Standard Chartered sees $500 billion bank deposit shift Into Stablecoins

Standard Chartered warns stablecoins could draw $500 billion from US bank deposits by 2028, pressuring regional lenders most. Regulatory delays, rising crypto adoption, and Ethereum’s institutional momentum signal a structural shift in finance as digital assets edge deeper into mainstream banking.

A fresh warning from Standard Chartered suggests that the quiet rise of stablecoins could soon become a defining force in global finance — and a serious challenge for traditional US banks. According to the bank’s head of digital asset research, Geoff Kendrick, as much as $500 billion in US bank deposits could migrate into stablecoins by the end of 2028, marking one of the largest structural shifts in modern banking.

Stablecoins, once viewed as a niche tool within crypto trading circles, are increasingly functioning as digital cash equivalents. Their rapid integration into payments, cross-border transfers, decentralized finance (DeFi), and digital commerce is blurring the line between crypto infrastructure and mainstream financial plumbing. Kendrick’s projection signals that this shift is no longer theoretical — it is measurable, accelerating, and poised to affect banks’ core earnings models.

Why Deposits Matter More Than Ever

Bank deposits are not just idle funds; they form the backbone of lending operations and drive a major portion of bank profitability through net interest margin (NIM) — the difference between interest earned on loans and interest paid to depositors. Any large-scale movement of deposits into stablecoins could erode this revenue engine.

Kendrick’s analysis indicates that regional US banks are the most exposed. These institutions depend more heavily on traditional deposit bases and have fewer diversified income streams compared to large universal or investment banks. If customers increasingly park liquidity in stablecoins — which offer speed, programmability, and integration with digital platforms — regional banks could see pressure on both funding costs and profitability.

Diversified banks, on the other hand, generate income from trading, advisory, wealth management, and capital markets activities, making them less vulnerable to deposit flight. Still, the broader message is clear: stablecoins are no longer peripheral; they are competing with core banking functions.

Stablecoins: From Trading Tool to Financial Rail

The evolution of stablecoins has been swift. Initially used primarily for crypto trading and arbitrage, they now power a growing ecosystem of financial activity. Businesses use them for cross-border payments, freelancers accept them for international contracts, and DeFi protocols rely on them as settlement assets.

What gives stablecoins an edge is their instant settlement, lower transaction friction, and compatibility with digital ecosystems. In regions with volatile currencies, they serve as a dollar proxy. In developed markets, they offer efficiency and programmability that traditional bank transfers often lack.

Standard Chartered’s earlier research estimated around $1 trillion in deposit outflows in emerging markets over a similar time frame. The new US-focused outlook expands that concern to developed economies, signaling a global re-evaluation of how digital money may reshape financial intermediation.

Regulatory Crossroads: The CLARITY Act Delay

Complicating matters is the evolving regulatory environment. The proposed US CLARITY Act, designed to create a clearer framework for digital assets, has faced delays. The draft legislation includes provisions preventing digital asset service providers from paying interest or yield on stablecoin holdings — a move that could slow their appeal as deposit substitutes.

The delay underscores the uncertainty banks face. While Kendrick expects the bill to pass by the end of the first quarter of 2026, the gap between innovation and regulation leaves institutions navigating shifting ground. Banks must prepare for competitive pressure even as policymakers debate guardrails.

If stablecoins continue to integrate into payments and savings behavior, regulatory action may shape — but not halt — adoption. Instead, banks may need to adapt by offering digital asset custody, tokenized deposits, or blockchain-based settlement services.

Structural Change, Not Cyclical Trend

What makes this development significant is its structural nature. Unlike temporary market cycles, stablecoin growth represents a technological shift in how money moves. Kendrick’s remark that “the tail is starting to wag the dog” reflects the growing influence of digital asset infrastructure over traditional banking norms.

Payments and deposits — historically controlled by banks — are becoming contested territory. Fintech firms, crypto platforms, and even large technology companies are building parallel financial rails using blockchain-based settlement layers.

This trend could reduce banks’ role as intermediaries, especially if digital wallets and on-chain payment networks become mainstream. The shift may resemble the disruption seen in telecommunications or media, where digital platforms redefined distribution models.

Crypto Market Resilience Adds Momentum

Even as banking risks emerge, the broader crypto market shows renewed strength. Ethereum activity has reached record levels following major network upgrades that improved scalability and efficiency. Institutional demand is playing a notable role.

Companies such as BitMine have expanded their Ethereum holdings as part of digital asset treasury strategies, reflecting growing corporate comfort with crypto exposure. Exchange-traded products tied to Ethereum have also seen steady inflows, signaling institutional validation.

Macro conditions are also supportive. Expectations of stable monetary policy and easing pressure on risk assets are helping sustain digital asset valuations. Together, these factors reinforce the ecosystem in which stablecoins operate, making deposit migration scenarios more plausible.

The Banking Industry’s Next Move

Banks are not standing still. Many large institutions are experimenting with tokenized deposits, blockchain-based settlement systems, and partnerships with fintech firms. The goal is to retain customers within bank-regulated environments while offering digital convenience.

However, the speed of innovation outside traditional finance may outpace these efforts. Regional banks, with fewer resources for technological overhaul, could struggle to compete unless they adopt collaborative models or specialized digital services.

The industry may ultimately see a hybrid model where banks coexist with stablecoin infrastructure, offering regulated gateways between fiat and digital assets. Yet, the balance of power may shift if customers increasingly trust digital wallets over bank accounts for everyday liquidity.

A Global Reassessment Underway

Standard Chartered’s warning highlights a broader theme: the convergence of crypto and traditional finance is accelerating. What began as an experimental asset class now influences funding structures, payment systems, and policy debates.

The projected $500 billion shift in US deposits represents not just a number, but a signal of how financial behavior could evolve. If realized, it would mark one of the most consequential transitions in the history of modern banking.

For policymakers, the challenge is to craft frameworks that protect consumers and financial stability without stifling innovation. For banks, the task is adaptation — rethinking services, infrastructure, and competitive positioning in a world where digital dollars circulate alongside traditional deposits.

For the crypto industry, the message is validation. Stablecoins are no longer speculative side tools; they are becoming foundational financial instruments.