Coinbase Fires Back: Stablecoins Don’t Threaten U.S. Banks—Here’s Why (2025 Update)

• Are Stablecoins Really a Threat to Banks?
• The $187 Billion Fee Empire Banks Are Protecting
• History Repeats: Banks Fought ATMs and Online Banking Too
• Why the $6 Trillion Deposit Flight Prediction Doesn’t Add Up
• The GENIUS Act: How Banks and Stablecoins Could Coexist
• Bank Alternatives Beyond Complaining
• FAQ: Your Stablecoin vs. Banks Questions Answered

Coinbase is doubling down on its defense of stablecoins, calling out U.S. banks for what it claims are misleading arguments about systemic risks. The crypto giant argues that stablecoins aren’t draining bank deposits but are instead modernizing payments—while banks cling to outdated profit models. With $6 trillion in potential deposit shifts and a $2 trillion stablecoin market forecasted by 2028, the battle between legacy finance and crypto innovation is heating up. Here’s the full breakdown.

Are Stablecoins Really a Threat to Banks?

Coinbase’s Chief Policy Officer Faryar Shirzad isn’t mincing words: “The narrative that stablecoins endanger bank lending is a smokescreen.” He points to Federal Reserve data showing banks parked $3.3 trillion in reserves last year—20% of all deposits—earning $176 billion in risk-free interest. “If banks were truly worried about lending capacity, they wouldn’t hoard cash at the Fed,” Shirzad told analysts this week. Stablecoins, he argues, are primarily used for cross-border payments and crypto trading, not as savings replacements. (Source: Federal Reserve H.3 Report, 2024)

The $187 Billion Fee Empire Banks Are Protecting

Behind the warnings about “systemic risk” lies a more straightforward motive: profit protection. Traditional banks rake in $187 billion annually from card swipe fees—a revenue stream stablecoins could disrupt by enabling direct peer-to-peer transfers. “It’s ironic that the same institutions warning about stability risks are the ones charging $3 for ATM withdrawals,” quipped Matt Hougan, Bitwise’s CIO. Case in point: 50% of 2023’s $2 trillion stablecoin volume flowed through Asia, Latin America, and Africa—regions where banking fees are notoriously high. (Source: CoinMarketCap Institutional Research)

History Repeats: Banks Fought ATMs and Online Banking Too

Coinbase’s policy team dug up a revealing pattern: banks historically resisted innovations like ATMs (1970s), electronic check clearing (1990s), and online banking (early 2000s)—each time citing consumer protection concerns. “The playbook hasn’t changed,” Shirzad noted. Now, banks like Citi are lobbying Congress to restrict stablecoin yields, even as Bank of America explores issuing its own stablecoin. “They want to control the innovation that threatens them,” a BTCC market analyst observed.

Why the $6 Trillion Deposit Flight Prediction Doesn’t Add Up

A Treasury Borrowing Advisory Committee report forecasting $6 trillion in potential deposit shifts sparked alarm—but Coinbase calls the math flawed. “Stablecoins currently represent just 3% of U.S. bank deposits,” Shirzad clarified. “Even if the market grows to $4 trillion by 2028, most activity will remain overseas.” He highlighted that stablecoins settle trades and remittances instantly, unlike traditional systems requiring days and middlemen. “Banks should innovate, not litigate,” he urged.

The GENIUS Act: How Banks and Stablecoins Could Coexist

Emerging correlations between bank stocks and crypto firms like Circle suggest a possible détente. The proposed GENIUS Act—Guiding and Establishing National Innovation for U.S. Stablecoins—could create guardrails allowing both sectors to thrive. “Look at Japan’s pilot with Mitsubishi UFJ’s stablecoin,” said a BTCC strategist. “When banks participate, everyone wins.”

Bank Alternatives Beyond Complaining

Bitwise’s Hougan offered blunt advice to banks: “Pay better interest.” With stablecoin-based DeFi platforms offering 5-7% APY versus banks’ 0.5% savings rates, the competition is obvious. “Markets adapt—if banks lose deposits, borrowers will tap DeFi lending pools directly,” he added. This article does not constitute investment advice.

FAQ: Your Stablecoin vs. Banks Questions Answered

Do stablecoins actually reduce bank lending?

Coinbase argues no—banks currently hold excess reserves that could cover loans 3x over. Stablecoins mainly facilitate payments, not long-term savings.

Why are banks suddenly worried about stablecoins?

With $2 trillion in annual transaction volume, stablecoins threaten the $187 billion card fee industry banks dominate.

Could stablecoins replace banks entirely?

Unlikely soon—but as Bank of America’s stablecoin experiments show, hybrids may emerge.