Coinbase CPO says USDC and bank deposits are growing together, not competing

Banks have spent the better part of two years warning that stablecoins would siphon money out of the traditional financial system. Coinbase’s chief policy officer has a different take: the numbers don’t support that story.

Faryar Shirzad pointed to a six-month window in which USDC supply grew by approximately 4.6-5% while total demand deposits in the US banking system climbed by roughly 4.5-5%. Both went up. Neither ate the other’s lunch.

The data behind the argument

USDC’s circulating supply has reached approximately $75 billion, making it the second-largest stablecoin by market cap.

A July 2025 study from Charles River Associates, commissioned by Coinbase, examined whether USDC adoption had measurably harmed community bank deposits. The conclusion: no statistically significant negative effects. Community banks, the institutions most often cited as vulnerable to stablecoin competition, appear to be doing just fine.

Shirzad followed up with a blog post in September 2025 that directly rejected what he called the “deposit erosion myth” propagated by banking industry lobbyists.

Why banks keep pushing the narrative anyway

Coinbase has obvious incentives here too. The company earns a revenue share of 100% from USDC held on its platform and 50% from other sources. USDC powers around 90% of Coinbase’s spot trading in USD/USDC pairs.

Coinbase’s broader USDC strategy

The company’s USDC yield program has historically offered returns up to 5%. Coinbase has also been building out direct deposit functionality, letting users receive paychecks in USDC.

Coinbase is also partnering with other firms to expand stablecoin use in payments, pushing USDC closer to becoming a practical medium of exchange rather than just a trading intermediary.

What this means for investors

For Coinbase shareholders, the USDC economics are worth watching closely. When the company earns a full revenue share on platform-held USDC and half on off-platform holdings, every billion dollars of USDC growth translates directly to the income statement. At $75 billion in circulation, the economics are already substantial.

Tether’s USDT still dominates the global stablecoin market, but USDC has been gaining ground in regulated markets, particularly in the US and Europe.

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