Coinbase Dismisses Claim That Stablecoins Drain Bank Deposits
Coinbase has denied recent that stablecoins are to blame for US banks losing deposits, calling these worries a “myth.” The crypto platform made a lengthy statement and a to back it up, saying that there is not enough data to connect the expansion of stablecoins to the outflow of deposits at community or larger banks.
Instead, Coinbase stressed that stablecoins are primarily used for payments rather than savings accounts, giving consumers quicker and cheaper ways to make transactions without moving their assets around.
Global Use of Stablecoins Reinforces the Dollar
mostly talked about how most stablecoin activity happens outside of the US, especially in places where the financial system isn’t as strong. More than half of all stablecoin transactions in 2024 occurred outside of the US, mainly in Asia, Latin America, and Africa.
are mostly linked to the US dollar; therefore, their use around the world actually strengthens the dollar’s position as the world’s most significant currency. This increases the dollar’s power without having a significant effect on the availability of bank credit in the US.
Challenging Predictions of Deposit Flight
Coinbase also disagreed with the US Treasury Borrowing Advisory Committee’s of a possible $6 trillion deposit flight caused by the use of stablecoins, even though the committee only predicted a $2 trillion stablecoin industry by 2028.
The company said that these numbers “don’t add up” and showed that bank stocks and crypto companies did well later than the was passed. This indicates that stablecoins and banks can work together and do well.
Banks Urged to Improve Deposit Offerings
During the debate, detractors from the have said that stablecoins are a threat to competition, especially since certain stablecoins offer better returns than regular bank deposits.
But people in the business, like investment chief Matthew Hougan, say that banks should stop blaming stablecoins and instead work on making their deposit options better, including interest rates. Hougan noted that banks have historically benefited from paying depositors cheap interest rates and should now change to serve better clients who are competing with stablecoins.
Coinbase’s viewpoint strongly disputes that stablecoins pose a danger to the US banking system via eroding deposits. Instead, it views stablecoins as payment options that work well with other payment methods and assist the US dollar’s role in the world without making existing banks’ credit and lending operations less stable.
