Coinbase Rejects U.S. Bank Deposit Erosion Fears, Cites $3.3T Reserves

• Coinbase rejects claims that stablecoins will drain deposits, citing $3.3 trillion in bank reserves.
• Data shows no meaningful link between stablecoin adoption and deposit outflows at U.S. banks.
• Stablecoins are reshaping payments by challenging card fees and promoting cheaper, faster alternatives.

Coinbase has dismissed claims that stablecoins threaten U.S. bank deposits, arguing that such concerns are more about profit protection than financial stability. The crypto exchange highlighted that U.S. banks currently hold $3.3 trillion in reserves at the Federal Reserve, representing nearly 20% of all deposits across the system. These reserves generated $176 billion in interest income in 2024 alone, which accounted for 55% of banks’ pre-tax earnings. 

Such numbers make it clear, Coinbase argues, that banks are not struggling to attract deposits or fund lending activities. Instead, the narrative of erosion reflects an attempt to defend the payment monopoly and fee streams enjoyed by the largest institutions. Stablecoins, according to Coinbase, are primarily used for cross-border settlements, digital asset purchases, and fast peer-to-peer payments, making them function more like modern payment tools than traditional savings accounts.

Stablecoins are Reshaping Payments by Competing Directly with Banks’ Multibillion-Dollar Fee-based Business Model

The central argument that stablecoins reduce lending capacity is not supported by data, because deposit flight has not been observed among community banks even as stablecoin adoption has grown. Rather than replacing deposits, stablecoins provide an alternative to expensive and slow payment methods such as wire transfers and card networks. For banks, the real concern lies in the $187 billion in annual swipe-fee revenue that credit and debit card transactions generate in the United States. Stablecoins could bypass these systems entirely, making payments cheaper, faster, and available around the clock without middlemen.

While banks point to card rewards as consumer-friendly, these programs are funded by inflated fees that are ultimately passed on to everyday customers, especially those paying in cash. This means that lower-income households often subsidize perks such as airline miles and cash-back offers enjoyed by wealthier cardholders. In this light, stablecoins represent not only a technological shift but also a potential rebalancing of consumer costs in the financial system.

Coinbase Lawmakers and Industry Leaders Argue Stablecoins Offer Innovation That Banks Should Embrace Rather than Resist

Coinbase’s defense comes as U.S. banks lobby Congress to amend the GENIUS Act, which created a regulatory framework for stablecoins. Banking groups argue that stablecoins could indirectly offer yields through exchanges or affiliates, undermining deposit products. In response, groups such as the Crypto Council for Innovation and the Blockchain Association have urged lawmakers not to tilt the playing field in favor of traditional banks. Meanwhile, investment experts like Bitwise CIO Matt Hougan have criticized banks for suppressing deposit interest rates, pointing out that stablecoins are offering better alternatives for savers and businesses.

These scare articles about stablecoins destroying local lending markets are absurd.

If local banks are worried about competition from stablecoins, they should pay more interest on deposits. They're only worried because they've been abusing depositors as a free source of… https://t.co/WDALrdLxGp

— Matt Hougan (@Matt_Hougan) September 9, 2025

From Coinbase’s point of view, stablecoins are not a threat to financial stability but a step toward modernizing global payments. Similarly, banks can streamline payments, reduce operational costs, enhance cross-border payments, and serve customers more effectively by simply adopting stablecoins. Those who resist risk repeating the mistakes of the past, when incumbents fought against ATMs, electronic check clearing, and online banking before eventually conceding.

The wider picture reflects a familiar trend in financial history where incumbents resist new technologies. Banks once warned against digital innovation, only to eventually adopt it after years of opposition. Stablecoins appear to be the latest addition to this list. By dismissing fears of deposit erosion and focusing attention on the trillions sitting safely at the Fed, Coinbase has reframed the debate. The company insists that innovation in payments is not a threat but an opportunity, and that U.S. leadership in financial technology depends on embracing competition rather than suppressing it.