Stablecoins Fuel Global Finance, Bypassing Banks With Speed and Savings

Coinbase has argued that stablecoins are not a threat to the U.S. banking system but rather a complementary financial tool that reinforces the dominance of the U.S. dollar and offers a more efficient alternative to traditional banking services. The crypto exchange challenged the notion of “deposit erosion,” describing it as a myth, and pointed to recent analysis showing no significant link between stablecoin adoption and deposit outflows from community banks. Coinbase further noted that stablecoins serve as fast and cost-effective payment instruments rather than savings alternatives, emphasizing their utility in cross-border transactions and their role in reducing reliance on high-cost traditional banking services.

The firm also critiqued a recent U.S. Treasury Borrowing Advisory Committee report that projected $6 trillion in potential deposit flight from banks due to stablecoins. Coinbase found the math behind the report problematic, particularly as the report forecasted a stablecoin market of only $2 trillion by 2028. According to Coinbase, stablecoin activity is largely concentrated outside the U.S., with over $1 trillion of the $2 trillion in stablecoin transactions in 2024 occurring in regions like Asia, Latin America, and Africa. These regions, which often have weak financial infrastructure, benefit from dollar-pegged stablecoins that offer fast and secure payment options without significantly affecting domestic credit availability in the U.S.

The stablecoin market, as of mid-2025, has grown significantly, with a total market capitalization of $251.7 billion. Tether (USDT) remains the largest stablecoin by market cap, with $112 billion in circulation and a 68% share of the market. USD Coin (USDC), backed by Circle, BlackRock, and Coinbase, has also seen steady growth, with $64 billion in circulation and a 24.3% market share. These stablecoins, along with others like Binance USD (BUSD) and Pax Dollar (USDP), are increasingly integrated into both decentralized finance (DeFi) and traditional financial systems. For instance, DeFi TVL climbed to $123.6 billion in 2025, with stablecoins contributing around 40% of that total.

Stablecoins have also become a key component of cross-border transactions and remittances. As of 2025, stablecoin-powered remittance services have reduced fees by 30–60% in some cases, with average global fees using stablecoins around 2–3%, compared to 6% with traditional banks. In regions such as Nigeria, Argentina, and Vietnam, stablecoins are widely used to hedge against inflation or facilitate low-cost international payments. For example, MoneyGram, in partnership with Stellar, has expanded its USDC-based remittance services beyond initial test markets to Southeast Asia, Africa, and Latin America, where traditional remittance fees are prohibitively high.

Regulatory developments are playing a critical role in shaping the stablecoin landscape. The U.S. passed the GENIUS Act in July 2025, creating a federal license-and-compliance framework for stablecoins that requires one-to-one asset backing, audits, and reserve transparency. This law has led to positive correlations between banks and crypto firms like Coinbase and Circle. Meanwhile, the EU’s MiCA regulation has set compliance standards for stablecoin issuers across member states, while countries like Hong Kong have mandated licenses for stablecoin issuers. These regulatory shifts are encouraging institutional adoption and fostering trust in the stablecoin ecosystem.

Looking ahead, stablecoin transaction volumes are expected to continue growing, with 2025 seeing a sharp 66% surge in volume through Q1. Stablecoins now account for 40% of total crypto exchange trading volume and are used by over 25,000 merchants worldwide for online transactions. As stablecoins become more deeply integrated into global financial systems, they are likely to further reduce the cost and complexity of international payments, challenge traditional banking models, and drive innovation in digital finance.