A war is brewing between crypto firms and traditional banks: how the stablecoin boom is changing bank profits
The rapid spread of digital financial instruments is gradually changing the balance of power in the global banking system, as new technology platforms offer users alternative ways to store funds, make payments and generate income. At the center of these changes are stablecoins – cryptocurrencies that are tied to traditional currencies and thus combine relative stability with the technical capabilities of the blockchain.
Analysts warn that their rapid spread could gradually affect the revenues of traditional banks, as new digital tools open up financial scenarios for users that were previously the exclusive domain of the banking system. The issue is attracting increasing attention from financial institutions, investors and regulators, as fierce competition between cryptocurrency companies and traditional banks unfolds in the market. Analysts at investment bank Jefferies point out that the spread of stablecoins may gradually reduce the volume of bank deposits and create additional pressure on the profitability of financial institutions.
In their analysis, Jefferies experts describe a scenario in which the gradual spread of digital dollars may affect the structure of bank funding. This is not an immediate crisis or a sharp withdrawal of funds from the banking system, but in the medium term, some customers may start using new digital tools to store money and make payments.
Analysts believe that over the next five years, banks may lose from 3% to 5% of their core deposits. Although at first glance this share does not seem critical, even a moderate outflow of deposits can change the economics of the banking business, because it is deposits of the population and companies that remain one of the key sources of financing for banking operations.
Jefferies experts draw attention to the fact that the gradual redistribution of funds between the banking system and digital financial platforms may lead to an increase in the cost of financing for banks. As a result, their profitability may decline, as financial institutions will have to offer more favorable conditions for holding client funds.
“The risk of a gradual outflow of deposits in the medium term due to the emergence of new opportunities for generating income and payment scenarios should not be ignored,” analysts emphasize.
According to their calculations, even in a scenario of moderate pressure, the average bank may face a decrease in profits of about three percent.
To understand the reasons for the banking sector’s concerns, it is necessary to consider the role of stablecoins in the modern financial ecosystem. These are cryptocurrencies that are created in such a way as to maintain a stable value, usually tied to fiat currencies – most often to the US dollar or euro.
As experts note, a few years ago, these digital assets were used mainly in cryptocurrency trading, where they served as a convenient tool for moving funds between different platforms. However, after the GENIUS Act was passed in the US, the market began to rapidly expand and go beyond the narrow cryptocurrency environment.
Thanks to this, stablecoins are increasingly used for international transfers, corporate payments, and managing companies’ financial flows. This transformation turns them from a technical tool for the crypto market into an element of the global payment infrastructure.
The dynamics of the development of this segment demonstrate how quickly the financial landscape is changing. At the end of 2025, the total volume of stablecoins reached approximately $305 billion, which means an annual growth of 49 percent. The volume of transactions is even more indicative: in 2025, transactions worth about $11.6 trillion were carried out through such digital assets. Such a scale indicates that stablecoins are already becoming an important tool for global capital movements.
Jefferies analysts predict that over the next five years, the capitalization of this segment may grow to $800 billion or even $1.15 trillion. According to them, the peculiarity of stablecoins is that they operate without time restrictions, since transactions in blockchain networks occur 24 hours a day. Unlike traditional banking systems, where payments often depend on working hours or intermediaries, digital assets allow for almost instant settlements.
In addition, such tokens are easily integrated into decentralized financial platforms, known as DeFi, where users can receive income from staking or other financial transactions. In many cases, the potential profitability of such instruments exceeds the conditions offered by traditional bank accounts. This factor is of greatest concern in the banking industry.
Bank of America CEO Brian Moynihan warned that if this segment develops actively, some deposits may move to digital financial products. According to his estimate, the volume of such potential redistribution could reach six trillion dollars.
Despite the rapid growth of the market, an instant transition of customers from the banking system to stablecoins remains unlikely due to existing regulatory restrictions. The GENIUS Act, adopted in the USA, contains a provision that prohibits stablecoin issuers from paying income to passive token holders. Such a requirement significantly reduces the attractiveness of digital assets as an alternative to bank deposits.
At the same time, analysts draw attention to another aspect of the market. Even in the absence of direct income payments, users can receive rewards through participation in decentralized financial services or through the active use of stablecoins in settlements. Such mechanisms still create incentives for partial redistribution of funds. The reaction of large financial institutions indicates that the banking sector is trying to prepare for the changes. Some companies have already begun experimenting with their own digital instruments in order not to lose their position in the new financial ecosystem. For example, Fidelity Investments has launched its own stablecoin called Fidelity Digital Dollar (FIDD). Other large financial institutions are also preparing for similar steps.
Bank of America and Goldman Sachs are considering issuing their own tokens as soon as US legislation finally defines the rules for their use. Such a strategy indicates the desire of banks not only to protect their market share, but also to integrate new technologies into traditional financial models.
Analysts at Jefferies believe that risks to the banking system will be distributed unevenly. Financial institutions that rely heavily on retail deposits and interest-bearing accounts may be the most vulnerable. Among the banks that could potentially feel the strongest impact of the changes, experts name Wintrust Financial Corporation, Flagstar Financial, Webster Financial Corporation, Eagle Bancorp and Axos Financial. The latter company attracts particular attention from analysts due to its business model. Axos Bank operates as one of the largest fully digital banks in the US, so its clients are already accustomed to online finances and can more easily adapt to new digital tools.
At the same time, large international financial groups and custodian banks that are actively investing in digital infrastructure and blockchain technologies have much more opportunities to adapt to the new financial reality.
