Coinbase Defends Stablecoins, Says They Strengthen Dollar and Don't Threaten US Banks

Crypto exchange Coinbase has strongly rebutted claims that the rise of stablecoins could drain deposits from US banks or undermine traditional lending. In a market note shared on Wednesday, Faryar Shirzad, Coinbase's chief policy officer, argued that the narrative that stablecoins will destroy bank lending ignores how the market actually functions.

Shirzad emphasized that most stablecoin demand comes from outside the US, with international users seeking dollar exposure, particularly in emerging markets facing currency depreciation or limited banking access. He stated, "Most stablecoin demand comes from outside the US, expanding dollar dominance globally, not competing with your local bank," adding that concerns echo misplaced fears from earlier financial innovations like money market funds.

According to Coinbase, approximately two-thirds of all stablecoin transfers occur on decentralized finance (DeFi) and blockchain platforms, which operate independently from traditional banks. The firm described stablecoins as "the transactional plumbing of a new financial layer that runs parallel to, but largely outside, the domestic banking system." Shirzad further noted that treating stablecoins as a threat "misreads the moment" and that they actually reinforce the dollar's international role.

Coinbase pushed back against forecasts that trillions in stablecoin assets would flow out of US bank deposits, estimating that even if global stablecoin circulation reached $5 trillion, the majority would remain foreign-held or locked in digital settlement systems, with minimal impact on domestic deposits, which currently exceed $18 trillion. The report suggested that stablecoins could extend US monetary influence and give American firms a competitive edge in the digital asset economy.

In a related development, Western Union announced plans to launch the US Dollar Payment Token (USDPT) on the Solana blockchain in the first half of 2026. Issued by Anchorage Digital Bank, this stablecoin aims to facilitate global money transfers with lower fees, faster settlement, and reduced reliance on traditional intermediaries. CEO Devin McGranahan cited Solana's speed, scalability, and low-cost transactions as key reasons for the choice, aligning with the company's remittance business goals.

This defense comes amid increased bank exploration of stablecoin products following the passage of the GENIUS Act, the US regulatory framework for stablecoin issuers. Coinbase argued that community banks and stablecoin holders barely overlap, and banks could even improve services by integrating stablecoins.