What you need to know:
- According to Standard Chartered, US banks could lose more than $500 billion in deposits to dollar-backed stablecoins by 2028.
- Stablecoin supply grew around 40% year-on-year and exceeded $300 billion, driving its adoption in payments and settlements.
- Regional banks may be more exposed to the risks of stablecoin adoption.
Standard Chartered Projects US banks could lose more than $500 billion in deposits to dollar-backed stablecoins by 2028, new sources have revealed. research. The analysis warns that accelerated adoption could threaten traditional bank financing models. This comes as regulatory clarity improves and digital tokens find greater use in payments, settlements and on-chain financial activities.
Regional US banks face the greatest exposure, the report because they are highly dependent on retail deposits and net interest income. As interest-bearing stablecoins proliferate, deposit substitution could squeeze profitability more quickly at smaller lenders than at diversified banking groups with broader revenue streams, capital markets operations and balance sheets.
Supply is already up about 40% year-over-year, exceeding $300 billion. This can drive its adoption in payments and settlements. Clearer crypto regulations and supporting legislation can legitimize stablecoin as a tool for trading, cross-border settlements and blockchain-based financial infrastructure.
Payment shifts undermine the net interest margin
The analysis is based on net interest margin, which is a key driver of banks’ profitability. Net interest margin is a measure of the difference between the interest earned on loans and the interest paid on deposits. According to Geoff Kendrick, the payment shift to stablecoins is eroding the net interest margin and the traditional banking business model in the US banking system.
Standard Chartered’s findings show that regional banks have been hardest hit. Unlike diversified banks, which have a wide range of businesses and revenue streams, regional banks derive a greater share of their income from interest. This shows that diversified banks and investment companies are the least affected under the current adoption path model assumption.
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Stablecoin market structure and regulatory impact
Stablecoins dominate the cryptocurrency payment and settlement landscape. Despite their large market share, stablecoin issuers have limited reserves in traditional bank deposits. This limits the positive impact on traditional banking business models that are experiencing an outflow of deposits due to the growth of cross-chain adoption.
Standard Chartered estimates that the stablecoin market is expected to reach a value of $2 trillion by 2028. This will result in a loss of $500 billion in bank deposits in developed markets. The clarity of the legislation is still a concern. However, the bank expects the US market structure regulation to be adopted by the end of the first quarter of 2026.
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