Standard Chartered: Stablecoins Could Drain $500B from Bank Deposits, Pressuring Bank NIMs

Standard Chartered research warns rapid stablecoin adoption could pull up to $500 billion from developed-market bank deposits by end-2028, threatening banks’ net interest margins (NIMs). Geoff Kendrick, global head of digital assets research, estimates deposit outflows could equal roughly one-third of stablecoin market cap if total supply expands toward $2 trillion. Stablecoin supply has risen ~40% year-on-year to just over $300 billion, driven by increased use for settlement and liquidity, yield-bearing stablecoin products (for example, Coinbase offering ~3.5% on USDC), and prospective U.S. legislation such as the Clarity Act that may accelerate adoption. Regional U.S. banks—Huntington, M&T, Truist and Citizens—are identified as most vulnerable due to higher NIM reliance and local lending exposure; large national banks are less exposed. Tether (USDT) and Circle (USDC) reportedly keep most reserves in Treasury bills rather than bank deposits (0.02% and 14.5% in bank deposits respectively), limiting immediate redepositing back into banks. Short-term indicators are mixed: regional bank stocks have recently rallied and expected rate cuts may ease deposit costs, but Kendrick warns of a longer-term structural shift. For traders: monitor stablecoin supply growth, yield products, major stablecoin flows (USDT, USDC), regional bank NIM trends and equity/debt performance, and legislative progress on the Clarity Act. Potential impacts include pressure on regional bank equities and yield-sensitive instruments, increased attention to on-chain dollar liquidity, and opportunities in stablecoin market instruments.