Stablecoins Could Slowly Drain Bank Profits Over Five Years, Jefferies Warns

TLDR

• Jefferies estimates stablecoins could cause a 3%–5% drop in core bank deposits over five years
• Average bank earnings could fall by around 3% as funding costs rise
• The stablecoin market hit $314 billion and could reach up to $1.15 trillion in five years
• The GENIUS Act bars stablecoin issuers from paying yield to passive holders, limiting near-term deposit flight
• Banks like Wintrust Financial and Webster Financial are seen as most exposed

Stablecoins are growing fast. The total market cap of the stablecoin sector now sits at around $314 billion, up from about $184 billion in 2022.

Jefferies analysts say this growth could quietly hurt traditional bank earnings over time. Their new report estimates banks could see 3% to 5% of core deposits drift away over the next five years.

That deposit loss would likely push banks to find more expensive funding. Analysts led by David Chiaverini estimate the average bank could see earnings fall by roughly 3%.

Stablecoins are cryptocurrencies pegged to fiat currencies like the U.S. dollar. They are widely used in crypto trading and are expanding into payments, treasury management, and cross-border transfers.

Stablecoin transfer volume reached $11.6 trillion in 2025. Supply hit $305 billion at the end of 2025, up 49% from the year before.

Jefferies projects the stablecoin market could grow to between $800 billion and $1.15 trillion within five years.

Why Banks Are Paying Attention

Stablecoins can move around the clock and plug into decentralized finance platforms that offer yields above most bank accounts. That makes them attractive to users who want their money working harder.

Still, U.S. rules passed last year reduce some of the near-term risk. The GENIUS Act, passed in July 2025, bars regulated stablecoin issuers from paying yield directly to passive holders.

That rule limits how quickly deposits might shift out of checking and savings accounts into stablecoins.

Banks Are Moving to Compete

Some major financial firms are not waiting. Fidelity Investments launched its own stablecoin, the Fidelity Digital Dollar.

Bank of America’s Moynihan said the bank will issue a stablecoin if Congress legalizes it. Goldman Sachs CEO said his firm has a large number of people focused on tokenization and stablecoins.

Jefferies says banks with higher concentrations of retail and interest-bearing deposits face more exposure than larger institutions already investing in digital asset infrastructure.

The report names Wintrust Financial, Flagstar Financial, Webster Financial, Eagle Bancorp, and Axos Financial as the most exposed banks under coverage.

The Jefferies report was published on Tuesday, March 10, 2026.

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