Standard Chartered analysts estimate US banks could lose around $500 billion in deposits to stablecoins by the end of 2028, with regional lenders facing the highest risk. The projection comes as the two largest stablecoin issuers, Tether (USDT) and Circle (USDC), continue to park most of their reserves in US Treasuries rather than bank accounts, limiting the recycling of capital back into the banking system.
Why the industry is pushing back
During recent Senate Banking Committee deliberations on the CLARITY Act, the American Bankers Association sent more than 8,000 letters to Senate offices targeting stablecoin yield rules. The lobbying blitz drew sharp criticism from Senator Bernie Moreno, who accused banks of trying to "kill stablecoins" and called the industry a "cartel" protecting low-interest deposit models. The tension highlights a fundamental clash: stablecoins offer users a way to earn yields far higher than traditional savings accounts without leaving the crypto ecosystem.
A growing appetite among finance executives
A survey by Ripple found that 74% of finance executives view stablecoins as tools for unlocking working capital and improving treasury operations. That sentiment aligns with the broader market data: the stablecoin market now sits at about $320 billion, with Tether's USDT commanding $188 billion and Circle's USDC another $76 billion, according to DefiLlama. Analysts say the appeal is straightforward—users can earn roughly 5% risk-free by holding stablecoins, whereas banks currently pay depositors between 0.1% and 0.5%.
"Depositing money in a bank is an unsecured loan," analyst EGRAG noted, explaining that banks lend those deposits at rates between 6% and 28% while passing on almost none of that return to customers. Stablecoins, by contrast, separate custody, settlement, and yield, giving users direct access to the underlying interest generated by Treasury-backed reserves.
Regional banks in the crosshairs
Standard Chartered's report specifically flags regional banks as most exposed to deposit outflows. These institutions rely heavily on low-cost deposits to fund lending, and a shift of even a fraction of the projected $500 billion could squeeze their margins. Unlike the largest national banks, regional lenders have fewer options to replace lost deposits without raising rates or tapping wholesale funding.
The dynamic is already visible. As stablecoin reserves flow into Treasuries, they bypass the traditional bank lending cycle entirely. That means less capital available for mortgages, small-business loans, and other credit that regional banks typically provide.
The Senate's CLARITY Act, which would regulate stablecoin issuers and set rules around reserves and yields, remains a flashpoint. Banks want tighter limits on what stablecoins can offer. Stablecoin advocates, including Senator Moreno and the growing number of corporate treasurers using them, argue that the current system locks depositors into near-zero returns while banks pocket the difference.
