Standard Chartered: Stablecoins Could Lead to $1.5 Trillion Outflow from Traditional Banking System

Standard Chartered Bank analyst Geoffrey Kendrick warned that by the end of 2028, approximately $500 billion will flow out of developed market banks in the U.S., and another $1 trillion will flow out of emerging market banks, primarily due to stablecoins offering instant settlement, round-the-clock operation, and yields superior to traditional savings accounts.

The report highlights four major risks: 1. Net Interest Margin (NIM) is under pressure, with U.S. regional banks being the most vulnerable, as NIM accounts for 80% of total revenue; 2. Stablecoin issuers Tether and Circle hold only 0.02% and 14.5% of reserves in banks, with the remainder invested in U.S. Treasuries and money market funds, leading to nearly all funds flowing out of the banking system; 3. Over 95% of stablecoins are denominated in U.S. dollars, putting U.S. banks at the forefront; 4. Banks need to borrow from institutional investors at higher costs to replace retail deposits. Kendrick stated that stablecoins are the first significant disruptor in the financial market based on blockchain technology.