Stablecoins Could Disrupt Banks, Similar to 1980s Financial Crisis: Report

Citigroup analyst Ronit Ghose warns that interest payments on stablecoins could trigger a massive deposit flight from traditional banks, echoing the destabilizing effects of money market funds in the late 1970s and early 1980s. The potential for high-yield rewards through affiliate programs—despite the GENIUS Act's restrictions on direct interest payments—creates an uneven playing field, with stablecoins poised to capture 10% of the U.S. money supply by 2028.

U.S. banking groups, including the American Bankers Association and the Bank Policy Institute, are pushing for stricter regulations to close loopholes that allow stablecoin platforms to offer competitive advantages over heavily regulated banks. The debate underscores the growing tension between innovation and financial stability as digital assets reshape the monetary landscape.