Coinbase CPO says USDC and bank deposits rose 5% in tandem, not competing

USDC supply and US bank deposits both grew roughly 5% over a six-month period, according to data cited by Coinbase Chief Policy Officer Faryar Shirzad, challenging the banking industry's claim that stablecoins erode the traditional deposit base.

"Both went up. Neither ate the other's lunch," Shirzad said in a blog post, citing a six-month window in which USDC's circulating supply rose alongside total demand deposits in the US banking system.

USDC's circulating supply has reached approximately $75 billion, making it the second-largest stablecoin by market cap, according to DefiLlama. A July 2025 study from Charles River Associates, commissioned by Coinbase, found no statistically significant negative effects on community bank deposits from USDC adoption. Shirzad followed up in September 2025 with a post directly rejecting what he called the "deposit erosion myth" pushed by banking industry lobbyists.

The debate carries real economic weight. Citi estimates the global stablecoin market could generate more than $58 billion in annual revenue by 2030, while total stablecoin supply has already surpassed $270 billion, per DefiLlama. With the US GENIUS Act and Europe's MiCA framework creating regulatory pathways for mainstream issuance, the question is shifting from whether stablecoins compete with banks to how the two systems coexist.

Banks have spent the better part of two years warning that stablecoins would siphon money out of the traditional financial system. The data tells a different story. Over the same six-month period Shirzad examined, both USDC supply and demand deposits rose in parallel — roughly 4.6-5% and 4.5-5%, respectively. Community banks, the institutions most often cited as vulnerable to stablecoin competition, showed no measurable harm, according to the Charles River Associates study.

Coinbase has obvious incentives in this debate. The company earns a 100% revenue share on USDC held on its platform and 50% from other sources. USDC powers approximately 90% of Coinbase's spot trading in USD and USDC pairs. The company has also been building out direct deposit functionality, letting users receive paychecks in USDC, and has offered yields of up to 5% on the stablecoin.

Visa's entry reshapes the stablecoin market

The infrastructure race is intensifying. Visa launched the Visa Stablecoin Platform in beta, a toolkit that lets financial institutions issue, transfer, and manage stablecoins directly within its global payments ecosystem. The platform initially supports Open USD, a decentralized dollar-pegged stablecoin developed by the Open Standard consortium, which includes Visa, Mastercard, Coinbase, BlackRock, and Alphabet. Open USD charges no mint or redeem fees — a direct challenge to the fee structures that have made stablecoin issuance profitable for incumbents like Circle.

Visa's stablecoin settlement pilot had already reached a $7 billion annualized run rate across nine blockchain networks by April 2026. Circle's shares reportedly dropped roughly 5% following Visa's announcement, reflecting the competitive pressure.

For Coinbase shareholders, the USDC economics are significant. Every billion dollars of USDC growth flows directly to the income statement through the company's revenue-sharing agreements. At $75 billion in circulation, the economics are already substantial. Tether's USDT still dominates the global stablecoin market, but USDC has been gaining ground in regulated markets, particularly in the US and Europe.

The broader implication is that stablecoins are evolving from trading intermediaries into financial operating systems. Stablecoins have processed more than $51 trillion in transaction volume over the past 12 months, according to Visa Onchain Analytics. As regulatory frameworks in the US and Europe enable more issuers to enter the market, the competitive advantage will shift from issuance to the financial utility built around each stablecoin ecosystem.

This article is for informational purposes only and does not constitute investment advice.