The $500 Billion Wake-Up Call
Standard Chartered’s Global Head of Digital Assets Research, Geoff Kendrick, issued a stark warning to the traditional finance sector on Tuesday: the US banking system faces a $500 billion deposit flight by 2028 as capital migrates to stablecoins. The research note identifies dollar-pegged assets not merely as crypto trading tools, but as the inevitable "killer app" for global payments that will cannibalize legacy infrastructure.
The projection assumes the total stablecoin market capitalization, currently sitting at $311 billion per DeFiLlama data, will balloon to $2 trillion by the end of the decade. Kendrick estimates nearly a third of that growth will come directly at the expense of traditional bank deposits.
Regional Banks in the Crosshairs
The damage will not be evenly distributed. Kendrick’s analysis specifically isolates US regional banks as the primary victims. These institutions rely heavily on Net Interest Margin (NIM), the spread between interest paid on deposits and interest earned on loans. Stablecoins threaten to compress this margin to zero.
“US banks face a threat as payment networks and other core banking activities shift to stablecoins. This issue has pitted big banks against Coinbase,” Kendrick wrote, highlighting the structural weakness of lenders dependent on captive, low-yield deposits.
The logic is brutal but simple: as stablecoin utility improves for cross-border settlement and payments, the friction of keeping capital in a 0.01% yield checking account becomes unjustifiable for institutional treasurers. If regulations eventually permit stablecoin issuers to pass Treasury yields directly to holders, a key battleground in the stalled Clarity Act, the exodus could accelerate beyond current models.
The Regulatory Moat is Crumbling
The report lands amidst a tense legislative standoff. While the GENIUS Act established a framework for issuance in mid-2025, the fight has shifted to yield. Legacy banks are lobbying aggressively to ban stablecoin issuers from offering interest, viewing it as an existential threat to their funding models. Standard Chartered’s $500 billion figure puts a price tag on that fear: it is the cost of efficiency finally breaking the banking monopoly on money transmission.
