Stablecoins and the Upcoming Battle for Depositors

ABSTRACT

We lay out the research questions raised by the GENIUS Act of 2025 which creates a federal framework in the United States for payment stablecoins that may compete for balances with bank deposits. We first set out the motivating facts: what stablecoins are used for, what the Act does and leaves open, why a bank deposit is one leg of a bundle rather than a standalone product, and what happened when a previous innovation, namely money market funds, competed for deposits. These facts pose three policy questions relating to payment stablecoins and their issuers— payment of interest or rewards; access to Federal Reserve settlement systems; and obtaining national trust bank charters— and two analytical questions— which depositors might withdraw funds from bank to buy stablecoins and with what welfare consequences.