Coinbase: The view that stablecoins will lead to a massive exodus of bank deposits is untenable

Coinbase Chief Policy Officer Faryar Shirzad wrote in an article that banks across the United States are sounding the alarm about stablecoins, claiming they will siphon off deposits and undermine lending. This narrative, now ubiquitous in mainstream media, distorts both the evidence and the reality of stablecoin use. The argument that stablecoins will lead to a massive exodus of bank deposits is simply unfounded. There is no meaningful correlation between stablecoin adoption and deposit outflows from community banks, stablecoins pose no threat to lending, and there is no reason to believe that large banks will fare any worse. Instead, what we are seeing is a coordinated effort by large financial institutions to slow innovation and preserve the rents they earn from a payments system that has remained essentially unchanged for decades.