Jefferies: Stablecoin Growth to Cut Bank Earnings by 3%
In a report published on March 10, analysts at Jefferies warned that the rise of stablecoins poses a significant, long-term risk to the profitability of traditional banks. The firm estimates that the steady adoption of digital dollars could siphon 3% to 5% of core deposits from U.S. banks over the next five years. This outflow would force lenders to seek more expensive funding, resulting in an estimated 3% reduction in average bank earnings. While analysts, led by David Chiaverini, do not foresee an immediate, sharp run on deposits, they caution that the "intermediate-term risk of gradual deposit runoff from emerging activity-based yield opportunities and payments use cases should not be ignored."
Market Projected to Reach $1.15 Trillion
The forecast is underpinned by the explosive growth in the stablecoin sector. The total supply of stablecoins reached $305 billion at the end of 2025, a 49% increase from the prior year, while adjusted transfer volume climbed to $11.6 trillion. With the market capitalization now at $314 billion, up from $184 billion in 2022, Jefferies projects it could reach between $800 billion and $1.15 trillion in five years. The expansion is driven by new use cases in payments, cross-border transfers, and treasury management. This C-suite concern was echoed by Bank of America CEO Brian Moynihan, who previously warned of a potential $6 trillion shift in deposits toward stablecoin-related products.
Retail-Focused Banks Face Highest Deposit Risk
The risk is not distributed evenly across the banking sector. According to Jefferies, banks with a high concentration of retail and interest-bearing deposits are the most exposed to this trend. The report specifically identified WTFC, FLG, WBS, EGBN, and AX as institutions with higher vulnerability. Regulatory guardrails, such as the GENIUS Act passed in July 2025 which bars yield payments to passive stablecoin holders, mitigate the risk of a sudden capital flight. However, major financial institutions are not standing still. Fidelity has already launched its own stablecoin, the Fidelity Digital Dollar (FIDD), while executives at Goldman Sachs and Bank of America have signaled their intent to develop tokenization and stablecoin solutions to compete in the evolving financial landscape.
