Leading U.S. cryptocurrency exchange Coinbase has refuted claims that stablecoins threaten the US banking system by causing “deposit erosion.” It called this idea a myth.
In a blog post on September 16, the exchange dismissed concerns about stablecoins pulling funds from bank deposits as unfounded. Coinbase also cited that recent analysis highlighted that there is no significant connection between stablecoin use and deposit outflows at community banks.
Further, the exchange argued that stablecoins, which are dollar-pegged cryptocurrencies, function primarily as payment tools rather than savings accounts. “Stablecoins don’t threaten lending—they offer a competitive alternative to banks’ $187 billion annual swipe-fee windfall,” it stated, emphasizing that users choosing stablecoins for international payments are not reallocating savings but opting for faster, cheaper transactions.
The exchange also challenged a U.S. Treasury Borrowing Advisory Committee report projecting $6 trillion in potential deposit flight against a $2 trillion stablecoin market by 2028, calling the figures inconsistent. Coinbase’s accompanying paper noted that most stablecoin activity, over $1 trillion of $2 trillion in 2024 transactions, occurs outside the U.S., particularly in Asia, Latin America, and Africa, where financial infrastructure is weaker.
Coinbase: Stablecoins boost USD, coexist with banks
Coinbase argued that this international use strengthens the U.S. dollar’s global dominance rather than undermining domestic banks. It further highlighted positive correlations between bank stock performance and crypto firms like itself and Circle after the passage of the GENIUS Act, suggesting banks and stablecoins can coexist.
The exchange’s stance aligns with comments from Bitwise’s Investment Chief Matt Hougan, who last week criticized U.S. banks in an X post for offering low deposit yields while resisting stablecoin competition instead of improving services. The debate follows August 2025 calls from U.S. banking groups, led by the Bank Policy Institute, urging Congress to address a perceived loophole in the GENIUS Act that could allow stablecoin issuers to indirectly offer yields through crypto exchanges.
Also Read: Hong Kong To Simplify Crypto Rules To Support Stablecoin Banking
