Quick Breakdown
- Coinbase dismisses banks’ warnings that stablecoins drain deposits.
- Report highlights banks’ $187B annual payment fee profits at risk.
- Stablecoins are framed as faster, cheaper payment tools, not threats to lending.
Coinbase has dismissed warnings from U.S. banks that stablecoins threaten deposit levels and lending capacity, calling the narrative a “myth” designed to protect payment processing profits rather than the financial system.
The company argues that claims of “deposit erosion” ignore the actual use of stablecoins, which function as payment tools and settlement instruments, not as savings accounts. In a new policy paper, Beyond the Deposit Debate: Why Stablecoins Complement Banks and Strengthen the Dollar, Coinbase contends that the pushback from Wall Street signals resistance to innovation, not legitimate concern over credit markets.
Banks’ profits, not lending, under threat
Banks have raised alarms that stablecoins could spark $6 trillion in deposit outflows, citing a Treasury Borrowing Advisory Committee report. Coinbase counters that this projection lacks evidence and contradicts forecasts of a $2 trillion stablecoin market by 2028.
The company stresses that stablecoins are primarily used for cross-border payments, digital asset purchases, and settlement areas where traditional systems are slow and costly. Instead of draining deposits, they bypass banks’ $187 billion annual card-processing fee revenue, a key profit source.
Coinbase further noted that if banks were truly short on deposits, they would raise savings rates. Instead, U.S. banks currently park $3.3 trillion with the Federal Reserve, earning $176 billion in interest last year over half of pre-tax earnings.
Innovation vs. Protectionism
According to Coinbase, the resistance mirrors earlier fights against ATMs, online banking, and electronic check clearing, where incumbents framed innovation as a threat while defending entrenched revenue streams.
The company urged banks to compete rather than block new technology, highlighting that stablecoin rails can cut costs, enable instant settlement, and expand access to 24/7 payments.
Notably, Coinbase backed the GENIUS Act, which established a regulatory framework for stablecoins, and warned lawmakers against reversing progress.
“The choice is clear,”
the paper states,
“protect bank monopolies or protect consumers.”
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