GENIUS Act Could Spark $6.6T Deposit Exodus to Stablecoins: Expert

Jain argued on X that the law marks “the beginning of the end for banks’ ability to rip off their retail depositors with minimal interest.” He believes that Big Tech firms like Meta, Google, and Apple are now positioned to challenge banks by offering stablecoin-based savings with faster payments and better user experience.

However, the GENIUS Act has also sparked regulatory confusion. While it bans stablecoin issuers from directly offering yields, it doesn’t explicitly prohibit affiliated exchanges or partners from doing so. This gray area could allow issuers to bypass restrictions through third-party arrangements—a loophole that traditional banks are lobbying to close.

$6.6 Trillion Could Flow Out of Banks

Concerns about a possible banking exodus are already being echoed by U.S. officials. The Department of the Treasury estimated earlier this year that as much as $6.6 trillion could exit traditional banks if yield-bearing stablecoins gain widespread adoption. 

The Bank Policy Institute warned that such a shift could lead to “greater deposit flight risk,” ultimately shrinking the credit supply and pushing interest rates and loan costs higher for consumers and businesses.

Jain added that in order to remain competitive, “banks will have to pay more interest to depositors, and their profits will suffer.” Currently, average savings account interest rates hover around 0.40% in the U.S. and 0.25% in Europe, while stablecoin yields on platforms like Aave sit near 4% for both USDT and USDC.

Big Tech’s Entry Into Stablecoins with GENIUS Act

The potential for Big Tech to enter the stablecoin space adds another layer of disruption. A Fortune report from June revealed that Apple, Google, Airbnb, and X were among major firms exploring stablecoin issuance to reduce payment fees and improve international transactions.

With the global stablecoin market already valued at $308.3 billion—dominated by USDT ($177B) and USDC ($75.2B)—the Treasury now predicts it could soar 566% to $2 trillion by 2028. If this growth materializes, the GENIUS Act may go down as the spark that redefined global banking forever.

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