Standard Chartered has said that more than $1 trillion could leave banks in developing countries and move into stablecoins by 2028, as more people around the world start using dollar-linked cryptocurrencies.

In a report released on Monday, the bank’s Global Research team said that more people using stablecoins could lead to a big change in banking. This shift might move savings away from traditional banks to options based on blockchain technology.

The report says that stablecoin use in developing countries could go from $173 billion now to $1. 22 trillion in three years. This could mean that $1 trillion might be taken out of banks in these countries.

As prices go up, stablecoins are helping people in the Global South with banking needs.

Geoffrey Kendrick, who is the global head of digital asset research at the bank, and economist Madhur Jha, say that stablecoins are like “USD-based bank accounts” for many people in areas where it’s hard to get U. S dollars Sure Here’s a simpler version: money.

They observed that more people are starting to use adoption, moving from a few big investors to many smaller users who want quick access to their money, trustworthiness, and round-the-clock availability—things that are often lacking in regular banks.

Standard Chartered found that Egypt, Pakistan, Colombia, Bangladesh, and Sri Lanka are most at risk of losing deposits. Turkey, India, China, Brazil, South Africa, and Kenya are also in danger.

Stablecoins like Tether’s USDT and Circle’s USDC are digital currencies that are tied to the U. S dollar at a 1:1 ratio. Dollars, supported by cash or short-term government bonds, are very important in countries with high inflation and weak local money.

In Venezuela, where prices have gone up by as much as 300%, people now use stablecoins instead of the national money for daily transactions. Shops often price their products in USDT, which people locally call “Binance dollars. ”

Chainalysis says that in 2024, Venezuela was the 13th country in the world for using cryptocurrency, and its usage grew by 110% compared to the previous year. Crypto made up about 9% of the country’s $5. 4 billion in money sent back home.

Similar trends are seen in Argentina and Brazil, where stablecoins account for about 60% of cryptocurrency transactions, according to Fireblocks. Companies in both countries are using USDC and USDT more often to protect themselves from rising prices and problems with their money’s value.

The report also talks about the U. S The GENIUS Act, which was passed earlier this year, makes it illegal for U. S-approved stablecoin companies to provide interest or rewards on their coins. Even so, Standard Chartered thinks that more people will keep using it. They argue that getting back the money you put in is more important than how much money it makes.

The bank expects the global stablecoin market to reach $2 trillion by the end of 2028, in line with predictions mentioned by the U. S Treasury

The bank said that countries with developing economies will face the biggest challenges because moving to stablecoins might make it harder for banks to give out loans. This could also weaken the usual connection between deposits and loan making.

Emerging markets are fueling the growth of stablecoins, owning two-thirds of the total supply

People in traditional finance share this worry. On October 1, Andrew Bailey, the Governor of the Bank of England, said that stablecoins could change how money works in Britain by separating how people hold money from how they get loans.

He said that this change might make banks less important for giving loans and could possibly cause problems in the financial system.

The Bank of England is working on a document to discuss rules for stablecoins. They are suggesting that individuals should have limits of between £10,000 and £20,000, while businesses should have a limit of £10 million.

Officials say the rule is meant to slow down the possible withdrawal of money from bank accounts, but some people who support cryptocurrency are not happy about it.

Tom Duff Gordon, Coinbase’s vice president for international policy, said limits would be “bad for UK savers” and would hold back new ideas. The Payments Association said that limits on ownership are not needed and hard to follow.

Big companies are encouraging banks to change. Stripe CEO Patrick Collison said that the growth of stablecoins will probably make banks raise the interest they pay on deposits. “Being unfriendly to customers seems like a bad idea,” he wrote on X, pointing out that savings accounts in the U. S only pay 0. 40% and 025% in the European Union.

The tension between regular banks and stablecoins has grown stronger since the GENIUS Act was created in the U. S A system for issuing things that follow rules. Coinbase has disagreed with the idea that stablecoins can harm banks, saying that concerns about money leaving banks are exaggerated.

The exchange pointed out that banks make around $176 billion each year from money held with the Federal Reserve, but they give very little back to their customers.

Standard Chartered’s report says that using stablecoins in developing countries is now a major change that is happening, not just a minor trend.

The bank says that a lot of stablecoins, which are digital currencies, are stored in savings accounts in developing countries. They warn that in the next few years, we might see a big move of money from regular banks to these digital dollar options.