Viewpoint: Stablecoin Regulatory Uncertainty May Increase Traditional Banks' Disadvantage

Deep Tide TechFlow News, March 15, reports that regulatory uncertainty surrounding stablecoins could put traditional banks at a greater disadvantage, while crypto companies continue to operate in the gray area.

Mega Matrix Capital Markets Executive Vice President Colin Butler pointed out that bank legal advisors have recommended the board delay large capital expenditures on stablecoin infrastructure because it’s unclear whether stablecoins will be classified as deposits, securities, or standalone payment tools. He said, “Risk and compliance departments won’t approve full deployment unless the product classification is known.” Banks that have invested in infrastructure face deployment restrictions, while crypto exchanges can offer 4%–5% returns on stablecoin balances, potentially accelerating the migration of funds from fringe users.

Fabian Dori, Chief Investment Officer of Sygnum, believes that this asymmetric competition is significant but has not yet triggered large-scale deposit outflows because banks emphasize trust, regulation, and resilience; however, if stablecoins are regarded as “productive digital cash,” pressure will become more apparent. Limiting stablecoin yields may push activity offshore. The article emphasizes that banks cannot comfortably operate in the gray area like crypto companies, and regulatory ambiguity worsens their disadvantages.