- The GENIUS Act, enacted in July, could lead to large amounts of money moving from bank deposits into stablecoins offering higher yields.
- The U.S. Department of the Treasury estimates up to $6.6 trillion may exit the traditional banking system if stablecoins become widely adopted.
- Stablecoins like Tether (USDT) and USDC currently offer interest rates up to ten times higher than average U.S. and European savings accounts.
- Banks may need to raise interest rates to stay competitive, possibly impacting their earnings, according to statements from Multicoin Capital’s Tushar Jain.
- Major technology companies such as Apple, Google, and Meta are exploring the use of stablecoins for payments and deposits.
The GENIUS Act, passed in July, may prompt a significant shift of retail deposits from traditional bank accounts to high-yield stablecoins, according to statements made by Tushar Jain, co-founder of Multicoin Capital. Jain shared his views on social media, stating that new competition from technology companies could challenge banks’ existing control over retail deposit markets.
Official estimates from the U.S. Department of the Treasury project as much as $6.6 trillion in deposit outflows from conventional banks as stablecoins gain broader acceptance. A report from the Bank Policy Institute warned that widespread adoption of these digital tokens could result in increased risks of bank deposit flight and reduced lending activity, placing upward pressure on interest rates and increasing borrowing costs for businesses and households.
Jain noted that large technology firms including Meta (formerly Facebook), Google, and Apple could begin competing directly with banks for retail deposits due to their extensive distribution networks. He highlighted that stablecoins currently offer much higher yields than traditional savings accounts. For example, on the lending platform Aave, interest rates for Tether (USDT) and USDC stand at 4.02% and 3.69% respectively. By comparison, the U.S. average savings rate is 0.40%, and in Europe, it is 0.25%, according to Stripe CEO Patrick Collison.
The GENIUS Act prohibits stablecoin issuers from paying interest directly to token holders. However, the law does not clearly ban related companies or exchanges from providing yields, which some banking groups have described as a “loophole.” In August, financial institutions reportedly urged regulators to address this concern.
The stablecoin market is currently valued at $308.3 billion, based on CoinGecko data, with USDT and USDC leading in market share. The Treasury Department estimates the market could reach $2 trillion by 2028, which would represent a 566% increase. Recent reports indicate companies like Apple, Google, Airbnb, and X are investigating stablecoin solutions to cut transaction fees and improve international payments.
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