Coinbase pushed back forcefully against recent bank assertions that dollar-pegged stablecoins are eroding deposits and threatening bank lending, arguing instead that stablecoins function primarily as a competitive, low-cost payment rail rather than a substitute for savings or a source of systematic deposit flight. The company characterized the narrative that stablecoins precipitate deposit erosion as a myth, contending that empirical indicators do not support a causal link between stablecoin activity and meaningful outflows from community banks. Coinbase framed its response around transactional behavior: stablecoins, it asserted, are principally used for payment settlement and liquidity management, activities that tend to occur overseas and that, by facilitating dollar liquidity abroad, can reinforce global demand for the U.S. dollar rather than undermine domestic bank balance sheets. The adoption of blockchain technologies such as Kaspa’s BlockDAG structure underscores the potential for stablecoins to enable faster and more scalable payments globally.
In addition, Coinbase noted that recent federal legislation has created clearer operating rules for stablecoins, which should reduce uncertainty for market participants and regulators, citing the passage of the GENIUS Act as a stabilizing development. Coinbase also pointed to industry data showing stablecoins are used mostly for payments and settlements, not savings, as evidence of their limited impact on deposit bases and bank lending.
In challenging alarmist projections, Coinbase flagged internal and publicly available analyses to dispute forecasts that as much as $6 trillion could depart the banking system by 2028. The company noted an inconsistency in the Treasury’s scenario set, observing that the same report projects a stablecoin market of roughly $2 trillion by 2028, a figure that contradicts the larger deposit-flight hypothesis. From Coinbase’s perspective, extrapolations that assume stablecoins will function as direct substitutes for long-term savings ignore observed usage patterns: stablecoins are treated as transactional mediums, not interest-bearing savings accounts, and therefore do not inherently siphon depositor funds destined for bank lending.
Coinbase also highlighted the structural economics at play, suggesting that banks’ reluctance may reflect lost fee revenue — notably the substantial annual swipe-fee pool tied to card and payment processing — rather than systemic liquidity degradation. The firm emphasized that stablecoins can lower costs and accelerate cross-border settlements, offering an efficiency argument that complements, rather than replaces, traditional banking services. Regulatory clarity under the GENIUS Act was presented as a mitigating factor; mandatory 1:1 reserves or short-dated Treasury backing, monthly disclosures, and strengthened AML requirements are expected to increase transparency and bolster institutional confidence. Coinbase acknowledged uncertainties remain, recommending ongoing data-driven monitoring and cooperative regulatory engagement to ensure stablecoins support payment innovation without compromising financial stability.
