Standard Chartered Warns Stablecoins Could Drain $1.5 Trillion from Traditional Banking by 2028

According to a ChainCatcher report, 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 an additional $1 trillion will leave emerging market banks. The main reason is that stablecoins offer instant settlement, operate 24/7, and provide higher returns than traditional savings accounts. The report highlights four major risks: First, net interest margin (NIM) income will be impacted, with regional U.S. banks being the most vulnerable, as NIM accounts for up to 80% of their total revenue. Second, stablecoin issuers Tether and Circle hold only 0.02% and 14.5% of their reserves in banks, respectively, while the rest is invested in U.S. Treasury securities and money market funds, effectively removing nearly all funds from the banking system. Third, over 95% of stablecoins are denominated in U.S. dollars, making U.S. banks the most directly affected. Fourth, banks will need to borrow from institutional investors at higher costs to replace retail deposits. Kendrick stated that stablecoins are the first major disruptors in financial markets based on blockchain technology.