Most US stablecoin issuers hold US dollars or Treasury securities as reserves, meaning the money lands in domestic institutions either way.<\/p>\n
\u201cGlobal demand for USD is massive,\u201d Witt wrote, calling it net new capital entering American banks. His comments came amid a heated congressional debate over the CLARITY Act<\/a> and the GENIUS Act,<\/a> both designed to give the crypto industry clearer regulatory ground to stand on.<\/p>\n Lost in the rewards\/yield debate is how GENIUS-compliant stablecoins will actually lead to deposit inflows.<\/p>\n Global demand for USD is massive. Foreigners exchange local currency for stablecoins from a US-based issuer.<\/p>\n That is net new capital entering the American banking system.<\/p>\n \u2014 Patrick Witt (@patrickjwitt) March 12, 2026<\/a><\/p>\n<\/blockquote>\n Not everyone shares that view. Standard Chartered, in a recent research note, estimated that rising stablecoin<\/a> adoption could shrink US bank deposits by roughly one-third of the total stablecoin market cap.<\/p>\n For community banks that fund local mortgages and small business loans with those deposits, the figure is hard to ignore.<\/p>\n Christopher Williston, president of the Independent Bankers Association of Texas, made that case bluntly last Friday.<\/p>\n\n
The Fear Behind The Legislation<\/h2>\n