Moody's Analyst: Stablecoins Pose Limited Near-Term Threat to US Banks

The immediate impact of stablecoins on the traditional US banking sector remains limited, according to Abhi Srivastava, associate vice president of the Digital Economy Group at Moody’s Investors Service. While the adoption cycle is progressing, the analyst suggests that the current phase does not yet threaten the core market share of established financial institutions. Srivastava noted that stablecoin market capitalization surpassed $300 billion by the end of last year, indicating significant growth in on-chain finance and cross-border commerce. Despite this, he argued that existing US payment systems remain fast, low-cost, and trusted, which mitigates the immediate pressure on traditional banking rails. However, the long-term outlook presents more structural risks. The growth of tokenized real-world assets (RWAs)—physical or traditional financial assets represented on a blockchain—could eventually lead to an erosion of bank market share. Such a shift could result in significant deposit outflows, thereby reducing the overall lending capacity of the banking sector. These tensions are currently playing out in the legislative arena via the Digital Asset Market Clarity Act of 2025, also known as the CLARITY Act. The bill, intended to establish a comprehensive regulatory framework and asset taxonomy, has stalled in Congress. A primary point of contention is the prohibition of yield-bearing stablecoins, a move opposed by several crypto industry leaders, including Coinbase. While Senator Thom Tillis has indicated plans to release an updated draft to reconcile the interests of the crypto industry and the banking lobby, the proposal has reportedly faced pushback. Market analysts warn that a failure to pass the CLARITY Act could leave the digital asset industry vulnerable to more aggressive regulatory crackdowns in the future.