Will Stablecoins Drain Bank Deposits? The Numbers Explained

US banks held about $19.7 trillion of deposits in September 2026, and very little of it was sitting in a vault (source: Federal Reserve H.8). Banks use the money you keep with them to fund the loans they make, from home loans to small-business credit, and they count on it staying put because it is the cheapest money they can get.

A dollar stablecoin offers something new: a digital dollar you can hold and send with no bank account behind it. That raises a fair question. If enough people moved their savings out of banks and into stablecoins, would banks have less to lend, and what would that mean for everyone who borrows from them?

The headlines have not been calm about it. You may have read that stablecoins put "$6.6 trillion" of bank deposits at risk, or that they could cut lending "by one-fifth or more". Both numbers are real, and both mean something different from what the headlines suggest.

For a trader, the question reaches beyond banking, because the same money flows touch Treasury yields, interest rates and the stablecoins your trades settle in.

Are stablecoins draining bank deposits?

So far, they have not. US bank deposits grew by about $1.3 trillion between August 2025 and September 2026 (source: Federal Reserve H.8). Dollar stablecoins were worth $311.7 billion on September 23, 2026, roughly 1.6% of bank deposits (source: DefiLlama). Whether they drain deposits later depends on two things: where issuers keep their reserves, and whether holders can earn interest.

The first lever is reserves. When you buy a stablecoin, the issuer keeps your dollar somewhere. If it keeps it as a deposit at a bank, the money stays inside the banking system and simply changes hands. If it buys Treasury bills or a money market fund instead, the money leaves banks, at least for a while.

The second lever is yield. A stablecoin that pays nothing is a poor place for savings, so few people would move their rainy-day money into one. A stablecoin that pays interest, either directly or through an exchange's rewards, starts to compete with a savings account, and that is when larger sums could move.

A third factor sets the scale: how big stablecoins grow. Reserves and yield are policy choices, set by laws like the GENIUS Act and still argued over in Congress. Every estimate you will read, from the smallest to the largest, is really a guess about these three things. Each one can tip the effect on banks from small to large:

Where your dollar goes when you buy a stablecoin

When you swap dollars for a stablecoin, your bank balance falls, but the money does not vanish. It moves to the issuer, and the issuer's choices decide whether it stays in the banking system. A Federal Reserve staff note says stablecoins can "reduce, recycle, or restructure bank deposits rather than simply draining them."

That line comes from a December 2025 note by Fed economist Jessie Jiaxu Wang, which sets out the staff's own views, not Fed policy (source: Federal Reserve FEDS Note). The easiest way to see what it means is to follow a single dollar.

Say you move $1,000 from your bank account into USDC. Your bank loses a $1,000 deposit, and Circle, the company that issues USDC, gains $1,000 to hold. At the end of July 2026, Circle kept 14.8% of its USDC reserves as cash at banks and other regulated firms. About 84.4% sat in the Circle Reserve Fund, a government money market fund that holds Treasury bills and repurchase agreements (repos), which are overnight loans backed by Treasuries (source: Circle USDC reserve report, July 2026). So roughly $148 of your $1,000 went back into a bank, and most of the rest went into Treasury bills and overnight loans backed by them.

Now say you move the same $1,000 into USDT. At the end of June 2026, Tether held $115.0 billion of its $187.8 billion of assets in Treasury bills. It held only about $40 million, or 0.02%, as cash and bank deposits (source: Tether reserves report). Almost none of your dollar would stay in a bank.

Even money that goes into Treasury bills can come back. Whoever sold the issuer those bills gets paid, and if they put the cash in a bank, the banking system gets it back. The Fed note says the effect depends on exactly this: whether the people who sell assets to issuers end up putting the money back in banks. The three places an issuer can put your dollar lead to three different results for banks:

Why do banks care where the dollar ends up? Deposits are their cheapest and steadiest source of money. The Congressional Research Service describes deposits as a stable, inexpensive way for banks to fund their loans (source: CRS, The Stablecoin Yield Debate). A bank that loses deposits has to replace them with more expensive funding or lend less, and the same Fed staff note says banks are likely to pass much of that extra cost on to borrowers (source: Federal Reserve FEDS Note).

Issuers publish these breakdowns in their own reserve reports, so any holder of a fiat-backed stablecoin can check where its dollars sit.

On BloFin, the stablecoin you choose is also the stablecoin your margin sits in. Of the 499 perpetual futures contracts BloFin listed on September 24, 2026, 475 settle in USDT and 10 settle in USDC. Say you trade the BTCUSDT Perpetual with 1,000 USDT of margin. The reserves behind that USDT sit almost entirely in Treasury bills and other assets outside banks (source: Tether reserves report). USDC, by contrast, keeps about a seventh of its reserves as bank cash (source: Circle USDC reserve report, July 2026). Which one you prefer depends on how you weigh those designs, one of the main differences between USDT and USDC.

If you would rather your margin sat in USDC, BloFin lists the same market as the BTCUSDC Perpetual, and the live price and funding rate of the USDT version are on the BTCUSDT Perpetual page.

Stablecoin deposit estimates and who made them

The big numbers come from very different places: a slide shown to a Treasury committee, a bank lobbying letter, a Fed staff note, a White House report and a bank's research team. Each measures something different, and only some are official views. Side by side, they run from a rounding error to over a trillion dollars.

The trade groups' letter says interest-paying stablecoins "could reduce consumer, small business and agricultural lending by one-fifth or more" (source: bank trade groups' letter). Its only cited source is an October 2025 newsletter essay by economist Andrew Nigrinis, which assumes stablecoins pay yield at the federal funds rate.

The White House Council of Economic Advisers cites Nigrinis's 2025 work as an example of the trillion-dollar claims it set out to test. At its baseline settings, its model finds that banning stablecoin yield would add just $2.1 billion of lending, or 0.02% (source: White House CEA).

Citi's September 2025 report expects stablecoins to reach $1.9 trillion by 2030 in its base case, within a range of $0.9 trillion to $4.0 trillion. It puts the US deposits that move into them at $182 billion to $908 billion (source: Citi GPS, Stablecoins 2030). Even Citi's bull case is about 5% of the $18 trillion of US savings and checking deposits it expects in 2030.

Where the $6.6 trillion comes from

The $6.6 trillion is the total of US transactional deposits, the checking-type accounts people use for day-to-day spending, taken from bank filings at the end of 2024. It appeared in April 2025 slides for the Treasury Borrowing Advisory Committee, a group of private-sector market experts that advises the Treasury, where a slide headed "Potential Deposit Types 'At Risk'" showed $5.7 trillion of demand deposits and $0.9 trillion of other transactional deposits, a total a later slide labels "~$6.6tn" (source: TBAC slides).

In other words, the slides named the kind of deposit most exposed to stablecoins and showed how big that pool is. It did not forecast that $6.6 trillion would leave. The same slides said the way stablecoins are designed would likely decide how much deposits move, and they treated interest-paying stablecoins as the case with the biggest impact.

The number traveled. On Bank of America's January 2026 earnings call, CEO Brian Moynihan said studies he thought were "done by treasury" showed "upwards of $6 trillion" in deposits could move into stablecoins (source: Bank of America Q4 2025 call transcript). In the retelling, a slide about the size of a pool of deposits had become a Treasury study of money that could leave banks.

Why the estimates are so far apart

The estimates differ by a factor of hundreds because they answer different questions and set the three levers differently. The White House's $2.1 billion is lending a yield ban would add. The Fed staff note's $65 billion to $1.3 trillion is lending lost as stablecoins grow, depending mostly on their size and how much of their reserves stays in banks.

The Fed staff note shows it most clearly, because it runs three scenarios side by side. It works from a rule of thumb: every $100 billion of deposits that leaves banks and never comes back cuts lending by $60 billion to $126 billion (source: Federal Reserve FEDS Note).

Say you run a small business with a bank credit line. US banks lend about $14 trillion today, so in the low case the drop is about 1% or less, and you would probably never notice it (source: Federal Reserve H.8). In the high case, the drop is about 4% to 9%, and banks would lend less or charge more. The note itself calls its figures a rough, back-of-the-envelope estimate, which is a fair warning about all of them.

There is also a way for banks to keep the deposits: issue the stablecoin themselves. Under the GENIUS Act, a bank can issue a stablecoin through an approved subsidiary and become a licensed issuer (source: Public Law 119-27). A bank that issues its own coin can keep the reserves as bank deposits, so the money stays in the banking system, although the reserves still cannot be lent out (source: CRS, The Stablecoin Yield Debate).

The stablecoin yield question

Under the GENIUS Act, stablecoin issuers may not pay interest just for holding their coins (source: Public Law 119-27). The law says less about rewards that exchanges pay out of their own share of the income those reserves earn (source: CRS, The Stablecoin Yield Debate). That gap is why banks lobby so hard. So whether stablecoins can pay interest in practice comes down to who is paying: the issuer cannot, while an exchange might.

Bank deposits vs stablecoin growth so far

The data so far show bank deposits adding far more dollars than stablecoins have. Neither the Fed's May 2026 Financial Stability Report nor Bank of America's 2026 earnings calls report deposits leaving banks for stablecoins, and the New York Fed's study of bank balance sheets covers only the few banks that hold issuers' money.

Total deposits at US commercial banks were $19.7 trillion in the week of September 9, 2026, up from about $18.3 trillion in August 2025 (source: Federal Reserve H.8). Over roughly the same year, the dollar stablecoin supply grew from about $293.1 billion to $311.7 billion on September 23, 2026 (source: DefiLlama). Deposits added dozens of times as many dollars as stablecoins did.

The Fed's May 2026 Financial Stability Report said stablecoin growth had slowed in recent months. It also noted that stablecoins are mostly used to trade crypto (source: Federal Reserve Financial Stability Report). Money that sits in a stablecoin between trades is less likely to be money that would otherwise be in a savings account.

A February 2026 New York Fed staff report studied the real balance sheets of the banks that hold issuers' deposits. It found that these partner banks keep much larger reserve balances to cover sudden stablecoin payouts. It also found that their loans shrink as a share of their assets compared with similar banks (source: New York Fed Staff Report 1185). The authors call the findings early and their own views. In plain terms, stablecoin money can leave a bank quickly, so banks keep more of it on hand and lend less of it out.

What stablecoins do to Treasury bills and interest rates

The money that leaves banks mostly lands in short-term US government debt, which makes stablecoin issuers big buyers of Treasury bills. That pushes bill yields down a little when stablecoins grow, and it could push them up sharply if holders rushed to cash out.

By December 2025, dollar stablecoins held $153 billion of Treasury bills, according to a Bank for International Settlements working paper by Rashad Ahmed and Iñaki Aldasoro (source: BIS Working Paper 1270). Its June 2026 revision finds that a $3.5 billion inflow into stablecoins lowers 3-month bill yields by 0.71 basis points (hundredths of a percentage point) straight away, and by up to about 4 basis points within 10 days. The authors say outflows under stress could move yields by more, because issuers would have to sell quickly.

Say you hold a Treasury bill, or a fund that owns them. When stablecoins grow, issuers compete with you to buy bills, which nudges their yield down. If holders rushed to cash out, issuers would sell bills to pay them, which would push yields up.

One Fed official sees a wider effect. In November 2025, Fed Governor Stephen Miran argued that stablecoin demand for Treasuries, much of it from outside the US, pushes down the neutral interest rate. He cited a 2024 study by Marina Azzimonti and Vincenzo Quadrini, which estimated that widespread stablecoins could push interest rates down by as much as 40 basis points (source: Governor Miran's speech). He also said he saw "little prospect of funds broadly fleeing the domestic banking system", because GENIUS Act stablecoins pay no yield and have no deposit insurance. The speech states that these views are his own.

Stablecoins and banks outside the US

Outside the US, the worry changes shape. In countries with weak currencies, a dollar stablecoin can be a better place to keep savings than a local bank, so people there swap local deposits for digital dollars. Europe makes issuers keep part of their reserves in banks, and the UK plans to cap the size of each large sterling stablecoin.

In emerging markets, Standard Chartered's research team projected in October 2025 that stablecoins held as savings could grow from about $173 billion to $1.2 trillion by the end of 2028. That would mean more than $1 trillion leaving emerging-market banks (source: Standard Chartered, Stablecoins: Implications for EM). The note names Egypt, Pakistan, Bangladesh and Sri Lanka as countries at relatively high risk. It adds that the sum would be about 2% of bank deposits in its high-risk group, and it is a forecast by the bank's analysts.

Europe made a different choice from the US. Under the EU's MiCA law, a stablecoin issuer must keep at least 30% of its reserves as bank deposits, and 60% for the largest coins. In September 2026, the EU's central banks told the European Commission that this link is risky. If a stablecoin faces a run, the issuer would have to pull its deposits out of the bank quickly, and that bank could run short of cash (source: ESCB response to the MiCAR review). They pointed to March 2023, when trouble at Silicon Valley Bank set off a run on USDC. They proposed replacing the deposit floor with rules on how quickly reserves must mature, which is a proposal, not a change in the law.

The UK went a third way. The Bank of England had planned to cap how much of a large sterling stablecoin each person could hold, at £20,000 per coin (source: Bank of England, November 2025). In June 2026 it dropped that idea for a temporary issuance limit of £40 billion per large stablecoin, to protect bank lending while the market grows (source: Bank of England). Issuers may hold up to 70% of their backing in short-term UK government debt, and the Bank expects regulated stablecoins to start operating in the UK from 2027.

The three regions start from different worries and reach for different tools:

What the deposit debate means for you as a trader

For most people, the risk is not that their own bank account shrinks. The realistic effects are indirect: slightly different interest rates, and slightly tighter or looser lending. For a trader, the questions that matter are which stablecoin holds your money, what backs it, and what would move its supply.

Stablecoin supply is the number to watch. A rising supply means more dollars are waiting on exchanges, and a falling one means money is leaving crypto, which is why stablecoin supply and crypto prices are so often read together. Treasury bill yields are the second number, since that is where most reserves sit. The third is the yield rule: if exchanges end up free to pay rewards, stablecoins look more like savings, and the deposit debate gets louder.

Looking to move between USDT and USDC, or trade perpetuals margined in either? To get started, you'll need to first create a BloFin account, fund your account with cryptocurrency, and navigate to the USDC/USDT Spot trading page, BTCUSDT Perpetual page or BTCUSDC Perpetual page.

Frequently asked questions

Would banning stablecoin interest protect bank lending?

The White House Council of Economic Advisers found that a ban would do very little to protect bank lending. At its baseline settings, its April 2026 model adds $2.1 billion of bank lending, about 0.02%. Even stacking every worst-case assumption, the model produces $531 billion, a 4.4% rise in bank loans. That case needs stablecoins to grow to about six times their current share of deposits, all reserves to sit in cash that cannot be lent, and the Fed to abandon its current monetary framework.

Can banks issue their own stablecoins?

A US bank can issue a stablecoin through a subsidiary that its federal regulator has approved under the GENIUS Act, and the coin's reserves can be held as deposits at a bank. That keeps the money inside the banking system, but less of it goes back into loans, because banks must hold extra liquid assets against an issuer's deposits, which can leave quickly. The Congressional Research Service notes that the effect on credit would occur even if customers shifted to bank-issued stablecoins, because the ban on lending out stablecoin reserves would still apply.

Would a stablecoin run hurt banks?

It depends on where the coin's reserves sit. At the end of July 2026, 14.8% of USDC's reserves were cash at banks and other regulated firms, so a USDC run would pull deposits out of those banks. Tether held 0.02% of its assets in cash and bank deposits at the end of June 2026, so a USDT run would mostly force sales of Treasury bills. The damage can also flow the other way. In March 2023, trouble at Silicon Valley Bank set off a run on a stablecoin, because Circle held part of USDC's reserves there as uninsured deposits.

Is a tokenized deposit the same as a stablecoin?

A tokenized deposit is an ordinary bank deposit recorded on a blockchain, so it stays on the bank's balance sheet as a deposit. A stablecoin is issued by a separate company that holds reserves against it. The GENIUS Act keeps the two apart: its definition of a payment stablecoin leaves out bank deposits, including deposits recorded on a blockchain.

Who earns the interest on stablecoin reserves?

The issuer does, at least at first. Stablecoin reserves sit largely in Treasury bills and money market funds, and the interest they earn goes to the company that issued the coin. Under the GENIUS Act, a licensed or foreign issuer may not pay holders interest just for holding the coin, so holders get none of it directly from the issuer. Some issuers pass part of that income to exchanges, which pay it out as rewards, and whether that should be allowed is still being fought over by banks and crypto firms.

Researched and written by the BloFin Academy editorial team with AI-assisted drafting. All facts independently verified. Primary sources include the Federal Reserve, the Treasury Borrowing Advisory Committee, the White House Council of Economic Advisers, the Congressional Research Service, the Bank for International Settlements, the Bank of England and the European System of Central Banks, alongside the Circle and Tether reserve reports, Citi, Standard Chartered, DefiLlama and Bank of America's earnings call, current as of September 2026.

Nothing in this article constitutes financial, investment or tax advice, and nothing in it is a recommendation to buy, sell or hold any stablecoin or other digital asset. The estimates quoted here are the views and forecasts of the institutions that produced them, and BloFin takes no position on pending rules or legislation. A stablecoin can lose its peg and carries no deposit insurance, so the reserve design behind the coin you hold matters. Leveraged products including perpetual futures carry additional risk, because losses can exceed your initial margin and positions can be closed out automatically. Figures are stated as of the dates given and can change. BloFin services are not available in restricted locations, including the United States. Do your own research and consider your risk tolerance before you trade on BloFin.