tl;dr
Coinbase researchers dismissed claims that stablecoins threaten U.S. banks, arguing they expand the dollar's global influence. The report highlights that 66% of stablecoin transfers occur on DeFi platforms, with most demand coming from international users, particularly in emerging markets. Coinbase ...
**Coinbase Challenges Claims That Stablecoins Threaten U.S. Banks, Argues Global Demand Boosts Dollar’s Role**
A recent analysis by Coinbase researchers has dismissed concerns that stablecoins—cryptocurrencies pegged to traditional assets like the U.S. dollar—pose a threat to U.S. banks by siphoning deposits. Instead, the firm argues that these digital assets expand the dollar’s global influence and cater to international users, not local banking customers.
Faryar Shirzad, Coinbase’s policy chief, criticized the “stablecoins will destroy bank lending” narrative as misguided, stating it ignores the real-world applications of stablecoins. “Most stablecoin demand comes from outside the U.S., expanding dollar dominance globally, not competing with your local bank,” Shirzad said in a market note. The argument echoes similar concerns from past financial innovations, such as money market funds, but fails to account for how stablecoins are actually used, he added.
### Global Demand, Not U.S. Competition
Coinbase’s analysis emphasizes that stablecoin adoption is driven by international users rather than U.S. consumers. Emerging markets, in particular, use U.S. dollar stablecoins to hedge against currency depreciation, according to the report. These tokens serve as a “practical form of dollar access” for the underbanked, the firm said.
Additionally, two-thirds of stablecoin transfers occur on decentralized finance (DeFi) platforms, positioning them as the “transactional plumbing” of a parallel financial layer outside the traditional banking system. “Treating stablecoins as a threat misreads the moment: they strengthen the dollar’s global role and unlock competitive advantages that the U.S. shouldn’t constrain,” Shirzad stated.
### Community Banks Are Not at Risk
Coinbase also refuted claims that community banks could collapse due to stablecoin adoption, noting that the typical stablecoin user differs from a traditional bank customer. “Community banks and stablecoin holders barely overlap,” Shirzad said, suggesting that banks could instead enhance their services by integrating stablecoins.
The firm further cautioned against overestimating the impact of stablecoin growth on U.S. deposits. Even if stablecoin circulation reached $5 trillion globally, most of that value would remain foreign-held or locked in digital settlement systems, not diverted from U.S. checking or savings accounts. U.S. commercial bank deposits exceed $18 trillion, Coinbase noted, asserting that the effect of stablecoins on domestic deposits would remain “marginal.”
### Regulatory Landscape and Industry Adoption
Despite the concerns, major U.S. banks and financial institutions have increasingly entered the stablecoin space following the passage of the GENIUS Act earlier this year, which establishes regulatory guidelines for stablecoin providers. The law aims to balance innovation with oversight, and Coinbase’s analysis suggests it could foster a more integrated financial ecosystem.
Meanwhile, other companies like Western Union have partnered with blockchain networks such as Solana to launch stablecoin and crypto services, signaling broader industry interest.
### Conclusion
Coinbase’s argument underscores a growing divide between regulators and innovators over the role of stablecoins in the financial system. While banking groups warn of risks to deposit stability, Coinbase and its allies see opportunities to amplify the dollar’s global reach and empower underbanked populations. As the debate continues, the firm’s analysis highlights the need to distinguish between speculative fears and the tangible, international use cases driving stablecoin adoption.