Migration Not Flight: The Impacts of Stablecoins on Deposits

Stablecoin growth has raised a direct question for banks: How much money could leave conventional deposits as customers begin using digital dollars for payments, settlement, cross-border transfers, and treasury activity? Market capitalization and transaction volume provide incomplete measures because average balance behavior sits outside both. This report reframes the issue around deposit substitutability and models how much funding could migrate across consumer, small business, commercial, and corporate treasury products. It focuses on the balances most likely to support persistent stablecoin use. 

Using lower- and upper-bound scenarios, the model estimates potential gross migration of approximately $257 billion to $1.129 trillion, equal to 1.23% to 5.39% of the modeled deposit base. The exposure concentrates in payment-intensive balances and at larger institutions. Each bank’s vulnerability will depend on its customer mix, funding structure, product capabilities, and its place in the movement of money. Javelin’s analysis considers how stablecoin reserves may redistribute funding within the banking system. It explains the implications for deposits, payments revenue, treasury relationships, liquidity, and technology, then provides practical recommendations for measuring exposure and preparing an appropriate response.

Key questions discussed in this report: 

• How much of the U.S. bank and credit union deposit base could migrate to stablecoins?
• Which deposit products and institution tiers carry the greatest exposure?
• How could migration affect bank funding, payments revenue, treasury relationships, and customer ownership?
• What should financial institutions do now to measure their exposure and prepare an appropriate response?