Crypto exchange Coinbase has pushed back against claims that the rise of stablecoins could drain deposits from US banks or undermine traditional lending.
Key Takeaways:
- Coinbase says stablecoins don’t threaten US banks, arguing most demand comes from international users seeking dollar exposure.
- Two-thirds of stablecoin activity happens on DeFi platforms.
- Stablecoins strengthen, not weaken, the US dollar’s global role.
In a market note shared Wednesday, Faryar Shirzad, Coinbase’s chief policy officer, argued that the “stablecoins will destroy bank lending” narrative ignores how the market actually functions.
“Most stablecoin demand comes from outside the US, expanding dollar dominance globally, not competing with your local bank,” Shirzad said, adding that concerns echo misplaced fears raised during earlier financial innovations such as money market funds.
Stablecoin Demand Driven by Global Markets
According to Coinbase, the majority of stablecoin users are international investors seeking access to the US dollar, not domestic savers.
In countries facing currency depreciation or limited access to banking, dollar-pegged stablecoins serve as a lifeline for the underbanked, providing stability and a bridge to global commerce.
The report noted that roughly two-thirds of all stablecoin transfers occur on decentralized finance (DeFi) and blockchain platforms, systems that operate independently from traditional banks.
“They are the transactional plumbing of a new financial layer that runs parallel to, but largely outside, the domestic banking system,” the firm said.
Shirzad emphasized that treating stablecoins as a threat “misreads the moment,” arguing that they reinforce the dollar’s international role rather than compete with it.
The company said US policymakers should see stablecoins as a strategic tool for dollar expansion, not as a risk to community banks or deposits.
“Community banks and stablecoin holders barely overlap,” Shirzad said. “In fact, banks could improve their services with stablecoins.”
Coinbase also pushed back against claims that trillions in stablecoin assets would flow out of US bank deposits, noting that any future growth would likely remain foreign-held or locked in digital settlement systems.
Even if global stablecoin circulation reached $5 trillion, Coinbase estimates the majority would sit outside the US, with little effect on domestic deposits, which currently exceed $18 trillion.
The firm argues that, if anything, stablecoins will extend US monetary influence while giving American financial firms a competitive edge in the digital asset economy.
The defense comes as more banks explore stablecoin products following the passage of the GENIUS Act, the US regulatory framework governing stablecoin issuers and payment systems.
Western Union to Launch Dollar-Backed Stablecoin on Solana
Western Union is also entering the stablecoin market with plans to launch the US Dollar Payment Token (USDPT) on the Solana blockchain in the first half of 2026.
The token, issued by Anchorage Digital Bank, will allow users to move money globally with lower fees and faster settlement times, reducing reliance on traditional banking intermediaries and volatile currency conversions.
CEO Devin McGranahan described the move as a continuation of Western Union’s 175-year mission to simplify money transfers, this time through blockchain technology.
He said Solana was chosen for its speed, scalability, and low-cost transactions, which are crucial for the company’s high-volume remittance business.
By leveraging blockchain rails, Western Union aims to make remittances nearly instantaneous and more transparent.
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