Stablecoin Boom Triggers $6 Trillion Banking Crisis Concerns Amid Regulatory Disputes

Bitget-RWA2025/11/07 02:14

By:Bitget-RWA

- Stable's deposit pre-activation event raised $860M by Nov 7, with $500M cap triggering proportional distribution if exceeded. - Canada's 2025 stablecoin framework mandates 100% reserve backing and $10M+ oversight funding to prevent depegging risks. - U.S. banks warn $6T deposit outflows could destabilize banking if interest-bearing stablecoins are permitted, clashing with crypto firms like Coinbase . - Regulatory tensions highlight global challenges balancing stablecoin innovation with financial stabilit

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Blockchain records indicate that by November 7, Stable's second round of its deposit pre-activation initiative had raised over $860 million, as detailed in a

LookonChain analysis

. This amount represents a substantial increase from previous days: on November 6, the total stood at $650 million, according to

the November 6 announcement

, up from $230 million reported on

November 5

. The event enables users to deposit

USDC

and complete Know Your Customer (KYC) checks, with a $500 million ceiling for qualifying deposits. Should contributions surpass this

limit

, funds will be allocated proportionally, following Stable’s revised distribution guidelines.

The swift rise in participation highlights the growing appetite for stablecoins, now a vital part of the digital asset landscape. This momentum, however, has also attracted the attention of regulators. Canada’s 2025 federal budget unveiled

a proposed regulatory structure

for fiat-backed stablecoins, requiring full reserves held in high-quality, liquid assets such as cash equivalents.

Stablecoin Boom Triggers $6 Trillion Banking Crisis Concerns Amid Regulatory Disputes image 0

The new rules, designed to promote financial stability and minimize depegging risks, obligate issuers to offer clear redemption processes and implement national security measures to deter illicit activity. Oversight funding includes an initial $10 million from the Bank of Canada, with ongoing costs covered by annual issuer fees.

At the same time, regulatory debates are intensifying in the United States. The American Bankers Association (ABA) and 52 state banking associations have called on the Treasury Department to enforce the GENIUS Act’s prohibition on stablecoin interest, cautioning that easing this restriction could threaten the stability of the banking sector, according to

a Coindoo article

. Coinbase, a leading stablecoin platform, has opposed this stance, contending that the ban should only apply to issuers, not exchanges or third-party providers. The company pointed to $355 million in stablecoin-related income during Q3 2025, emphasizing the industry’s economic impact. Banks, meanwhile, warn that permitting interest on stablecoins could prompt a massive shift of deposits—potentially over $6 trillion—by offering returns that traditional banks cannot match.

This ongoing discussion illustrates the broader struggle to balance financial innovation with effective oversight. While Canada’s approach focuses on reserves and security, the U.S. debate exposes the friction between crypto companies and established banks over regulating interest-bearing stablecoins. The GENIUS Act, passed in July 2025, seeks to build confidence in stablecoins through reserve mandates and audits, but its implementation—anticipated by late 2026—remains contentious.

With stablecoins now facilitating 30% of all crypto transactions worldwide, both regulators and industry leaders are navigating a rapidly evolving environment. Canada’s forward-looking stance and the regulatory disputes in the U.S. mark a critical juncture for the industry, as the direction of oversight will play a decisive role in shaping the future of digital finance.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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1. Technology stocks fell sharply as investor interest shifted toward energy and selected defensive assets. From October 10 to 16, the Nasdaq 100 declined 5.49% and the S&P 500 fell 1.95%, while the Dow gained 0.67% and WTI crude rose 10.41%. BTC, ETH, and SOL declined 1.27%, 2.65%, and 4.44%, respectively. This week's technology earnings will be an important test of whether revenue growth, margins, and cash flow can justify current valuations. Better-than-expected results could help stabilize markets in the near term. 2. Crypto continues to see pockets of strong activity, but a broad-based altcoin season has yet to materialize. CoinMarketCap's (CMC) Altcoin Season Index stood at 54 as of the October 18 UTC daily observation, below the altcoin-season threshold of 75, while BTC dominance rose to 60.08%. Our proxy leverage ratio fluctuated between 4.00 and 4.07 during the week, showing no sustained increase and suggesting limited appetite for additional leverage. Meanwhile, as major exchanges expand access to traditional financial assets, the recent sell-off in AI-related equities could attract short-term speculative capital away from crypto. Such capital rotation could make it more difficult for a new altcoin season to take hold. 3. Papertrade's loss-to-mine model has generated significant interest across the crypto community. The protocol combines high-leverage derivatives trading with zero slippage and a mechanism that rewards trading losses with PAPER tokens. Across the eight complete UTC days from October 10 to 17, cumulative reported revenue reached approximately $56.08 million, including $51.90 million distributed to token holders. With growing participation from key opinion leaders (KOLs), Papertrade has reportedly ranked among the top three platforms by profitability in the broader market recently. Assets to watch: BTC, ETH, SOL, ARB, OP, SKHYNIX, SKHY, META, TSLA, LRCX, and SPCX. Key research priorities this week: Cash flow performance in technology earnings; the relative discount and holding costs of the two SK Hynix contracts; and U.S. initial jobless claims and PMI data. Weekly market data cover the period through October 16, while research information was verified through October 18. Observation periods are specified separately for each chart.

Bitget•2026/10/19 06:51