As US policymakers increasingly view well-regulated, dollar-pegged stablecoins as a potential backbone for faster and cheaper payments, community banks have raised concerns about whether these digital assets might displace critical retail deposits.
A new empirical study by CRA addresses this pressing question—and finds no evidence of a material funding risk to community banks from current and near-future levels of stablecoin adoption.
Using monthly data from 2019 to 2025, the study tests whether the growth of the USD Coin (USDC)—the most US-centric stablecoin, aligned with the GENIUS Act definition of a payment stablecoin—correlates with changes in community bank deposits, while controlling for macroeconomic conditions and shocks, such as the collapse of Silicon Valley Bank. Our findings show that USDC adoption does not significantly impact community bank funding.
Our study also considers a more extreme, model-free scenario in which every dollar invested in stablecoins reduces bank deposits one-for-one. Even under this unlikely assumption and assuming extreme growth of the stablecoin market, the projected impact would amount to just 6.8% of community bank deposits—comparable to historical outflows to money market funds. Under more plausible adoption scenarios, the estimated impact falls below 1%.
Our analysis shows that despite the headline concerns, current and even near-future stablecoin adoption is unlikely to pose a systemic funding risk to community banks. That said, we recommend continued monitoring, especially as payment stablecoins become more widely adopted.
This study was commissioned by Coinbase, Inc.
