Citi Warns Stablecoin Yields Could Drain $6.6 Trillion From Banks

Citi’s Ronit Ghose, head of Future of Finance, has warned that offering interest on stablecoin deposits could lead to significant outflows from traditional banks, echoing the money market fund surge of the 1980s [1]. According to Ghose, the potential for stablecoin yields to attract depositors may create structural risks for the banking sector, particularly if such products gain mainstream adoption [2]. He compared this scenario to the period between 1981 and 1982, when U.S. banks faced a $32 billion net withdrawal of deposits as money market funds expanded from $4 billion in 1975 to $235 billion by 1982, outpacing regulated bank deposit rates [1].

Sean Viergutz of PwC similarly cautioned that a shift to stablecoins could lead to higher funding costs for banks, as they may be forced to rely more on wholesale markets or increase deposit rates. This, in turn, could result in higher borrowing costs for households and businesses [2]. The broader implication, he noted, is that the competitive landscape between traditional financial institutions and stablecoin platforms may become increasingly imbalanced.

The concerns raised by Citi and PwC align with recent regulatory actions in the U.S., including the GENIUS Act, which seeks to establish a legal framework for stablecoin regulation. However, the law has drawn criticism from banking groups like the Bank Policy Institute, which argue that its current structure creates a regulatory “loophole” allowing crypto exchanges to offer yields indirectly [1]. These groups have expressed fears that such practices could lead to a $6.6 trillion outflow from traditional banks, disrupting the flow of credit to businesses and consumers.

In contrast, the crypto industry has pushed back against such concerns. Industry representatives argue that restricting stablecoin yields would unfairly advantage traditional banks while stifling innovation and consumer choice. They contend that stablecoins play a critical role in maintaining the U.S. dollar’s global dominance, as highlighted by Treasury Secretary Scott Bessent, who emphasized the government’s commitment to using stablecoins to preserve the dollar’s position as the world’s primary reserve currency [1].

As stablecoin adoption continues to grow, the debate over their role in the broader financial ecosystem intensifies. Ghose’s warning underscores the need for both regulators and market participants to carefully assess the systemic risks and opportunities associated with this emerging asset class. Whether the outcome reinforces traditional banking systems or accelerates the shift toward decentralized financial models remains uncertain.

[1] Cointelegraph, 2025年08月09日, https://cointelegraph.com/news/citi-executive-stablecoin-yields-drain-bank-deposits-report

[2] advfn.com, 2025年08月19日, https://mx.advfn.com/bolsa-de-valores/COIN/FLOWUSD/crypto-news/96696092/citi-executive-warns-stablecoin-yields-could-drain