Stablecoin Surge Sparks $6T Banking Crisis Fears as Regulators Clash

On-chain data reveals that Stable's second phase of its deposit pre-activation event has surpassed $860 million in raised funds as of November 7, according to a LookonChain report. This figure marks a significant leap from earlier totals: on November 6, the campaign had accumulated $650 million, per the November 6 update, following an initial tally of $230 million just one day prior in the November 5 report. The event, which allows participants to deposit USDC and undergo Know Your Customer (KYC) verification, has a $500 million cap for eligible deposits, and if total deposits exceed that threshold funds will be distributed proportionally as outlined in Stable's updated allocation model.

The rapid growth in participation underscores the increasing demand for stablecoins, which have become a critical component of the crypto ecosystem. However, this surge has also drawn regulatory scrutiny. Canada's 2025 federal budget introduced Canada's proposed framework for fiat-backed stablecoins, mandating full reserve backing with high-quality assets like cash equivalents.

The framework, aimed at ensuring financial stability and preventing depegging risks, requires issuers to maintain transparent redemption policies and implement national security safeguards to combat illicit transactions. Funding for oversight includes a $10 million initial investment from the Bank of Canada, followed by annual fees from issuers.

Meanwhile, regulatory tensions are escalating in the U.S. The American Bankers Association (ABA) and 52 state banking groups have urged the Treasury Department to uphold the GENIUS Act's ban on stablecoin interest, warning that relaxing the rule could destabilize the banking system, according to a Coindoo report. Coinbase, a major player in the stablecoin space, has pushed back, arguing that the restriction should apply only to issuers and not platforms or third-party services. The company highlighted stablecoin-related revenue of $355 million in Q3 2025, underscoring the sector's financial significance. Banks, however, fear that allowing interest-bearing stablecoins could trigger massive deposit outflows—potentially exceeding $6 trillion—by offering yields that traditional savings accounts cannot match.

The debate reflects broader challenges in balancing innovation with risk management. While Canada's framework emphasizes reserves and security, the U.S. dispute highlights the tension between crypto firms and traditional financial institutions over how to regulate interest-bearing stablecoins. The GENIUS Act, enacted in July 2025, aims to establish trust in stablecoins through reserve requirements and audits, but its enforcement—expected by late 2026—has become a political flashpoint.

As stablecoins continue to drive global crypto transactions—accounting for 30% of the market—regulators and industry players face a complex landscape. Canada's proactive approach and the U.S. policy clash signal a pivotal moment for the sector, where oversight will shape the future of digital finance.