Stablecoins Could Drive Bank Deposit Flight
Figure CEO Mike Cagney predicts that the combination of yield and payment functionality offered by stablecoins will trigger a significant flight of deposits from traditional banks. He argues this shift could empower direct lending through decentralized finance (DeFi) protocols. This represents a potential disruption to the core business model of deposit-taking institutions.
- The total market capitalization of stablecoins surged from $28 billion in 2020 to over $300 billion by early 2026, with some forecasts projecting a market size of nearly $2 trillion by 2030. - A new class of "yield-bearing" stablecoins has emerged, growing from $660 million in August 2023 to approximately $9 billion by May 2025. These products, such as USDY by Ondo Finance and the SEC-registered YLDS by Figure Markets, pass through yield from underlying assets like U.S. Treasuries directly to token holders. - In July 2025, the U.S. enacted the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, creating the first federal regulatory framework for stablecoin issuers. The law mandates 1-to-1 backing with high-quality liquid assets and establishes oversight by banking regulators like the OCC. - While stablecoins gain traction, traditional payment rails are also upgrading; The Clearing House's RTP network processed $246 billion in 2024 and now has a transaction limit of $10 million. The newer FedNow service, launched in July 2023, reached over 1,200 participating institutions and handled over $20 billion in the fourth quarter of 2024. - B2B cross-border payments have become a primary use case for stablecoins, accounting for an estimated $226 billion annually. A survey of over 350 executives revealed that 41% of organizations using stablecoins reported cost savings of 10% or more, primarily from efficiencies in international payments. - Major financial institutions are actively entering the space; PayPal has issued its PYUSD stablecoin, and a survey found that while 15% of financial institutions already offer stablecoin services, another 57% plan to explore them, focusing on digital wallets and on/off-ramp infrastructure. - The growth in stablecoins has led issuers to become major holders of U.S. debt; Tether, the largest stablecoin issuer, held over $150 billion in U.S. government securities as of July 2025, making it one of the largest holders globally. - Stablecoin transaction volumes are increasingly rivaling traditional payment networks, with one 2025 report noting monthly volumes reaching $710 billion, compared to Visa's approximate $1 trillion monthly processing volume.
