By 2026, stablecoins have moved well beyond their early crypto-native use cases. Legislative clarity in the US under the GENIUS Act, the rollout of MiCA in the EU and advancing frameworks in the UK and Middle East have brought greater clarity to issuance, reserves and oversight. Once regulation is in place, the debate changes. The question is no longer whether stablecoins belong in the financial system; it is what they mean for its foundations, especially bank deposits. Our recent Taurus study on stablecoins and the banking system examines that issue directly. If regulated stablecoins begin to function as always-available digital cash for payments and settlement, how much transactional liquidity could shift away from bank deposits? And what would that mean for bank balance sheets?
Where the funding pressure begins
To understand the impact, it helps to start with the basics; commercial banks fund lending largely through deposits. Among them, transactional balances are one of the cheapest…
