Coinbase Says Stablecoin Fears Are Misguided by Banks

Stablecoin Panic Is Misguided, Coinbase Pushes Back on Bank Claims

Written by Aaron S.,

Editor-In-Chief

Last Updated: October 30, 2025

Key Takeaways

Coinbase said stablecoins are not draining US bank deposits, as most users are overseas using them to hold dollars in unstable economies;
The company argues that stablecoins mainly support new financial systems on blockchains rather than competing with local banks;
Coinbase adds that fears that small banks will lose customers are overstated, since stablecoin users rarely overlap with community bank clients.

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Coinbase $2.38B has pushed back against the idea that stablecoins pose a major risk to US banks.

According to the company, these concerns overlook how stablecoins are actually used and who is using them.

On October 29, Coinbase’s head of policy, Faryar Shirzad, said concerns that stablecoins are hurting bank lending are misplaced. He explained that most people using stablecoins are outside the United States.

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These users are not withdrawing money from local banks, they are using stablecoins to hold dollars in places where the local currency may be unstable.

Coinbase explained that the demand for stablecoins mostly comes from overseas markets. In countries where people face currency instability or lack access to reliable banks, dollar-based stablecoins offer a way to hold value and make transactions.

The company also noted that concerns about stablecoins pulling deposits from banks are not new. They compare this to past reactions to money market funds, which were also seen as a threat when first introduced.

According to Coinbase, around two-thirds of stablecoin activity occurs on blockchain systems that operate independently of traditional banks. This shows that the technology supports new kinds of financial networks, rather than replacing old ones.

Shirzad also addressed claims that small, community banks would be hit hardest. He said that stablecoin users and community bank customers rarely overlap.

Recently, Coinbase announced plans to add private transaction features to its Base network. What did CEO Brian Armstrong say? Read the full story.