Standard Chartered predicted a structural shift by 2028 that could move a total of $500 billion from bank deposits into stablecoins. This prediction positions stablecoins as the primary player for transfers, checking accounts, and as a source of savings.
Standard Chartered’s analysis identifies a significant, concentrated vulnerability, as regional banks rely on retail deposits and savings for their operations, enabling them to make loans and maintain their net interest margin (NIM).
This is why Standard Chartered argues that a migration to dollar-pegged tokens would reduce the funding base many regional banks use to generate interest income. This loss could spell the end for small banks that depend almost exclusively on these types of transactions.
Furthermore, the bank notes that the $500 billion figure is a conservative projection, as there are possible scenarios where losses could be even greater, reaching $2 trillion by 2028.
A structural problem for small banks
The way stablecoin issuers hold reserves will determine how much of that capital is recycled into the banking system. Standard Chartered highlights a marked difference between issuers: Tether holds approximately 0.02% of its reserves in bank deposits, while Circle holds close to 14.5%.
Another important point Standard Chartered makes is that stablecoins are increasingly being used for everyday payments, as well as being used as a primary source of savings. This expansion, combined with yield differentials, could accelerate the migration from deposit accounts to tokenized cash held on crypto chains.
This is where regulation will be a decisive factor for the future of banks. Standard Chartered expects legislation on market structure in the US to be passed by the end of the first quarter of 2026, abruptly reversing this trend.
The most recent drafts include a ban on stablecoin issuers paying interest to holders, something that would greatly benefit smaller banks. This measure, supported by major banks, aims to stem the flight of deposits but would also reshape the product economics for token issuers and could slow adoption if yields are constrained.
For banks, the practical conclusion is to stress-test funding models in the face of a sustained migration of deposits; for regulators, the dilemma will be between preserving the stability of bank funding and enabling innovation in digital cash and payments.
