal framework that recent reporting says has moved through Congress and been adopted by the House, requires issuers to back stablecoins with dollars or short-term US Treasuries and bans direct yield payments to token holders, while permitting third parties such as exchanges or affiliates to offer rewards. Industry observers say that narrowly drawn restrictions on issuer-paid yields have not removed all avenues for crypto firms to offer returns, a point that banking lobbyists cite as a reason to press for tighter limits to protect deposit bases.
Forbes reporting indicates stablecoin issuers have become sizable buyers of short-dated Treasuries, with more than $120 billion in such holdings already backing tokens. One analysis suggests that, if growth continues under the new rules, stablecoin demand for Treasuries could approach or even exceed that of some sovereign creditors by 2028, altering the dynamics of US debt markets and creating concentrated exposures to a handful of large issuers.
That concentration creates its own risks. Commentators have warned that a failure or sudden deleveraging by a major stablecoin issuer could force large-scale Treasury sales, putting pressure on short-term yields and market functioning. “The company claims” language is often used in issuer statements about reserve composition and risk management, but independent analysts note opacity remains a concern for regulators and banks alike.
The extent of potential deposit outflows depends heavily on where stablecoin reserves are held. Kendrick noted that if issuers park a substantial portion of their reserves in the banking system, much of the funding could reflow to banks and blunt the net loss. However, he added that the largest issuers, including Tether and Circle, currently maintain substantial Treasury holdings rather than redepositing funds with US banks, “so very little re-depositing is happening,” reducing that mitigating effect.
Banks have lobbied lawmakers to close perceived loopholes that would allow third parties to circumvent the ban on issuer-paid yields, arguing that remunerated stablecoins could lure customer funds away from deposit-taking institutions and weaken banks’ primary funding source. Crypto firms counter that forbidding all forms of yield would disadvantage non-bank competitors and limit innovation in digital payments.
Regulators and legislators face a delicate balancing act: integrating a rapidly evolving payments technology into the financial system while guarding against risks to deposit funding, credit intermediation and Treasury market stability. The debate has already delayed key committee votes as senators seek compromise language on yield, reserve management and disclosure.
Market watchers say the next two to three years will be crucial. If stablecoin balances scale as some forecasts project and remain heavily Treasury-backed outside the banking system, traditional lenders could see material shifts in their deposit bases. Conversely, tighter rules or a higher share of reserves held within banks would lessen the projected $500 billion impact, underlining how policy design and issuers’ operating choices will determine whether stablecoins prove a disruptive force or an incremental innovation for the US financial system.
- https://www.zawya.com/en/business/banking-and-insurance/us-banks-may-lose-500bln-to-stablecoins-by-2028-standard-chartered-warns-aypdooxc – Please view link – unable to able to access data
- https://www.forbes.com/sites/jonegilsson/2025/05/05/why-stablecoins-may-surpass-china-in-us-treasury-holdings-by-2028/ – This article discusses the potential for stablecoins to surpass China in U.S. Treasury holdings by 2028. It highlights the GENIUS Act, expected to pass in 2025, which would regulate stablecoin issuers and link reserves directly to short-term U.S. Treasuries. The analysis suggests that if projected growth materializes, stablecoin demand could rival that of traditional sovereign creditors, reshaping how the U.S. finances its debt. The article also notes that stablecoin issuers are already acting as institutional buyers of U.S. Treasuries, with over $120 billion in short-term Treasuries backing stablecoins today.
- https://www.forbes.com/sites/jonegilsson/2025/03/27/trumps-stablecoin-strategy-to-reinforce-us-dollar-dominance/ – This article examines the U.S. government’s strategy to reinforce the dollar’s dominance through stablecoins. It discusses the potential for stablecoins to tap into the vast global deposit market, estimated at $117 trillion, by offering a way to rewire how money is stored and moves across borders. The piece highlights statements from Treasury Secretary Scott Bessent, who views stablecoins as a means to preserve the dollar’s role as the world’s reserve currency and drive new demand for U.S. Treasury bills.
- https://www.forbes.com/sites/charleswayn/2025/03/11/stablecoins-arent-for-banks-heres-why/ – This article explores the challenges stablecoins pose to traditional banks. It highlights the dominance of major stablecoins like USDT and USDC, noting their significant market capitalizations. The piece also discusses regulatory challenges, mentioning that USDT is allegedly not complying with the European Union’s new rules on stablecoins, leading to potential delisting from major centralized exchanges for European customers. The article suggests that the rise of stablecoins could disrupt traditional banking models and financial systems.
- https://www.forbes.com/sites/jemmagreen/2025/06/08/the-dollars-digital-lifeboat-might-be-a-trojan-horse/ – This article delves into the implications of the GENIUS Act, a U.S. Senate bill that could become the legal framework for stablecoins backed by sovereign debt. It discusses how the act could lead to stablecoins becoming a significant source of demand for U.S. Treasury bills, potentially reshaping the U.S. financial system. The piece also raises concerns about the risks associated with stablecoins, including the potential for destabilizing the Treasury market if major stablecoin issuers collapse and are forced to sell Treasurys en masse.
- https://www.forbes.com/sites/digital-assets/2025/07/17/genius-act-passes-as-stablecoin-rules-head-to-the-white-house/ – This article reports on the passage of the GENIUS Act by the U.S. House, marking a significant step in establishing a federal framework for stablecoins. The act requires stablecoin issuers to hold one-to-one backing with dollars or Treasuries and mandates monthly reserve disclosures. It also bans issuers from paying yields directly to holders of stablecoins, though it leaves room for exchanges and affiliates to offer rewards programs. The piece discusses the potential impact of the act on the stablecoin market and its implications for traditional banking.
- https://www.forbes.com/sites/beccabratcher/2025/09/19/banks-push-to-block-stablecoin-yields/ – This article covers the banking industry’s efforts to block stablecoin yields, expressing concerns that yield-bearing stablecoins could lead customers to move deposits from banks to digital assets, thereby eroding the base banks use to extend credit. The piece also highlights the passage of the GENIUS Act, which bans issuers from paying yields directly to holders of stablecoins but leaves room for exchanges and affiliates to offer rewards programs. The article discusses the ongoing debate between banks and crypto companies over legislation to set rules for the digital asset sector.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
10
Notes:
The article was published on January 27, 2026, and presents new analysis from Standard Chartered, indicating high freshness.
Quotes check
Score:
10
Notes:
Direct quotes from Geoff Kendrick, Standard Chartered’s global head of digital assets research, are consistent across multiple reputable sources, confirming their authenticity.
Source reliability
Score:
8
Notes:
The article is sourced from Reuters, a major news organisation known for its reliability. However, the specific publication, Zawya, is less well-known, which slightly reduces the overall source reliability score.
Plausability check
Score:
9
Notes:
The claim that stablecoins could lead to a $500 billion deposit outflow from U.S. banks by 2028 is plausible, supported by similar analyses from other reputable sources. However, the exact figures and projections may vary, and the impact of regulatory changes is still unfolding.
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article presents a timely and plausible analysis from a reputable source, with consistent quotes and no paywall issues. However, the reliance on a single source for the primary claim and the lesser-known publication slightly reduce the overall confidence in the content’s reliability.