Coinbase calls stablecoin deposit drain a myth
Coinbase dismissed warnings that dollar-pegged digital tokens drain deposits from American banks, stating in a blog post that most activity happens overseas and does not undermine domestic credit.
The U.S. crypto exchange argued that these tokens are used mainly as payment tools, not savings accounts, and that their adoption supports the global role of the U.S. dollar rather than weakening American banks.
Coinbase responded Tuesday to concerns raised by the U.S. Treasury Borrowing Advisory Committee, which predicted up to $6 trillion in potential deposit outflows linked to digital tokens by 2028. Coinbase said such estimates are inconsistent with forecasts of a $2 trillion market and "the math doesn't add up."
The company reported that over $1 trillion of transactions in 2024 occurred outside the United States, particularly in Asia, Latin America, and Africa. Since most major tokens are pegged to the dollar, Coinbase said this overseas use enhances the dollar's global dominance instead of reducing bank deposits at home.
Coinbase responded Tuesday to concerns raised by the U.S. Treasury Borrowing Advisory Committee, which predicted up to $6 trillion in potential deposit outflows linked to digital tokens by 2028. Coinbase said such estimates are inconsistent with forecasts of a $2 trillion market and "the math doesn't add up."
The company reported that over $1 trillion of transactions in 2024 occurred outside the United States, particularly in Asia, Latin America, and Africa. Since most major tokens are pegged to the dollar, Coinbase said this overseas use enhances the dollar's global dominance instead of reducing bank deposits at home.
Coinbase pointed out that bank stock performance has positively correlated with crypto companies, including Coinbase and Circle, since passage of the GENIUS Act. The company cited this as evidence that the two sectors can coexist. Bitwise chief investment officer Matt Hougan added that banks worried about competition should raise deposit rates rather than lobby for tighter rules.
The exchange also stated that stablecoins don't threaten lending – instead, they offer a competitive alternative to banks' $187 billion annual swipe-fee windfall.
The Treasury committee's report examined potential risks to traditional banking from digital payment alternatives. Committee members expressed concern about deposits migrating from regulated banks to digital token systems.U.S. banking groups, including the Bank Policy Institute, have argued that dollar-pegged tokens create financial stability risks.
These groups recently pushed Congress to tighten rules under the GENIUS Act, which provides a regulatory framework for digital dollar tokens. Crypto industry associations responded by warning that stricter measures could stifle innovation and favor traditional banks. The debate reflects broader tensions between established financial institutions and digital payment providers.
Coinbase operates one of the largest U.S. cryptocurrency exchanges and has invested heavily in regulatory compliance infrastructure. The company has advocated for clear rules governing digital assets while opposing restrictions.
Previously, we reported that Galaxy Digital’s Michael Novogratz expects AI systems to soon dominate stablecoin transactions.
The exchange also stated that stablecoins don't threaten lending – instead, they offer a competitive alternative to banks' $187 billion annual swipe-fee windfall.
The Treasury committee's report examined potential risks to traditional banking from digital payment alternatives. Committee members expressed concern about deposits migrating from regulated banks to digital token systems.U.S. banking groups, including the Bank Policy Institute, have argued that dollar-pegged tokens create financial stability risks.
These groups recently pushed Congress to tighten rules under the GENIUS Act, which provides a regulatory framework for digital dollar tokens. Crypto industry associations responded by warning that stricter measures could stifle innovation and favor traditional banks. The debate reflects broader tensions between established financial institutions and digital payment providers.
Coinbase operates one of the largest U.S. cryptocurrency exchanges and has invested heavily in regulatory compliance infrastructure. The company has advocated for clear rules governing digital assets while opposing restrictions.
Previously, we reported that Galaxy Digital’s Michael Novogratz expects AI systems to soon dominate stablecoin transactions.
Author
Sebile Fane cut her teeth in blockchain by building tiny NFT experiments with friends in her living room, long before the buzzwords took hold. She’s driven by a curiosity for the human stories behind smart contracts — whether it’s a small-town artist minting her first token or a DAO voting on climate grants — and weaves technical insight with genuine empathy.
Recommended