Investment Partner,
@a16z Frontier,
@nlevine19 explains why banks' stablecoin deposit-flight fear is overblown
"The concern from banks is that if you can just passively hold USDC on Coinbase and get yield, do we start seeing a significant amount of deposit flight."
"We've seen examples historically where there are yield products in the market, things like money market funds, which banks similarly were worried about leading to deposit flight."
"Despite things like money market funds existing, deposits have increased."
"A lot of the use cases where you're holding stablecoins are related to trading and crypto capital markets, doesn't really align with the core customers of, say, community banks."
"I don't think banks should be as worried as maybe they're initially setting out to be, and ultimately it'll blow over over time."
Money market funds raised the same fear decades ago, and bank deposits kept climbing regardless.
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