Standard Chartered: Stablecoins to Drain $500B From US Regional Banks by 2028

The era of peaceful coexistence between stablecoins and regional banking is ending. As Tether launched its US-domiciled USAT token on Tuesday, Standard Chartered released a scathing risk assessment projecting a $500 billion deposit exodus from developed market banks over the next three years.

Geoffrey Kendrick, the bank's Global Head of Digital Assets Research, argues the sector has reached a tipping point. His model suggests one-third of all future stablecoin inflows will come directly from commercial bank deposits. With the market projected to hit $2 trillion by 2028, the math implies a massive liquidity drain for institutions relying on sticky retail capital.

The Victims: Regional Banks in the Crosshairs

The report specifically identifies Huntington Bancshares (HBAN), M&T Bank (MTB), and Truist Financial (TFC) as the most exposed. Unlike diversified Wall Street giants, these regional lenders depend heavily on net interest margin (NIM), the spread between what they pay depositors and what they earn on loans. If cheap deposits flee to yield-bearing stablecoins, that margin collapses.

Markets reacted swiftly to the narrative. Huntington shares dipped to $17.34 (-1.6%), while M&T Bank slid to $213.82 (-1.7%). Truist bucked the trend, holding steady at $50.19 (+1.2%), possibly buoyed by its larger fee-based revenue streams.

“NIM income as a percentage of total bank revenue is the most accurate measure of this risk because deposits drive NIM, and they risk leaving banks as a result of stablecoin adoption,” Kendrick noted.

The Catalyst: Institutional Legitimacy

The timing of the warning is no coincidence. Tether’s debut of USAT, issued by the federally chartered Anchorage Digital Bank, marks a structural shift. Previously, offshore entities like Tether (USDT) held minimal reserves in US commercial banks (reportedly 0.02%). USAT, however, integrates directly with the US regulated system, creating a frictionless highway for capital to leave traditional savings accounts for on-chain equivalents.

The threat extends beyond the US. Kendrick estimates emerging market banks could lose up to $1 trillion in deposits as users in high-inflation economies swap local currency for dollar-pegged assets.

Regulatory Standoff Amplifies Risk

Compounding the danger is the legislative limbo in Washington. The CLARITY Act, designed to regulate stablecoin yields, remains stalled. Standard Chartered expects passage by Q1 2026, but the delay allows yield-bearing stablecoins to entrench themselves further. Until the gap between 0.01% bank interest and 4-5% DeFi yields closes, the incentive for deposit flight remains mathematical, not just theoretical.