Stablecoins have seen a resurgence in use cases since July’s passage of the Genius Act, which set up regulatory guardrails for crypto. 

“There’s been nothing but excitement from banks [around stablecoins] while addressing some challenges in the regulations,” Matt Blumenfeld, global and U.S. digital assets lead at consultancy PwC, told Bank Automation News.  

“[There are] some use cases like capital markets flow, liquidity management and cross-border payments, but the industry is evaluating where else can they deploy stablecoins.” 

Thirteen percent of financial institutions and corporations globally use stablecoins, but that number is expected to grow to 54% in the next six to 12 months, according to a report this month from consulting firm EY.

READ MORE: Here come the stablecoins 

Stablecoins surpassed $26 trillion in transaction volume in 2024 and are expected to grow 57% year over year, Inderpreet Batra, global head of Boston Consulting Group’s payments and fintech practice, told Bank Automation News, adding that the Genius Act will open doors for more institutions to use the payment method. 

“Cross-border payments are where stablecoins are gaining traction fastest,” he said. “Business-to-business flows, treasury management, payroll and consumer remittances are all seeing adoption, particularly in markets with volatile currencies.” 

How FIs are approaching stablecoins 

For banks, there are at least five ways to approach stablecoin tech: 

• Becoming reserve custodians;  

• Issuing their own stablecoins;  

• Joining a consortium;  

• Issuing tokenized deposits instead; and 

• Focusing on the infrastructure. 

“Issuance is capital- and compliance-heavy, so it’s more realistic for larger institutions with scale,” Batra said. 

Major FIs including JPMorgan have already issued their own digital assets, while Citi is evaluating issuing its own stablecoin, according to BAN’s prior reporting. 

Custodianship, however, allows banks of all sizes to provide services including reserve management, custody or foreign exchange off-ramping — offering high-margin revenue streams, Batra said. 

“Smaller banks are well positioned to capture value by supporting issuers, while larger ones may explore direct issuance or tokenized deposits as part of their corporate transaction offerings,” he added.

Partnerships speed market entry 

Partnerships between fintechs and infrastructure providers are emerging as the fastest way for banks to enter the market, Batra said.  

“Longer term, larger players may invest to build these capabilities in-house, while smaller institutions will likely continue to rely on third parties to stay competitive,” he said.  

Partnerships that have recently been established include: 

• PNC teaming with Coinbase in July to offer digital asset custodianship to its clients; and 

• Fintech Finastra teaming with Circle to enable banks to integrate USDC settlement into cross-border payment flows. 

“We aim to be the provider of choice for all banks, and this partnership allows us to do that,” Mihail Duta, director of global solutions consultant of payments at Finastra, told BAN.  

Stablecoins can add value to Finastra customers “from a cross-border perspective, and certainly, it’s a great fit for us into building that future-looking capability,” he added. 

To capitalize on the stablecoin wave, many crypto vendors will look to become banks to issue stablecoins, PwC’s Blumenfeld said. 

“They’re going after banking charters because only a deposit-accepting entity can issue stablecoins,” Blumenfeld said. “You will see some big-name vendors applying for charters in the coming time.” 

Circle, for one, applied for a national trust bank charter with the Office of the Comptroller of the Currency on July 30, according to the company’s filings. 

Check out our exclusive new bank industry data here.