Standard Chartered warns stablecoins could strip hundreds of billions from U.S. bank deposits — and lawmakers may be accelerating the risk. In a note shared with Decrypt, Geoff Kendrick, Standard Chartered’s global head of digital assets research, estimates roughly $500 billion in cash could move from bank deposits into stablecoins by 2028. That’s a downshift from his October projection that stablecoins might lure as much as $1 trillion away from banks, but still a sizable hit to traditional deposit levels. The estimate arrives as Congress debates the CLARITY Act, a proposed federal framework for digital assets that could include rules around whether stablecoin holders may earn yield. Kendrick warns that if stablecoins are permitted to pay interest, they could siphon substantial deposits from banks—potentially eroding a key source of bank income. Kendrick highlights net interest margin (NIM) as the metric most at risk. NIM measures the spread between what banks earn from loans (like mortgages and credit cards) and what they pay on deposits; it’s a major driver of bank earnings. “If deposits decrease, NIM income—an important driver of bank earnings—will also decrease,” he wrote, using NIM as a comparable metric to gauge banks’ exposure to deposit migration. Regional U.S. banks are the most exposed under Kendrick’s analysis. Using Bloomberg data and the bank’s own research, he shows several regional lenders rely on NIM for more than 60% of revenue, including: - Huntington Bancshares - M&T Bank - Truist Financial - Regions Financial By contrast, large investment banks such as Goldman Sachs and Morgan Stanley derive under 20% of revenue from NIM, leaving them less vulnerable to a deposit shift into yield-bearing stablecoins. Kendrick doesn’t predict the death of regional banks, however. He notes a key mitigating factor: if stablecoin issuers park a large share of their reserves back in the banking system where the coins are issued, any deposit outflows could be offset. “If a deposit leaves a bank to go into a stablecoin, but the stablecoin issuer holds all of its reserves in bank deposits, there would be no net deposit reduction,” he wrote. On timing, Kendrick still expects the CLARITY Act to reach President Donald Trump’s desk by the end of Q1, despite current stalls in progress — a development that could materially shape how much yield stablecoins are allowed to offer and how quickly deposits migrate. Bottom line: Stablecoins are no longer just a niche crypto story — regulators’ decisions and issuers’ reserve practices could reconfigure where hundreds of billions of cash sits, with regional banks facing the biggest near-term exposure. Read more AI-generated news on: undefined/news