The rapid expansion of stablecoin adoption could trigger up to $1 trillion in deposit outflows from emerging market banks within three years, according to Standard Chartered's latest research. Savers are increasingly turning to dollar-pegged digital assets for enhanced security and liquidity.
Analysts Geoff Kendrick and Madhur Jha highlight that stablecoins provide households and businesses in developing nations with viable alternatives to traditional banking, accelerating the migration of core financial services to non-bank sectors since the global financial crisis.
These cryptocurrency assets maintain value through pegs to stable reserves like the U.S. dollar or gold, serving crucial roles in crypto markets as payment infrastructure and international transfer mechanisms.
The strongest stablecoin adoption appears in economies battling currency weakness and hyperinflation - particularly Egypt, Pakistan, Bangladesh, and Sri Lanka - where bank deposit flight risks are most severe.
Despite yielding no returns under current U.S. GENIUS Act restrictions, stablecoins continue attracting users focused primarily on capital preservation.
Standard Chartered projects the global stablecoin market will reach $2 trillion by 2028, with emerging markets generating approximately 65% of total demand.
While stablecoins present challenges to traditional deposit systems, they simultaneously enable cheaper remittance services and accelerated payment processing.
Emerging market regulators are countering with central bank digital currency trials and payment system enhancements. However, Standard Chartered warns that without rapid regulatory adaptation, the "stablecoin summer" could evolve into an extended winter for emerging market banking institutions.