Coinbase rejects claims that stablecoins threaten U.S. banking system

Coinbase pushed back against claims that stablecoins could disrupt the ￰0￱ ￰1￱ crypto exchange said that fears over U. S. dollar-backed digital assets draining bank deposits and cripple lending are ￰2￱ said the claims aren’t about protecting lending capacity but about protecting banks’ payment processing ￰3￱ company also alleged that banks are trying to protect an outdated, expensive financial ￰4￱ says banks are trying to preserve profit streams According to Coinbase’s Chief Policy Officer, there’s no meaningful link between stablecoin adoption and shift from community bank ￰5￱ exchange believes big banks are coordinating a campaign to slow innovation and preserve their revenue from the traditional payment ￰6￱ cited previous efforts by financial institutions to limit innovation in the financial sector, including their fight against ATMS, electronic check clearing, and online ￰7￱ banks have always warned of potential harm to consumers or financial ￰8￱ a result, Coinbase believes banks are just trying to protect their interests instead of those of their clients.

A report by the Treasury Borrowing Advisory Committee forecasted that there will be $6 trillion in potential deposit ￰9￱ same report also forecasted a $2 trillion stablecoin market by 2028, which Coinbase claims doesn’t add up since it doesn’t align with misleading claims that stablecoins are siphoning funds off of savings ￰10￱ pointed out that the stablecoin market could surge between $500 billion and $4 trillion over the next few ￰11￱ Chief Policy Officer argued that stablecoins are not savings accounts but payment tools used to purchase digital assets, settle trades, and move money across borders. Coinbase’s CPO also revealed in a separate report that most stablecoin activity occurs internationally, especially in regions with weak financial ￰12￱ to the report, half of the $2 trillion transactions in 2023 occurred in Asia, Latin America, and ￰13￱ argued that stablecoins offer a competitive alternative to banks’ $187 billion annual swipe-fee ￰14￱ pointed out that the same banks warning of systemic risk are the ones pocketing tens of billions from card processing fees, which stablecoins could bypass ￰15￱ data shows that financial institutions hold approximately $3.3 trillion in reserve at the Federal Reserve, which accounts for 20% of all ￰16￱ reserves garnered risk-free interest of $176 billion last year, representing 50% of all bank earnings before ￰17￱ Shirzad, Chief Policy Officer at Coinbase, revealed that banks do not need to have reserves, yet they hold more than they need to with the Federal ￰18￱ advised that banks should instead seize the opportunity to innovate with stablecoins rather than lobby to restrict ￰19￱ believes stablecoins can enable instant settlements, cut correspondent banking costs, and deliver 24/7 ￰20￱ banks are already experimenting with dollar-backed digital assets and are partnering with issuers to include them in their ￰21￱ instance, Bank of America and Citigroup hinted last month that they are considering issuing their own ￰22￱ believes that financial institutions that embrace stablecoins will thrive, while those that don’t will be left ￰23￱ also said that correlations between bank stock performance and crypto firms like Circle were following the established Guiding and Establishing National Innovation for ￰24￱ Act (GENIUS Act).

The trend shows that stablecoins and banks can thrive ￰25￱ urges banks to find better alternatives to attract customers Bitwise’s investment chief Matt Hougan also criticized ￰26￱ for complaining about the threat of stablecoins, saying they should offer better rewards to attract and keep ￰27￱ argued that financial institutions are worried because they’ve been abusing depositors as a free source of capital over the years. “The idea that credit will dry up if stablecoins compete with traditional bank accounts is classic first-order thinking. Yes, banks will provide less credit if they have fewer ￰28￱ instead, people with stablecoins will provide credit directly to borrowers through DeFi ￰29￱ are amazing at solving problems.” – Matt Hougan , Chief Investment Officer at ￰30￱ tech executive’s remarks came as Citi claimed in August that stablecoins could drain bank ￰31￱ ￰32￱ have also lobbied Congress to tighten up ￰33￱ laws around paying ￰34￱ up to $30,050 in trading rewards when you join Bybit today