Standard Chartered warns of $500 billion threat to banks

Bank deposits person ever been considered 1 of the safest and stickiest parts of the fiscal system.

But their dominance arsenic a harmless haven is facing a caller benignant of competition. Not from rival banks oregon wealth marketplace funds, but from the integer assets.

Standard Chartered warned successful a caller enactment that the increasing adoption of dollar-pegged stablecoins could softly siphon deposits retired of the accepted banking system. This is simply a structural hazard for banks successful some the United States and abroad, adjacent without a situation oregon classical slope run.

Related: Explained: What is simply a stablecoin?

A stablecoin is simply a cryptocurrency designed to support a unchangeable value, usually pegged to a fiat currency similar the U.S. dollar.

The latest informing comes from Geoff Kendrick, Standard Chartered’s planetary caput of integer assets research.

In a enactment circulated this week and viewed by CoinTelegraph, Kendrick said delays astir the US CLARITY Act are a reminder of what’s genuinely astatine stake.

“We estimation that U.S. slope deposits volition alteration by one-third of stablecoin marketplace cap,” Kendrick wrote.

With U.S. dollar-pegged stablecoins representing astir $301 cardinal successful marketplace value, according to CoinGecko, that implies tens of billions of dollars could migrate retired of the banking system.

“We estimation that astir two-thirds of stablecoin request comes from emerging markets astatine present, truthful one-third comes from developed markets,” helium wrote.

He said that if the stablecoin marketplace grows to astir $2 trillion, banks successful developed economies could spot astir $500 cardinal successful deposits travel retired by the extremity of 2028, portion emerging-market banks could suffer adjacent to $1 trillion implicit the aforesaid period.

The study lands amid increasing hostility betwixt banks and crypto firms implicit crypto operation bills.

The biggest constituent of contention betwixt crypto players and banks has been the output connected stablecoins. According to banks, allowing stablecoin output would propulsion deposits retired of the accepted banking system, weaken nett involvement margins, and summation bank-run risks.

Crypto assemblage counters that stablecoins already make output done reserves and marketplace activity, and banning rewards unfairly protects banks and stifles competition.

The statement has intensified astir projected U.S. authorities similar the CLARITY Act.  Exchanges similar Coinbase person opposed these restrictions, arguing that they would bounds innovation and organization adoption.

Standard Chartered is not the lone 1 that has issued specified a informing for slope deposits.

Just a mates of days ago, Bank of America CEO Brian Moynihan warned that arsenic overmuch arsenic $6 trillion successful slope deposits could determination retired of the banking strategy into stablecoins. That is astir astir 30-35% of the full commercialized slope deposits successful the country.