Stablecoins and the Banking System: Scale, Threats, and Comparisons

19th January 2026

The rapid rise of stablecoins — digital tokens pegged to fiat currencies like the US dollar — has sparked debate about their potential to disrupt traditional banking.

Advocates highlight their efficiency in payments and cross-border transfers, while critics warn they could undermine banks' deposit bases and profitability.

To assess the true scale of this threat, it is essential to compare the size of the stablecoin market with global banking assets and deposits.

The Scale of Stablecoins
As of 2025, the total value of stablecoins in circulation is estimated at $150-160 billion, dominated by issuers such as Tether (USDT), USD Coin (USDC), and DAI. Stablecoins are primarily used in cryptocurrency trading, decentralized finance (DeFi), and niche payment applications. While their growth has been impressive, they remain small compared to the vast scale of traditional finance.

Global Banking Assets and Deposits
By contrast, global banking deposits exceed $100 trillion, forming the backbone of the financial system. Banks rely on deposits as a cheap and stable funding source, enabling them to lend to households and businesses. Global banking assets — which include loans, securities, and other holdings — are even larger, estimated at $180–200 trillion.

When compared directly:

Stablecoins represent less than 0.2% of global bank deposits.

Even if the stablecoin market grew tenfold to $1.5 trillion, it would still account for only 1.5% of deposits.

Scenario Analysis
To illustrate the potential trajectory:

Current (2025): $150 billion stablecoins (~0.15% of deposits).

Moderate Growth (1%): $1 trillion stablecoins — noticeable but manageable displacement of deposits.

High Growth (5%): $5 trillion stablecoins — significant erosion of banks’ funding base, requiring regulatory intervention.

Extreme Growth (10%): $10 trillion stablecoins — systemic disruption, forcing banks to issue tokenized deposits or rely heavily on central bank liquidity.

Implications for Banks
Profitability: Banks could lose access to cheap retail deposits, raising funding costs.

Liquidity: Stablecoin reserves often sit in bank accounts, but if deposits migrate, liquidity coverage ratios weaken.

Credit supply: Reduced deposits may constrain lending capacity, affecting households and businesses.

Competition: Non-bank stablecoin issuers challenge banks’ role in payments and intermediation.

Regulatory Responses
Authorities are already acting to mitigate risks:

Central Bank Digital Currencies (CBDCs): State-backed alternatives to stablecoins, such as the Digital Euro and Digital Dollar.

Reserve requirements: Proposals to ensure stablecoins are backed by high-quality liquid assets.

Tokenized deposits: Banks experimenting with blockchain-based deposits to compete directly with stablecoins.

Usage limits: EU’s MiCA regulation caps stablecoin transaction volumes to protect financial stability.

Stablecoins are tiny compared to global banking assets and deposits, representing less than 0.2% of the system. The immediate threat to banks’ profitability is limited, but the potential for growth is significant.

If stablecoins expand into mainstream payments and savings, they could erode banks’ funding base and reshape financial intermediation. Regulators are acting early to contain this risk, but the balance between innovation and stability will define the future of money.