As I noted yesterday, the discussion around stablecoins and deposit substitution has become more nuanced — and more quantitative. At the system level, stablecoins remain small relative to deposits (~$275–280B vs. ~$18.5T), which makes it clear this is not a story about wholesale displacement of bank funding.
What’s interesting — and where today’s conversation naturally goes next — is how stablecoins are being used.
A new Moody’s 2026 outlook frames stablecoins and tokenized deposits not primarily as deposit competitors, but as “digital cash” becoming part of core market plumbing. In 2025 alone, Moody’s estimates on-chain settlement activity using stablecoins increased sharply, reaching trillions of dollars in transaction volume, driven largely by institutional use cases rather than retail speculation.
The distinction matters. Much of the activity Moody’s highlights sits inside financial markets, not consumer balance sheets:
• Intraday liquidity movements between funds and trading venues
• Collateral transfers and margin flows
• Repo and short-term settlement processes
• Cross-border payments and post-trade workflows
In that context, stablecoins function less like deposit substitutes and more like payment rails — infrastructure that moves cash-like value faster, continuously (24/7), and with fewer intermediaries. The analogy is closer to Fedwire or CLS than to a savings account.
This also helps reconcile two ideas that can seem in tension:
• Stablecoins are not yet large enough to materially reduce aggregate deposits
• But they can change how liquidity behaves — how quickly it moves, where it sits intraday, and how concentrated or mobile certain balances become
That’s why Moody’s pairs stablecoins with tokenized deposits (e.g., JPM Coin) in its analysis. The future they describe is not “banks vs. stablecoins,” but a hybrid liquidity stack where traditional deposits, tokenized bank money, and regulated stablecoins coexist on new digital rails.
The takeaway for ALM, liquidity risk, and funding discussions is a subtle but important shift. The question is moving from “Will deposits leave?” to “How does faster, programmable liquidity change behavior, concentration, and intraday risk?” Levels still matter — but behavior and velocity matter more.
Arnab Pandey 