Standard Chartered warns stablecoins could drain $500 billion from U.S. bank deposits by 2028

U.S. banks could face as much as $500 billion in deposit outflows to stablecoins by the end of 2028, according to a new report from Standard Chartered which frames stablecoin adoption as a growing structural risk to the traditional banking system.

The estimate represents roughly one-third of the $2 trillion stablecoin market cap that the bank’s analysts expect by the end of the decade, and about half of the $1 trillion in emerging market bank deposits that Standard Chartered has previously projected could migrate into U.S.-dollar stablecoins over the same period.

Geoffrey Kendrick, the bank’s global head of digital assets research, said the risks have become more visible as payments and other core banking activities increasingly migrate toward blockchain-based alternatives. He also pointed to delays surrounding the U.S. Digital Asset Market Clarity Act, known as the Clarity Act.

“This issue has pitted big banks against Coinbase,” Kendrick wrote. While Coinbase initially withdrew support for the bill, noting that its latest draft would bury a major incentive to hold and issue stablecoins, Bank of America’s CEO warned that stablecoins could attract up to $6 trillion in deposits from banks if allowed to pay interest.

The tussle in Washington suggests regulatory uncertainty could further accelerate adoption once the framework is finalized, the Standard Chartered analyst stated.

Regional banks lead exposure risk

To assess which American banks are most exposed, Standard Chartered analyzed net interest margin income as a percentage of total revenue, arguing that the metric best captures vulnerability to deposit flight. Deposits are a primary driver of net interest margin, Kendrick said, and a sustained shift into stablecoins would directly pressure that income stream.

Using this measure, the bank found that U.S. regional banks are the most exposed, given their heavier reliance on deposit-funded lending. Diversified banks face more moderate risk, while investment banks and brokerages appear least exposed due to their lower dependence on deposit-driven income, per Standard Chartered’s analysis.

Disruptive threats

The report also highlighted structural factors that could amplify deposit losses. For one, the two dominant stablecoin issuers, Tether and Circle, currently hold only a small fraction of their reserves in bank deposits, limiting any offset from redepositing funds back into the banking system.

Standard Chartered estimates that roughly two-thirds of current stablecoin demand originates in emerging markets, leaving about one-third tied to developed markets — a split that underpins its $500 billion projection for U.S. and other developed-economy banks.

Yet, Kendrick also cautioned that not all disruption would play out evenly. The impact on individual banks will depend on how they respond, including whether they adapt their funding models or engage more directly with tokenized financial infrastructure. Beyond deposits, the bank said it is also monitoring longer-term risks to non-interest income as tokenization of real-world assets expands.

U.S. dollar-denominated stablecoins currently have a supply of roughly $300 billion, according to The Block’s data. If Standard Chartered’s projections hold, the market would almost triple in size from bank deposits alone, moving closer to the widely anticipated $1 trillion level by 2028.

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