Popular crypto analyst EGRAG CRYPTO says banks oppose stablecoins not primarily because they are risky, but because stablecoins let people hold, move, and potentially earn returns on dollars without relying on traditional bank deposits.
His viewpoint arrives as US lawmakers negotiate crypto legislation and stablecoin rules, while banks and digital-asset advocates clash over whether yield-bearing stablecoins could siphon deposits from the banking system.
The Exit Banks Never Had to Plan For
In an analysis posted on June 1, EGRAG framed the debate around stablecoins as more than a regulatory dispute: he sees it as a direct threat to how banks make money.
He explained that when customers place money in a bank account, they are not simply storing funds. Legally, depositors are making an unsecured loan to the bank. The bank then lends those deposits at rates typically between 6% and 28%, while paying depositors only around 0.1% to 0.5%. That spread—earning high yields on loans while paying very little to depositors—is a core source of bank profits.
According to the analyst, stablecoins are breaking that long-standing arrangement by separating three services banks traditionally combine: custody, settlement, and yield.
With a stablecoin backed by Treasury bills, users can hold dollar-denominated value without a bank account, transfer it instantly without an intermediary, and earn roughly 5% on a risk-minimized basis.
EGRAG argues that if people can earn 4% to 6% yields while retaining full control of their funds and remaining independent of traditional banks, many will have little incentive to keep deposits at banks. That shift could undermine banks’ funding models and diminish the influence they currently hold.
“That’s the real threat and they will make wars and move tanks to stop it,” the analyst claimed.
His argument is bolstered by industry estimates. At the start of the year, an analysis by Standard Chartered estimated US banks could lose roughly $500 billion in deposits to stablecoins by the end of 2028, with regional banks most exposed.
Standard Chartered’s Geoff Kendrick noted that the largest stablecoin issuers—Tether (USDT) and Circle (USDC)—hold significant portions of their reserves in US Treasuries instead of bank accounts, meaning less capital circulates back into the traditional banking system.
What the Legislative Fight Is Really About
During recent Senate Banking Committee discussions around the CLARITY Act, the American Bankers Association mobilized heavily, delivering more than 8,000 letters to Senate offices in under a week that specifically targeted rules around yield-bearing stablecoins.
Senator Bernie Moreno accused banks of trying to “kill stablecoins that would let everyday Americans earn real yield on their own money,” calling the industry a “cartel” intent on protecting low-interest deposit models.
EGRAG interpreted that reaction as evidence of stablecoins’ significance, writing:
“If stablecoins were meaningless, banks wouldn’t fight them. Lobbyists wouldn’t panic. Bills wouldn’t stall. Narratives wouldn’t shift.”
Institutional interest appears substantial. A March survey released by Ripple found 74% of finance executives view stablecoins as tools for unlocking working capital and improving treasury operations, suggesting interest has moved well beyond experimentation.
The stablecoin market continues to expand. Data from DefiLlama shows the market is roughly $320 billion, led by USDT at about $188 billion and USDC at roughly $76 billion.