## "Catfish Effect" or "Survival Crisis"? Stablecoins Are Reshaping the Banking Game

Whether stablecoins will destroy the traditional banking system has been a debate ongoing for several years. From the global financial panic triggered by the Libra project in 2019 to the current booming development of the stablecoin ecosystem, market imagination and fears are both intensifying. But when we look at the data rather than guesses, a completely different picture emerges: **stablecoins are not the grave-diggers of banks; rather, they might be the "catfish" that activates the entire system**.

### Why do people still choose to keep their money in banks?

The survival logic of the banking system is actually simple—"friction." Your salary, loans, credit cards, mortgages—all nodes of your financial life are interconnected through bank accounts. Even if checking accounts earn no interest, have high fees, and are practically paralyzed on weekends, most people remain firmly bound by this "service package." This phenomenon is called "deposit stickiness" in economics—not because bank services are optimal, but because the costs of switching are too high.

So, given that stablecoins can offer digital dollars, 24-hour transfers, and cross-border instant settlements, **why is there no large-scale outflow of deposits**?

Professor Will Kun of Cornell University’s latest research provides an unexpected answer: **Existing data shows that the emergence of stablecoins has almost no causal relationship with the loss of bank deposits**. This suggests that all previous warnings about a "bank run" may have been more driven by stakeholders' panic and exaggerated fears rather than basic economic principles.

Deposit stickiness remains strong. For most users, the convenience value of the entire financial service package is too high—no one would transfer a lifetime of savings into a digital wallet just to earn a few extra percentage points in interest.

### Competition itself is the driving force for progress

But this does not mean everything remains unchanged. **On the contrary, the existence of stablecoins itself constitutes a form of discipline**.

Research shows that even if stablecoins do not truly steal deposits from banks, their presence has already forced traditional banks to raise fixed deposit interest rates, optimize operational efficiency, and launch more competitive products. The old assumption that "your money is locked here" is no longer valid—banks must genuinely compete for every deposit.

The power of this catfish effect is: **the system will not shrink but grow larger**. When banks face real alternative pressures, they are forced to offer cheaper intermediary services, release more credit, and improve the overall efficiency of the financial system. The ultimate beneficiaries are consumers and the entire economy.

As Professor Kun states: "Stablecoins are not meant to replace traditional intermediaries but to serve as complementary tools, expanding the boundaries of banking's existing expertise."

### Regulatory frameworks are the safe "guardrails"

Naturally, regulators have ample reasons to worry about "mass redemption risks"—if market confidence wavers, the reserves backing stablecoins might be forced to sell assets, triggering systemic crises.

But this is not a new risk. Financial intermediaries have always managed such liquidity risks. The key is not to "re-invent the laws of physics," but to **apply existing financial technology frameworks reasonably to new technological forms**.

The US GENIUS Act has done a clever thing: it explicitly requires stablecoins to be backed 100% by reserves, which can only include cash, US short-term government bonds, or protected bank deposits. This law transforms a potentially risky "shadow banking" activity into a transparent, robust upgrade embedded within the formal financial system.

The Federal Reserve and the Office of the Comptroller of the Currency (OCC) then translated these principles into enforceable regulatory rules, ensuring stablecoin issuers account for operational risks, custody failure risks, and the complexities of large-scale reserve management and blockchain system integration.

**This framework already covers the core risks identified by academic research, including redemption and liquidity risks**.

( The real opportunity: reshaping the global payment pipeline

Once we are no longer troubled by "deposit dispersion" anxiety, the true growth space will become apparent: **the fundamental infrastructure of the financial system needs upgrading**.

Current cross-border payment systems are costly, slow, and funds often get stuck with intermediaries for days before final settlement. Stablecoins, through on-chain transactions, compress this process into an irreversible, instant transaction.

The impact on global capital flows is profound—funds are no longer "stuck" for days due to cross-border settlements but can move in real-time, releasing large amounts of liquidity previously occupied by intermediary banking systems. Domestically, the same efficiency improvements mean faster merchant settlements and lower costs.

For the banking industry, this is a rare opportunity to modernize infrastructure: upgrading outdated payment systems still maintained with tape and COBOL into a truly 21st-century tech stack.

) The ultimate upgrade plan for the US dollar

Ultimately, the US faces an unavoidable choice: **either lead this technological evolution or watch the future of global finance form in overseas jurisdictions**.

The dollar remains the most popular financial asset worldwide, but its "orbit" is long outdated. The GENIUS Act offers a truly competitive institutional framework: by bringing stablecoins under regulation, the US transforms what was once a "shadow finance" wild growth into a **transparent, robust, domestically integrated "global dollar upgrade plan"**, making new technologies a core part of the domestic financial infrastructure.

Banks should stop obsessing over competitive pressure and start thinking about how to turn this technology into their own advantage.

Just as the music industry was forced to shift from CDs to streaming—initially resisted, but ultimately discovered it was a gold mine—**the resistance banks are showing to this transformation will ultimately save them**.

Once banks realize they can charge for "speed" rather than profit from "delay," they will truly learn to embrace this change.