Stablecoin boom could eat into traditional banks' profits, warn Jefferies analysts

Digital dollar use in payments and crypto markets may slowly pull deposits from banks, forcing lenders to seek pricier funding, a new report by Jeffries finds. What to know : A new Jefferies report finds that stablecoins are unlikely to spark a sudden run on U.S. bank deposits but could steadily erode bank earnings as digital dollars gain traction. The firm estimates that stablecoin adoption could drive a 3% to 5% runoff in core deposits over five years, cutting average bank earnings by about 3% as funding costs rise and fee income comes under pressure. While the GENIUS Act’s ban on yield for passive stablecoin holders reduces the risk of an abrupt deposit flight, the report warns that banks must adapt with their own tokenized payment solutions to prevent a gradual profitability squeeze.