U.S. Dollar-Backed Stablecoins Could Drain $1 Trillion From Emerging Market Banks, Standard Chartered Warns

The global financial landscape is on the brink of a major transformation as U.S. dollar-backed stablecoins continue their meteoric rise, challenging the dominance of traditional banking systems.

According to a new report by Standard Chartered, it warns that the rapid adoption of stablecoins, bolstered by supportive U.S. crypto policies, could drain up to $1 trillion in deposits away from emerging market banks within the next three years.

“We see the potential for $1 trillion to leave emerging market banks and move into stablecoins in the next three years or so,” the bank stated in its analysis released on Monday.

The global bank which has deep roots in developing economies, noted that as people seek to protect their wealth from local currency depreciation, many will turn to stablecoin wallets instead of traditional bank accounts.

While recent U.S. crypto legislation seeks to stem the outflow of deposits by barring stablecoin issuers from paying direct yields, similar to interest on bank accounts Standard Chartered believes this measure will do little to dampen demand in emerging markets.

“Return of capital matters more than return on capital,” the report noted, emphasizing that the priority for many savers is security rather than yield.

The bank further projected that stablecoin savings across developing economies could soar from the current $173 billion to $1.22 trillion by the end of 2028 if current trends persist.

This forecast aligns with recent comments from Tether co-founder Reeve Collins, who predicted that by 2030, every major currency whether dollars, euros, or yen will exist as a stablecoin. Collins described this as a “seismic shift” that will fully digitize global money systems.

He argued that stablecoins will become the dominant method of transferring funds within the next five years due to their efficiency and integration into both crypto and traditional financial systems.

“The benefits of tokenized assets are now too compelling for traditional finance to ignore,” he said, adding that the definition of stablecoins essentially comes down to moving money on a blockchain.

The rise in global adoption of Stablecoins, underscores growing confidence in blockchain-based financial instruments and highlights the deepening appeal of digital dollars in regions grappling with inflation, currency instability, and declining trust in local banking institutions.

According to market data, the total capitalization of stablecoins recently surpassed $301 billion, a new all-time high after a 6.5% increase over the past month. Stablecoins now form a crucial part of the digital finance ecosystem, serving as a haven during crypto volatility, a medium of exchange for trading and payments, and a key infrastructure for decentralized finance (DeFi) and cross-border transactions.

Notably, the GENIUS Act, enacted in July 2025 by the U.S government, is emerging as a potential game-changer for the U.S. financial system, one that could upend traditional banking models and accelerate the shift toward digital assets. The Genius Bill according to many is the beginning of the end for banks’ ability to rip off their retail depositors with minimal interest.

Industry leaders warn that the Act could spark a mass migration of deposits from low-interest bank accounts to high-yield stablecoins, threatening to erode bank profits and reshape how consumers store and grow their money.

Future Outlook

Looking ahead, the growing dominance of U.S. dollar-backed stablecoins could redefine global capital flows and reshape the role of traditional banks particularly in developing markets.

As stablecoin adoption accelerates, emerging economies may face tighter liquidity conditions, reduced lending capacity, and increased dependence on dollar-denominated digital assets.

On the flip side, the continued integration of stablecoins into mainstream finance could spur innovation, prompting central banks to accelerate the development of central bank digital currencies (CBDCs) as a countermeasure.