StableCoins Real-World Use Doesn’t Harm Banks, Coinbase Says

Concerns that Crypto StableCoins will harm US banks by cannibalizing banking deposits are misplaced and do not take into account the real uses of the tokens, according to Coinbase researchers.

“‘StableCoins will destroy bank narrative’ ignores reality,” Coinbase head of policy Faryar Shirzad said on Wednesday.

“Most StableCoin demand comes from outside the US, extending the dollar’s dominance around the world, not competing with your local bank.”

Shirzad shared a market remember That said the arguments StableCoins Impact on bank deposits and lending “Echo familiar concerns from earlier innovations such as money market funds. However they fail for how and where stablecoins are used.”

US banking groups have argued that stablecoins that offer yields could compete with bank accounts and Trigger Bank Outflowsand have urged Congress To clamp services that offer yield in StableCoins.

StableCoin demand is global, not US-centric

Coinbase argued in its note that the most demand for StableCoins came from “international users looking for dollar exposure” and not from US buyers.

It said emerging markets use US Dollar StableCoins to hedge against local currency losses, and the tokens are a “practical form of dollar access” for the underbanked.

The note adds that around two-thirds of StableCoin transfers occur on decentralized blockchain platforms. “In that sense, they are the transactional plumbing of a new financial layer that runs parallel to, but largely outside, the domestic banking system,” Coinbase said.

“Treating StableCoins as a threat misses the moment: they strengthen the global role of the dollar and unlock competitive advantages that the US should not prevent,” said Shirzad.

Community banks won’t collapse, Coinbase claims

Coinbase argued that concerns that community banks would be hit by the widespread use of StableCoin also lacked credibility, explaining that the average user of StableCoin “is not the same as the average community bank customer.”

“Community banks and stablecoin holders hardly overlap,” Shirzad said, adding that banks “can improve their services with StableCoins.”

Related: Western Union Selects Solana for StableCoin and Crypto Network

Coinbase also said forecasts of trillions of dollars flowing into stablecoins over the next 10 years “should be carefully scrutinized.”

“Even if StableCoin circulation reaches $5 trillion worldwide, most of that value will still be held offshore or locked in digital settlement systems, not diverted from checking or savings accounts,” it said.