Coinbase Debunks ’Myth’: Stablecoins Actually Strengthen Banking System, Don’t Drain Deposits
Forget everything you've heard about stablecoins sucking banks dry—Coinbase just dropped the truth bomb that's shaking traditional finance foundations.
The Banking Myth Exposed
Coinbase's research team systematically dismantled the tired narrative that digital stable assets somehow weaken traditional banking institutions. Their data reveals these dollar-pegged cryptocurrencies actually create new liquidity channels rather than divert existing capital.
Liquidity Multipliers, Not Drain Pipes
Stablecoins don't just sit idle—they circulate through DeFi protocols, cross-border payments, and smart contract ecosystems, generating velocity that ultimately flows back to traditional banking partners. The analysis shows every dollar in stablecoin circulation supports multiple transactions while maintaining full banking system integration.
Traditional Finance's Reality Check
While legacy banks worry about competition, smart institutions already recognize stablecoins as customer acquisition tools rather than threats. The data proves what crypto natives knew all along—innovation complements tradition when you're not clinging to outdated business models.
Guess banks finally realized they can't blame their inefficiency problems on technology that actually makes finance work better for everyone.
Coinbase: Stablecoins boost USD, coexist with banks
Coinbase argued that this international use strengthens the U.S. dollar’s global dominance rather than undermining domestic banks. It further highlighted positive correlations between bank stock performance and crypto firms like itself and Circle after the passage of the GENIUS Act, suggesting banks and stablecoins can coexist.
The exchange’s stance aligns with comments from Bitwise’s Investment Chief Matt Hougan, who last week criticized U.S. banks in an X post for offering low deposit yields while resisting stablecoin competition instead of improving services. The debate follows August 2025 calls from U.S. banking groups, led by the Bank Policy Institute, urging Congress to address a perceived loophole in the GENIUS Act that could allow stablecoin issuers to indirectly offer yields through crypto exchanges.
Also Read: Hong Kong To Simplify Crypto Rules To Support Stablecoin Banking
