Stablecoins Are a Bigger Threat to US Banks Than Regulators Admit: Standard Chartered

Group 1 - Standard Chartered estimates that approximately $500 billion will transition from bank deposits to stablecoins by 2028, a reduction from a previous estimate of $1 trillion [1] - The Digital Asset Market Clarity Act is currently under discussion in D.C., which may establish a federal regulatory framework for digital assets and could potentially limit yield earnings for stablecoin holders [2] - Despite delays in passing the bill, it is anticipated that it will reach the President's desk by the end of Q1, with implications for net interest margin (NIM) income for banks [3] Group 2 - Net interest margin (NIM) income is defined as the difference between what banks earn on loans and what they pay on deposits, and is crucial for comparing bank revenues with stablecoins [4] - Regional U.S. banks are more vulnerable to deposit losses due to stablecoin adoption, as they rely on NIM for over 60% of their revenue, unlike diversified banks and investment banks [5] - Investment banks like Goldman Sachs and Morgan Stanley derive less than 20% of their revenue from net interest margin, indicating a lower exposure to risks associated with stablecoin adoption [6] Group 3 - The potential for stablecoin issuers to hold a significant portion of their deposits in the banking system could mitigate net deposit flight from banks, as deposits would remain within the banking system despite the issuance of stablecoins [7]