Moody’s: Stablecoins pose limited short-term threat to banks

Moody’s Investors Service says stablecoins are unlikely to destabilize traditional banks in the near term, even as the stablecoin market tops about $300bn. The view comes from Moody’s VP Abhi Srivastava. Moody’s points to two buffers. First, U.S. rules prevent interest payments on stablecoin holdings, limiting their appeal as a bank deposit substitute. Second, existing payment rails like FedNow and ACH remain fast, secure, and trusted, with relatively clearer regulation. Regulation is the swing factor. The proposed but stalled CLARITY Act leaves uncertainty for banks and stablecoin issuers—reducing immediate “bank-like” competition, but also shaping what products can be offered. Market structure also matters: most stablecoin activity still stays inside crypto ecosystems (trading and transfers), though payment processors are beginning to add stablecoin settlement, hinting at gradual convergence. Longer term, stablecoins plus tokenized real-world assets (RWA) could erode bank deposits if interest-bearing stablecoins gain approval and institutions adopt tokenized RWA at scale—potentially reducing banks’ lending capacity. For traders, this is a cautious setup: stablecoins are a limited short-term disruption story, but regulatory outcomes around CLARITY and interest-bearing stablecoin products could shift sentiment over time.