Stablecoins Set to Disrupt Banking: $6.6 Trillion in Deposits at Risk

The passage of the GENIUS Act last year caught many in the banking sector off guard, despite Washington’s growing interest in cryptocurrency. Now, industry lobbyists are scrambling to address a critical loophole in the law that threatens to siphon vast sums from traditional banking deposits.

Meanwhile, bankers nationwide are grappling with how to strategically approach stablecoins – either defensively or as a new opportunity.

The financial implications are staggering. A 2025 report from the Trump Treasury Department, preceding the Act’s passage, highlighted the immense potential impact:

• A staggering $6.6 trillion in non-interest-bearing transactional deposits within the banking industry is at risk. This represents approximately one-third of all deposits held by U.S. commercial banks.

These figures are not merely theoretical. Accenture’s “Top Banking Trends 2026” report points to existing shifts observed in international markets, such as Argentina. “If this trend scales, it could displace traditional deposits, strain funding and lending capacity, and weaken monetary effectiveness,” the report warns.

Accenture further notes, “Traditional banks have long profited from the stability of deposits and customers’ reluctance to move funds from low-yield accounts. That model now appears increasingly unsustainable.”

Key Developments in the Stablecoin Landscape

• The debate rages in Washington over the payment of quasi-interest on stablecoin deposits, a point the banking lobby initially believed was settled in their favor under the GENIUS Act.
• Despite legislative intent, platforms like Coinbase continue to offer “awards” on stablecoin holdings. For instance, USDC stablecoin – designated as “crypto held to a higher standard” by the Act – can yield returns as high as 3.5%.
• A consortium of banking associations has voiced strong concerns to the Senate, stating that “Policies that undermine bank and credit union deposits destroy local lending.”
• Experts generally agree that the stablecoin risk will impact commercial deposits sooner than retail accounts. Low-cost business demand deposit accounts have historically been a crucial funding source for banks.
• The initial wave of stablecoin adoption is anticipated in international transactions, yet current adoption curves suggest a rapid acceleration across all sectors.
• New formidable competitors include crypto-native institutions like Erebor, boasting deep expertise and tech industry connections, and hybrid bank-fintech players like SoFi, with their robust technological capabilities.

An Industry in Flux: Navigating the Stablecoin Future

“So far, we’ve observed large banks innovating while community banks are primarily advocating, meaning they are actively working to protect their existing deposit base,” explains Duane Block, managing director of digital assets at Accenture.

The coming months are pivotal, as the question of stablecoin “interest” is resolved. This will be “the hinge of industry fate,” Block states, determining “whether there’s a real revenue-generating opportunity or whether this will be a defensive paradigm shift.”

Reflecting on the rapid evolution, Block remarks, “If you look at the President’s working group report back at the end of July and then look at the lockstep movement of different regulators in support of those recommendations, the collaboration has been unparalleled.”

Will traditional customer loyalty prevail? Block believes it’s not guaranteed that funds will exit banking solely due to stablecoins. Local banks have long relied on strong customer relationships. “At the end of the day, people with relationships may or may not respond to just one economic driver,” he notes.

Strategic Options for Banks: What Comes Next?

Beyond the largest financial institutions and new crypto-specialized trust banks, many are still pondering their next steps regarding stablecoins.

Chris Dean, CEO of Treasury Prime, which operates at the intersection of fintech and banking, frequently hears banks express urgency without clear direction. “They say, ‘We have to do something right now. It’s very important.’ And I say, ‘Great, what do you want to do?’ And they say, ‘We have to do something right now — it’s very important!’”

Dean identifies three concrete strategies banks can pursue:

1. Create your own stablecoin or tokenized deposit: This could be an individual bank effort or part of a consortium. For most, an independent stablecoin is out of reach, but consortium participation is more feasible, though still challenging. Dean cautions that despite political support, career regulators prioritize compliance and safety, with money laundering being a significant concern.
2. Refocus to become a crypto bank: While niche specialization can be appealing, this is a formidable undertaking. Existing players like Erebor and Cross River Bank already possess deep crypto integration and expertise.
3. Offer “pay in, pay out” services: This involves providing bank-based on/off ramps, allowing customers to move deposits into the stablecoin ecosystem for payments and accept stablecoin payments back into traditional banking. The key advantage is keeping funds within the bank for as long as possible, similar to wires, ACH, or instant payment channels like FedNow and The Clearing House RTP network. For businesses engaged in international trade, stablecoins offer a helpful mechanism. Tony DeSanctis, senior director at Cornerstone Advisors, highlights a firm that relies on PayPal’s stablecoin for offshore inventory purchases, valuing the recipient’s flexibility to convert to their preferred currency.

Duane Block also points to other specialized roles, such as becoming a stablecoin custodian. He anticipates clearer opportunities once Congress finalizes the second round of stablecoin legislation, often referred to as the CLARITY Act.

Retail vs. Business Adoption: Who Will Embrace Stablecoins?

The current consensus suggests that stablecoins hold greater appeal for businesses, particularly for payments and international transactions where local currencies may be less stable. Stablecoins under the GENIUS Act are mandated to be backed 1:1 by U.S. Treasury securities or actual dollars.

“The volume is there, on the retail side, but it’s really tiny,” says Dean. While he, as a tech enthusiast, finds the idea of paying for lunch with stablecoins appealing, the broader consumer experience remains nascent.

Lily Varon, principal analyst at Forrester, notes that consumer experiences thus far are “clunky and a little worrisome,” citing fears of losing funds due to lost access codes for self-custody wallets. Forrester’s annual payments forecast for 2026 did not predict any scalable use cases for retail stablecoins. Furthermore, the report stated, “For merchants, processor costs and integration challenges often negate any promised fee savings.”

“Stablecoins are not going to be an issue for the consumer side,” asserts Michael Abbott, senior managing director and global banking lead at Accenture. “Consumers will still be keeping their deposits in the bank. Your paychecks are not going to go into stablecoins.” However, stablecoins could facilitate rapid fund movement out of banks for deposit optimization via agentic AI.

One notable exception is international remittances. DeSanctis foresees stablecoins augmenting existing remittance mechanisms, citing Western Union’s recent announcement of its U.S. Dollar Payment Token. A looming question remains: could stablecoins inadvertently pave the way for future bank runs, reminiscent of the regional bank crisis?

Source: TheFinancialBrand.com