A Standard Chartered report warns that U.S. banks could face up to $500 billion in deposit outflows to stablecoins by end-2028, potentially amounting to about one-third of a $2 trillion stablecoin market and roughly half of the projected $1 trillion in EM deposits migrating to U.S.-dollar stablecoins over the same period.

The study finds domestic demand draining local deposits while foreign demand is less of a pressure, with roughly two-thirds of stablecoin demand coming from emerging markets and one-third from developed markets.

Geoff Kendrick, Head of Digital Asset Research at Standard Chartered, argues that rapid stablecoin adoption could threaten traditional banking operations and deposit-driven income.

The article notes that some content is AI-assisted and directs readers to CoinDesk’s ethics policy.

Debates around the CLARITY Act are referenced, with Coinbase and Circle CEO Jeremy Allaire offering differing takes on stablecoin risks.

Ethereum is reaching new highs on institutional demand and macro tailwinds, supported by ongoing institutional buying and treasury allocations by entities like BitMine.

Despite traditional-finance headwinds, the broader crypto ecosystem remains resilient, with Ethereum activity at record levels due to institutional support.

The Senate Banking Committee postponed a crypto-legislation hearing amid disputes over how to address banks’ concerns.

The report emphasizes that impact depends on issuer reserve locations and demand patterns, and warns of longer-term risks to non-interest income as asset tokenization expands.

The piece links to related developments and reads on how stablecoins drive neobanks and institutional crypto adoption.

The analysis notes that a broader liquidity risk exists as real-world assets expand beyond stablecoins, tying deposit risk to regulatory debates and potential tokenized assets.

Market context includes macro developments that support risk assets and possible shifts in U.S. monetary policy, contributing to crypto resilience despite regulatory and banking pressure.