Although the impact of stablecoins on the banking sector appears to be “limited” at this stage in the adoption cycle, as the market capitalization of the stablecoin sector and tokenized real-world assets (RWA) increases, banks may face increased competition and market share erosion.
“So far, stablecoin usage has been limited, but by the end of last year, the market capitalization exceeded $300 billion,” Abhi Srivastava, associate vice president in the Digital Economy Group at Moody’s Investors Service, told Cointelegraph.
Despite their current limited role, stablecoins’ role in payments, cross-border commerce and on-chain finance is “expanding,” Srivastava said, adding that the existing U.S. payments system is already “fast, low-cost, and reliable.” he said:
“For the banking sector, the risk of disruption appears to be limited at this stage. In the short term, stablecoins are unlikely to replace traditional deposits on a large scale domestically due to U.S. rules prohibiting the payment of yield on stablecoins.”
However, over time, increased adoption of stablecoins and tokenized RWA (traditional or physical financial assets represented on the blockchain by tokens) could put “pressure” on the banking sector, leading to deposit outflows and reduced lending capacity, he said.
Stablecoin regulatory policy has become a hot topic of contention among crypto industry executives and banking industry insiders, with concerns that high-yielding stablecoins will eat into banks’ market share proving to be a hurdle in Congress’ CLARITY Cryptocurrency Market Structure Act.
Related: Stablecoins behave like forex markets when liquidity is split: Eco CEO
CLARITY Act stalls as banks fight for higher-yielding stablecoins
The Digital Asset Market Transparency Act of 2025, also known as the CLARITY Act, is a comprehensive virtual currency market regulatory framework that establishes asset classification, regulatory jurisdiction, and oversight for virtual currency markets.
The bill is currently stalled in Congress after a group of crypto industry companies led by cryptocurrency exchange Coinbase publicly opposed an earlier draft of the bill.
The lack of legal protection for open source software developers and the ban on high-yield stablecoins were among the most controversial issues cited by opponents of the bill in the cryptocurrency industry.
US lawmakers and the White House have made several attempts to negotiate legislation that is acceptable to both the crypto industry and banking lobbies.
Earlier this month, North Carolina Sen. Thom Tillis said he planned to release an updated bill proposal that was acceptable to both sides. However, the bill has reportedly faced opposition and has not yet been published, according to Politico.
However, other crypto industry executives and market analysts have warned that if the CLARITY Act fails to pass, the industry could face future regulatory crackdowns from hostile lawmakers and officials.
Magazine: Stablecoins will experience explosive growth in 2025 as the world embraces the asset class
