McKinsey Reports: For Every $1,000 In USDC, Banks Lose $850 In Funding

• McKinsey & Company said on Thursday that stablecoins represent only a fraction of a broader $4 trillion on-chain finance transformation.
• The consulting giant argued that tokenized bank deposits already process volumes far larger than those of stablecoin payments.
• McKinsey outlined a future “three-layer” monetary stack combining stablecoins, tokenized deposits, and central bank money.

On Thursday, McKinsey released a report with an estimation that if users convert $1,000 in bank deposits into third-party stablecoins such as Circle’s USDC and Tether’s USDT, only $150 would flow back to banks as interbank reserves, while the remaining $850 would become U.S. Treasury securities held by the issuers of those stablecoins.

The consulting firm warned that the dynamic could slowly erode the net interest margins and liquidity coverage ratios that underpin bank profitability, comparing the shift to the money market fund disintermediation that squeezed bank deposits in prior decades.

This means that more and more banks are issuing their own tokenized deposits on their own blockchain infrastructure, enabling them to maintain customer balances and add programmable payment functionality. 

Tokenized bank deposits already underpin more than $4 trillion in annual transfers, roughly 10 times the $400 billion in stablecoin payment activity last year, McKinsey said.

McKinsey cited JPMorgan’s (JPM) Kinexys platform alone as processing more than $1 trillion annually, alongside similar initiatives from institutions including Citibank (C) and BNY Mellon (BNY). The report outlined a future “three-layer” monetary stack built around stablecoins, tokenized bank deposits, and central bank money operating together across global finance.

Although Bitcoin (BTC) and stablecoin-related infrastructure continue to attract institutional attention, McKinsey argues that price instability and anonymity, among other characteristics, have limited their "widespread adoption for commercial global payments." 

Banks Race To Keep Deposits On-Chain

The report warned that third-party stablecoins such as Circle’s USD Coin (USDC) and Tether’s USDT could gradually weaken traditional banking balance sheets. The firm said that the growing popularity of stablecoins could, in the end, eat away at net interest margins and liquidity ratios that support bank profitability, much as money-market-fund disintermediation has pushed down bank deposits in previous decades. 

BNY Mellon, for instance, launched a tokenized deposit service in January with early adopters including Intercontinental Exchange (ICE), Citadel Securities, and Circle (CRCL), enabling on-chain transfers for institutional payments, collateral, and margin transactions.

McKinsey said banks are increasingly responding by issuing tokenized deposits on proprietary blockchain infrastructure, allowing them to retain customer deposits while adding programmable payment functionality.

Circle’s stock was down by 0.56% during after-hours trading. On Stocktwits, the retail sentiment around CRCL remained in the ‘bearish’ zone, while chatter around it stayed in the ‘extremely low’ levels over the past day.

Regulatory Restrictions Could Slow Stablecoin Migration

McKinsey argued that tokenized deposits hold a major institutional advantage because they remain within existing banking frameworks and can potentially offer interest-bearing returns. By contrast, stablecoins regulated under Europe’s MiCA rules and the proposed United States GENIUS Act generally restrict issuers from passing yield directly to holders, a limitation the firm said may help prevent bank deposits from fully migrating on-chain.

The regulatory debate continues evolving in Washington. Earlier this month, the United States Senate Banking Committee advanced the CLARITY Act in a 15-9 bipartisan vote, while banking groups like the American Bankers Association (ABA) continue to push lawmakers to tighten rules on stablecoin reward programs.

Read also: Peter Schiff Says Whales Are Dumping Bitcoin On 'Bag Holders' — The On-Chain Data Says Otherwise

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