Standard Chartered: Stablecoins could drain $500B from US regional bank deposits by 2028

Standard Chartered’s digital-assets team warns that rising stablecoin adoption could shift roughly $500 billion of developed-market bank deposits to blockchain-based stablecoins by 2028, posing acute risk to US regional banks. The bank projects a $2 trillion global stablecoin market by 2028 and estimates one-third of that market (≈$500B) will come from developed-market deposits. Regional banks are most exposed because they rely heavily on retail deposit-funded net interest margin (NIM), which stablecoins can erode as issuers offer crypto-native deposit alternatives. Major issuers such as Tether and Circle hold only limited bank reserves (reported ~0.02% for Tether, ~14.5% for Circle), reducing the chance that issuer-held bank deposits could offset outflows. The regulatory backdrop in Washington—especially debate over market-structure rules and draft limits on issuer interest payments—remains unresolved but could crystallize policy and accelerate adoption once clarified; Standard Chartered expects relevant legislation possibly by late Q1 2026. The report highlights examples of growing U.S. on‑ramp competition (e.g., Tether’s USAT via Anchorage Digital Bank). For traders, implications include downside pressure on regional bank equities and bond spreads, a structural threat to bank NIM and fee income, continued bullishness for stablecoin and tokenization infrastructure themes, and increased regulatory event risk. Actionable points: monitor regional bank deposit trends and NIM reports, watch regulatory milestones in the U.S., track on‑chain stablecoin flows and market-share shifts (USDT/USDC), and reassess portfolio exposure to regional bank credit and financial-sector stocks.