Context and Debate
Coinbase has challenged banking sector warnings that stablecoins could lead to significant deposit outflows, countering claims of up to $6.6 billion in potential losses. The exchange argues that stablecoins primarily serve as efficient payment and settlement tools, especially for cross-border transactions, rather than as substitutes for traditional bank deposits.
Industry perspectives remain divided. Banks and consultancies like Citi suggest that interest-bearing stablecoins could divert deposits away from the banking system. Coinbase, however, points to data showing that over $1 billion of the $2 billion in stablecoin transactions in 2024 occurred outside the U.S., underscoring their global use case rather than domestic displacement.
Regulatory Framework and Institutional Positions
Regulatory distinctions are central to this debate. The GENIUS Act prohibits stablecoin issuers from paying interest directly to holders but allows exchanges to offer rewards a nuance criticized by banks as a loophole and defended by crypto firms as fair competition.
In Europe, MiCA’s licensing requirements for fiat-backed stablecoins may create regulatory divergence between markets, influencing product development and capital flows. The Bank for International Settlements (BIS) remains cautious, favoring tokenized bank deposits over stablecoins for their perceived stability.
Institutional opinions vary widely. Some financial advisors warn of higher banking costs and reduced credit availability, while U.S. Treasury officials acknowledge stablecoins’ potential to reinforce the dollar’s global role. Asset managers have also criticized banks for offering uncompetitive deposit rates, fueling the shift toward digital alternatives.
Implications
This debate has tangible effects on market structure and regulation:
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Regulatory attention may intensify around the GENIUS Act and exchange-led rewards programs.
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Tokenized bank deposits could emerge as a regulated alternative to stablecoins.
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Cross-border payments and B2B settlements may increasingly rely on stablecoins for efficiency.
The ongoing tension between banks and crypto firms will likely be resolved through regulatory clarity particularly regarding the GENIUS Act in the U.S. and MiCA in Europe which will shape the future of digital payments and liquidity management.
