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Coinbase Rejects Claims Stablecoins Threaten U.S. Banking System

Coinbase Rejects Claims Stablecoins Threaten U.S. Banking System

Coinbase’s research challenges Treasury and banking groups’ warnings of trillions in deposit outflows, arguing stablecoins boost dollar strength globally while banks protect their $187 billion payments monopoly.

Fact Check
The provided evidence does not contain a direct quote from Coinbase explicitly stating 'we reject the claim.' However, the evidence strongly supports the statement indirectly. A submission from Coinbase to the Financial Stability Board (FSB) references its 'Digital Asset Policy Proposal: Safeguarding America's Financial Leadership.' This framing suggests Coinbase views digital assets, including stablecoins, as a manageable component of the financial system rather than an inherent threat. Additionally, other Coinbase documents discuss mitigating redemption risks through banking relationships, indicating a belief that risks are manageable. This collective evidence points to a position that rejects the idea that stablecoins are a fundamental threat to the banking system.
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Summary

In an official announcement, Coinbase released a report titled “Beyond the Deposit Debate,” rejecting banking industry claims that stablecoins could trigger massive deposit flight and destabilize the financial system. The company disputed Treasury’s projection of $6 trillion in potential outflows, pointing instead to $3.3 trillion parked by banks in Federal Reserve reserves, which generated $176 billion in annual interest. Coinbase argued stablecoin activity is largely international and strengthens the U.S. dollar’s global role. The firm noted stablecoin market growth from $4 billion in 2020 to $285 billion today, with projections of $1 trillion in payment volume by 2030. While banking groups such as the American Bankers Association press Congress to close GENIUS Act loopholes, major institutions like Citigroup and JPMorgan are simultaneously exploring stablecoin issuance and tokenized deposits. Coinbase’s position is supported by research showing no meaningful link between stablecoin adoption and community bank deposit flight over the past five years.

Terms & Concepts
  • Stablecoin: A cryptocurrency pegged to a reserve asset such as the U.S. dollar, designed to maintain price stability.
  • GENIUS Act: U.S. legislation regulating stablecoin issuers, with ongoing debate over whether it restricts intermediaries from offering yield or rewards.