Standard Chartered has cautioned that the rising popularity of digital dollars poses a significant threat to traditional banks, particularly US regional banks. The rapid expansion of the stablecoin market is causing approximately $500 billion to move out of traditional bank deposits, creating a major risk for the banking sector. Stablecoins are digital assets typically pegged to stable currencies like the US dollar, facilitating faster and lower-cost financial transactions within the cryptocurrency market. This trend has reduced demand for traditional banking services, especially impacting small and medium-sized regional banks that are losing deposits. Furthermore, delays in approving market structure regulations exacerbate this risk, as the lack of proper oversight increases the potential for irregularities in stablecoin usage. Financial experts warn that without prompt regulatory intervention and supervision, the integrity of the banking system could be compromised. The ongoing shift from traditional deposits to stablecoins signals potential transformations in the financial system, underscoring the need for banks to adapt their services to the digital era to maintain customer engagement and mitigate financial risks.
Source: coindesk
