Banks' Worries About Stablecoins Overlook Real-World Impact, Says Coinbase
Coinbase researchers assert that fears surrounding stablecoins harming US banks are unfounded and fail to recognize the true usage of these tokens.
U.S. banking associations have called for Congress to restrict stablecoin yields, expressing fears that this could lead to an exodus of banking customers.
Coinbase researchers argue these concerns are misguided as they overlook the actual applications of stablecoins.
“The narrative that ‘stablecoins will destroy bank lending’ is detached from reality,” said Faryar Shirzad, Coinbase’s policy leader. Translation: The claims that stablecoins threaten bank loans ignore factual circumstances.
Shirzad noted that the demand for stablecoins primarily arises from international users rather than domestic consumers, promoting global dollar utilization rather than competition with local banks.
A report from Coinbase stated that stablecoins serve as a method for users in emerging markets to protect against local currency devaluation while also facilitating transactions for those who are unbanked.
The research highlighted that about two-thirds of stablecoin transactions occur on decentralized platforms, suggesting that they act as a new financial infrastructure that operates alongside traditional banking.
According to Shirzad, mischaracterizing stablecoins as a danger to the banking system misinterprets their function: they enhance the international standing of the dollar and offer competitive perks that should not be restricted.
Coinbase also suggested that fears over the declining health of community banks due to stablecoin adoption do not hold up, pointing out that typical stablecoin users differ significantly from regular community bank patrons.
Shirzad stated that community banks and stablecoin holders have minimal overlap, further indicating that banks could leverage stablecoins to enhance their offerings.
He cautioned against overly optimistic projections regarding the influx of trillions into stablecoins in the next decade, maintaining that even at nominal heights, the majority of stablecoin value would not detract from U.S. bank deposits.
Additionally, major banks are increasingly establishing or exploring stablecoin initiatives following the implementation of the GENIUS Act, which sets parameters for stablecoin service providers in the U.S.
