Coinbase report finds stablecoins do not erode bank deposits

Coinbase Institute's report indicates no evidence that stablecoin growth is impacting U.S. bank deposits. Three independent studies from the White House Council of Economic Advisers, Charles River Associates, and Cornell University Professor Lin William Cong reached the same conclusion using varied methodologies. Professor Cong's analysis suggests that significant fund movement from banks would only occur if stablecoin yields exceeded approximately 6%. Currently, the interest rate for USDC on Aave is around 4%, below this threshold. The report also notes that while USDC's market capitalization rose to about 75000 million dollars, regional bank deposits increased as well. A 2024 UCLA study found that 70-80% of U.S. bank deposits are unaffected by interest rate changes. Coinbase argues that stablecoins provide regional and smaller banks with an opportunity to compete more effectively with larger institutions by enhancing payment and cross-border remittance infrastructure.