According to a research report by Standard Chartered Bank, by 2028, an estimated $500 billion in cash will shift from bank deposits to stablecoins— This is equivalent to 1% of the total deposits in high-risk countries like Egypt, Pakistan, Bangladesh, Sri Lanka, Turkey, India, and Kenya. This could be a major shock to banks in the coming years! Bank deposits have been stable in the past because they served three roles: a parking spot for funds, a payment hub, and a credit intermediary. But stablecoins are already breaking down the first two roles. More and more cross-border settlements, on-chain transactions, and OTC clearings are bypassing the traditional banking system entirely. Regional banks like Huntington Bancshares and M&T Bank can’t compare to diversified banks like JPMorgan Chase and Citibank. Over 60% of their revenue comes from net interest margins, relying on low-cost deposits to leverage asset returns. If deposits start to drain, it could directly increase banks’ risk exposure, making liabilities more expensive and less stable. This isn’t as obvious during a high-interest-rate cycle, but once we enter a narrowing interest margin cycle, a bank run could happen in no time!