U.S. Regulator Alleviates Concerns Over Stablecoin 'Bank Run' as Market Surges Beyond $300 Billion

U.S. Regulator Alleviates Concerns Over Stablecoin 'Bank Run'

The head of the U.S. Office of the Comptroller of the Currency (OCC), Jonathan Gould, has eased concerns about potential banking crisis risks linked to stablecoins, stating that fears of a deposit run are exaggerated. As the stablecoin market grows rapidly, reaching over $307 billion in value, the OCC emphasizes the opportunities this provides for smaller banks in the digital payment sector.

Key Takeaways

Jonathan Gould from the OCC dismisses fears of a banking crisis stemming from stablecoins, asserting major deposit shifts would not go unnoticed.
The stablecoin market has increased dramatically in 2025, spurring calls for enhanced regulation from traditional banks.
Concerns from banking groups focus on potential loopholes in the GENIUS Act that might allow stablecoin providers to attract funds away from banks.
Gould encourages smaller banks to view stablecoins as a competitive advantage rather than a threat.
The discussion surrounding stablecoins contrasts with warnings from various banking and international regulatory bodies, highlighting a divide in perspectives.

The head of the U.S. Office of the Comptroller of the Currency (OCC), Jonathan Gould, has dismissed concerns that stablecoins could incite a sudden banking crisis. He characterized the risk of a bank run related to stablecoins as overstated, suggesting such events would not occur suddenly or unnoticed.

During his address at the American Bankers Association (ABA) Annual Convention in Charlotte on October 19, Gould reassured attendees that any significant transfer of funds associated with stablecoins “would not happen in unnoticed fashion” and “would not happen overnight.”

ABA Annual Convention Highlights
Source: DeFiLlama

Gould's remarks come amidst increasing tensions between federal regulators and traditional banking sectors regarding the rise of stablecoins—digital currencies tied to fiat currencies like the U.S. dollar. The stablecoin market has seen significant growth this year, surging from $205 billion in January to over $307 billion, with Tether's USDT commanding approximately 59% of the market, followed by Circle's USDC.

Concerns About the GENIUS Act

In August 2025, the American Bankers Association, along with over 50 state banking organizations, urged Congress to address perceived "loopholes" within the GENIUS Act, a federal law pertaining to stablecoins that President Donald Trump signed in July. They argued that the law allows stablecoin issuers to indirectly pay interest through affiliates, potentially leading to significant deposit outflows from traditional banks.

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Source: BPI

A joint letter from various banking groups, including the Bank Policy Institute and Consumer Bankers Association, claimed that yield-bearing stablecoins could withdraw as much as $6.6 trillion from conventional banks, citing U.S. Treasury estimates. They pointed out that these withdrawals might increase interest rates, limit loan availability, and heighten borrowing costs for individuals and businesses, arguing that payment stablecoins should not be allowed to pay interest like closely regulated banks do.

Opportunities for Smaller Banks

Despite the concerns expressed by banking institutions, Jonathan Gould downplayed the likelihood of an imminent crisis. He suggested that stablecoin acceptance could offer smaller banks new competitive advantages in the digital payments landscape.

Gould emphasized that the OCC closely monitors stablecoin activities, stating, “If there were to be a material flight from the banking system, I would be taking action,” assuring that regulatory bodies would intervene if necessary. He encouraged community banks to consider stablecoins as tools for competition rather than risks, indicating they could help smaller institutions rival the dominance of larger Wall Street banks in the payment markets.

He also noted that the OCC is currently working on regulations associated with the GENIUS Act and is mindful of the legislative deadlines set by Congress. “Payment stablecoin connectivity might be a possibility for community banks to break some of the dominance that exists right now among the very largest banks in the payment system in America,” Gould said, promising to find “safe and sound” ways for banks to engage with stablecoins.

Divergence in Perspectives on Stablecoins

The OCC's stance stands in contrast to the warnings from prominent banking associations and international regulators. Recently, the European Systemic Risk Board, led by ECB President Christine Lagarde, expressed concerns that multi-issuer stablecoin models could pose risks to financial stability in the EU. Similarly, the Bank of England has contemplated setting temporary limits on stablecoin holdings to safeguard credit availability.

In the U.S., the debate has sparked strong reactions from cryptocurrency platforms. Coinbase has published a thorough rebuttal to assertions that stablecoins jeopardize financial stability, describing the narrative of “deposit erosion” as a defense mechanism for banks that profit from their substantial payment processing revenues. They argue that stablecoin usage could bolster the U.S. dollar’s position globally and noted no significant correlation between stablecoin adoption and deposit migration from community banks in the last five years.

Meanwhile, Standard Chartered has warned that over $1 trillion might flow from emerging-market banks into stablecoins by 2028, accounting for up to 10% of the U.S. money supply, as global adoption accelerates. The bank also highlighted that stablecoins are being used increasingly as dollar-denominated savings tools in countries facing inflation and currency depreciation.

Despite the surrounding controversies, stablecoin integration into conventional finance is advancing. Companies like Coinbase, Circle, Ripple, and Paxos are pursuing federal banking licenses to issue or manage stablecoins under the OCC's supervision. Additionally, Sony has joined the list by applying to establish “Connectia Trust,” a proposed U.S. national crypto bank that aims to issue a dollar-pegged token regulated by the OCC.

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Source: OCC

While banks continue to voice concerns about the risks, Treasury Secretary Scott Bessent has adopted a more optimistic outlook, suggesting that digital currencies could broaden access to U.S. currency on a global scale and enhance demand for Treasury securities.