US banks face $500 billion loss on stablecoins

Welcome to the US Crypto News Morning Briefing, your essential summary of the most important developments in crypto for the day ahead.

Grab a coffee and sit back – things in banking and cryptocurrencies are about to get interesting. What started as a quiet corner of the digital asset market is now making its way into the core of traditional finance (TradFi). Some of the biggest changes may still be on the horizon, and not all banks are equally prepared to deal with them.

Crypto News of the Day: Standard Chartered Warns $500 Billion in US Bank Deposits Could Flow to Stablecoins by 2028

Standard Chartered first warned about the threat stablecoins pose to TradFi banks in October, as reported in a previous US Crypto News post. Now the bank is issuing another warning, only this time, with a timeline.

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The rapid adoption of stablecoins could pose a significant threat to US banks, according to Geoff Kendrick, head of digital asset research at Standard Chartered.

In a report released today, Kendrick projects that up to $500 billion (roughly a third of US bank deposits) could migrate to stablecoins by the end of 2028.

“The tail is starting to wag the dog,” Kendrick said, highlighting the growing influence of stablecoins on traditional banking operations.

He noted that this shift is not limited to emerging markets, where he previously projected around $1 trillion in deposit outflows over the same period, but is increasingly relevant to developed markets, including the United States.

Using net interest margin (NIM) revenue as a percentage of total revenue as a risk indicator, Kendrick identifies regional banks as the most exposed.

Deposits remain a core driver of NIM, meaning any significant outflow to stablecoins could directly impact banks’ profits.

In contrast, diversified and investment banks are relatively insulated from these pressures due to broader revenue streams.

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Regulatory uncertainty exacerbates risk for US banks

The recent delay in the US CLARITY Act, intended to create a comprehensive regulatory framework for digital assets, highlights the potential vulnerability of banks.

The latest draft prohibits digital asset service providers from paying interest or returns to users who hold stablecoins. Notably, this restriction led Coinbase to remove certain offers.

Although Kendrick expects the CLARITY Act to be passed by the end of the first quarter of 2026, the delay highlights ongoing challenges that U.S. banks may face as adoption of digital assets accelerates.

The risk is not just theoretical. Stablecoins could divert core banking functions, such as payments and deposits, from TradFi institutions, creating a structural challenge for banks that rely heavily on revenue generated from deposits.

The Standard Chartered executive suggests that regional banks, in particular, should prepare for the possibility of significant deposit outflows in the coming years.

“I try to determine which banks are relatively more or less exposed to this risk… regional banks are the most exposed,” he said.

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The new US analysis therefore extends concerns from emerging to developed markets, indicating a global reassessment of bank exposure to digital assets.

Ethereum Hits New Highs as Institutional Buying and Macro Tailwinds Boost Crypto Markets

Despite these obstacles, the broader crypto ecosystem is showing signs of resilience. Ethereum activity continues to hit all-time highs, driven by post-Fusaka upgrades that have improved capacity and sustained institutional interest.

BitMine (BMNR), for example, has increased its Ethereum holdings to nearly 5% of its Digital Asset Treasury, with plans to continue buying.

Macroeconomic developments, including easing pressure on global risk assets and favorable expectations for US monetary policy amid potential changes in Federal Reserve leadership, further support market stability.

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