Circle’s USDC Conversions Divert 85% of Deposits to Treasuries
CRCL•McKinsey estimated that converting $1,000 in bank deposits into stablecoins such as Circle’s USDC shifts $850 to U.S. Treasury securities held by issuers, leaving just $150 in interbank reserves. Tokenized bank deposits already process $4 trillion in annual transfers, ten times last year’s $400 billion in stablecoin payment activity.
1. McKinsey’s Funding Shift Estimate
McKinsey estimated that converting $1,000 in bank deposits into stablecoins such as Circle’s USDC results in only $150 returning to banks as interbank reserves, while $850 shifts into U.S. Treasury securities held by stablecoin issuers.
2. Tokenized Deposit Transaction Scale
Tokenized bank deposits already facilitate over $4 trillion in annual transfers, roughly ten times the $400 billion in stablecoin payment volume last year, with JPMorgan’s Kinexys alone processing more than $1 trillion and similar platforms from Citibank and BNY Mellon.
3. Banking Profitability Implications for Circle
This funding shift threatens bank net interest margins and liquidity coverage ratios, prompting financial institutions to issue their own tokenized deposits to retain customer balances and programmable payment features, potentially intensifying competition for Circle’s USDC issuance.
