McKinsey estimate: $850 funding loss per $1,000 USDC

McKinsey said in a May 21 note that third-party stablecoins can pull funding out of the banking system in a way that is larger than the headline growth of stablecoin supply alone suggests. The firm’s estimate, later cited by Stocktwits on May 24, said that when depositors convert $1,000 from bank deposits into stablecoins such as Circle’s USDC or Tether’s USDT, only about $150 returns to banks as wholesale or interbank reserves, while roughly $850 moves into assets held by the issuer. McKinsey said those assets are typically off-balance-sheet holdings such as U.S. Treasury securities. The estimate frames stablecoins not only as a payments product, but as a funding shift away from deposits and toward reserve portfolios. ### Where does the $850 figure come from? McKinsey’s May 21 article described a three-layer “on-chain money” system made up of stablecoins, tokenized bank deposits and central bank money. In that framework, the firm said third-party stablecoins do not recycle all customer funds back into the banking system in the same way ordinary deposits do. (mckinsey.com) The $850 figure is an estimate of what happens after conversion. Yahoo Finance and Stocktwits, both citing the McKinsey note, reported that for every $1,000 moved into third-party stablecoins, only $150 flows back to banks as interbank reserves, while the remaining $850 is invested in U.S. Treasury securities held by the stablecoin issuer. (mckinsey.com) ### Why would banks care about that mix? Banks rely on deposits as a funding base for lending, liquidity management and balance-sheet planning. If a depositor moves cash into a third-party stablecoin, the customer still holds a dollar-linked asset, but the bank no longer holds the same deposit liability and related funding. McKinsey’s estimate suggests most of that money ends up supporting the issuer’s reserve book rather than remaining on bank balance sheets. (finance.yahoo.com) McKinsey also said tokenized bank deposits already facilitate annual transfer volumes that are larger than stablecoin payments. That comparison is part of the firm’s broader argument that stablecoins are only one part of a larger shift in how money moves on-chain. ### Why is USDC the focus if the estimate is broader than one token? (mckinsey.com) Stocktwits framed the estimate around USDC in its May 24 post, but the underlying description in the cited coverage applied to third-party stablecoins including Circle’s USDC and Tether’s USDT. McKinsey separately said that as of early 2026 total stablecoin circulation was a little more than $300 billion, with about 99% denominated in U.S. dollars and 85% issued by Circle or Tether. (mckinsey.com) Circle’s USDC is one of the clearest examples because McKinsey’s September 2025 explainer said USDC reserves are backed mostly by short-term U.S. Treasuries or repurchase agreements, with the remainder in cash. That reserve structure helps explain why deposit conversion can reappear as Treasury holdings rather than bank funding. (stocktwits.com) ### What do MiCA and the GENIUS Act have to do with yield? Stocktwits said McKinsey also pointed to Europe’s Markets in Crypto-Assets regulation, or MiCA, and the U.S. GENIUS Act as limits on passing yield directly to stablecoin holders. That matters because if issuers cannot routinely share reserve income with users, the consumer case for moving deposits into stablecoins may look more like payments utility than a direct substitute for an interest-bearing bank account. (mckinsey.com) Congress.gov shows the GENIUS Act became U.S. law on July 18, 2025, after passing the Senate on June 17 and the House on July 17. Additional regulatory interpretation has since focused on how broadly yield restrictions apply across issuers, affiliates and distribution partners. ### What should readers watch next? McKinsey said on May 21 that stablecoin circulation had remained a little above $300 billion for roughly six months even as other on-chain assets increased by more than 30%. (stocktwits.com) That means the next data points to watch are stablecoin supply growth, reserve composition at issuers such as Circle and Tether, and any new U.S. rulemaking under the GENIUS Act. (mckinsey.com) (congress.gov)