HOW BANKS LEARNED TO STOP WORRYING AND LOVE STABLECOINS

Summary from the TLDR Crypto newsletter

Fears of stablecoins causing immediate “deposit erosion” were overstated, as there is little evidence of deposit outflows tied to stablecoin growth because deposits are “sticky” because of the checking account's role as the hub for payroll, bills, credit, and mortgages. Rather than displacing banks, stablecoins can discipline banks into paying better rates and improving efficiency, expanding lending/intermediation and consumer welfare. The GENIUS Act addresses run/liquidity risk by requiring stablecoins to be fully backed by cash, short-term Treasuries, or insured deposits, with operational details left to regulators. The upside case is payments plumbing because stablecoins enable 24/7 atomic settlement, reducing cross-border delays and “trapped” liquidity.