The Evolution of Stablecoins in a Shifting Financial Landscape
Stablecoins have emerged as a cornerstone of the digital asset ecosystem, bridging traditional finance and blockchain-based transactions. The recent growth in the value and volume of USD-denominated stablecoins, along with their increased usage beyond money transfer businesses and payment providers, indicates a new trend. This trend signifies rapid growth and adoption by retail users, innovative financial products, and tokenized money market funds as primary vehicles for liquidity provisioning.
With recent regulatory developments in the EU and US concerning stablecoins, it is evident that stablecoins are here to stay and will impact not only payments but broader capital markets. These developments signal a broader transformation as banks, payment firms, and financial service providers recognize stablecoins as a critical component of the evolving capital markets landscape. As stablecoins become key instruments for liquidity in tokenized markets, their role in real-world asset (RWA) tokenization, including money market funds and government securities, has grown significantly. As global regulatory frameworks begin to provide clarity, the market is poised for rapid expansion, with non-USD stablecoins potentially capturing $200B of a projected $2T market by 2030.
Source: Coinbase. "Stablecoins: The New Payments Landscape."
Stablecoins: The Institutional Shift and Market Implications
- Multi-Currency Expansion
While USD-denominated stablecoins dominate the market, new entrants from traditional banks, financial institutions, and investment advisors are diversifying the space. Major developments include:
- BBVA collaborating with Visa for a 2025 stablecoin launch
- Societe Generale's EURCV, now live for retail
- J.P. Morgan's JPM Coin, processing over $1 billion daily
- FV Bank integrating PYUSD, USDC, and USDT
This diversification supports 24/7 global foreign exchange markets and strengthens financial inclusion by enabling transactions across multiple currency corridors, fostering global trade efficiencies.
Source: Fat Pig Signals. "BBVA and Visa Stablecoin 2025."; SG Forge. "Coinvertible."; Bloomberg. "JPMorgan Says JPM Coin Now Handles $1 Billion Transactions Daily."; Business Wire. "FV Bank Adds PayPal's PYUSD Stablecoin to Direct Deposit and Outbound Payment Options with Real-Time USD Conversion."; FV Bank. "FV Bank Expands Stablecoin Capabilities with PayPal's PYUSD Integration."
2. Institutional-Grade Infrastructure
The entry of regulated financial institutions into the stablecoin ecosystem brings enhanced compliance, custody, and settlement capabilities. This mitigates risks associated with unregulated stablecoins and accelerates enterprise adoption of digital asset infrastructures. With additional regulatory clarification and the expected passage of relevant bills, there will be additional guidance on issuance, collateral, audit, and other market structures around stablecoins, allowing for wider acceptance and inclusion of financial institutional players. As institutions engage in the creation, acceptance, and processing of stablecoins, it will encourage the emergence of diverse and discerning products, making stablecoins key instruments for settlement and liquidity provisioning, ultimately accelerating institutional-grade infrastructure for processing and accounting stablecoins.
3. Emerging Business Models
Financial institutions are embracing stablecoins as a strategic opportunity. Specifically, in 2024, Tether generated $13 billion inprofits, and banks are leveraging their customer relationships and foreign exchange infrastructure to develop new digital products and revenue streams. Payment giants like PayPal, Stripe, and Visa are also integrating stablecoin solutions into their platforms, intensifying competition between traditional banks and fintech innovators. Driven by competition, financial institutions like Citibank now offer tokenization services, enabling other banks to issue their own stablecoins. This not only creates new digital offerings, but also opens avenues for collateral, treasury, and liquidity management services for other financial institutions.
Source: CoinDesk. "Tether Reports $13B Profit for 2024 with Rising Bitcoin, Gold Prices Contributing."
The War for Digital Banking: Tokenized Deposits vs. Stablecoins
The recent regulatory shift in the U.S., including the OCC's decision to allow banks to hold stablecoin reserves,has ignited a surge in institutional interest, paving the way for key advancements in the financial sector. Key players include:
Payment Firms
- PayPal: Launched PYUSD stablecoin
- Stripe: Offering stablecoin orchestration and on/off-ramp services
- Revolut: Developing its own stablecoin
- Visa: Providing a Tokenized Asset Platform for financial firms
Banks
- J.P. Morgan: JPM Coin is live for tokenized deposits
- Citi: Launched Citi Token Services for 24/7 corporate fund transfers
- Standard Chartered: Developing an HKD stablecoin
- Societe Generale - FORGE: EUR stablecoin EURCV integrated with Sygnum Ban.
- BBVA: Partnering with Visa for an upcoming stablecoin release
As the market evolves, financial institutions face a critical choice: prioritize interest income or transaction flows, and determine whether to serve as providers or direct issuers.
Source: Forbes. "OCC's New Guidance Marks Shift in US Crypto Banking Regulations.”; Office of the Comptroller of the Currency. "OCC News Release 2025-16."
The Role of Tokenized Money Market Funds and Government Securities
Stablecoins are becoming increasingly intertwined with tokenized real-world assets, providing liquidity and stability. Notable developments include:
- BlackRock's BUIDL Token, issued with Securitize and backed by U.S. Treasuries, surpassing $1 billion in assets
- Tokenized Treasuries Market Cap Reaches $4.2 Billion, reflecting investor interest in yield-bearing, digital-native assets
- Ethena’s USDtb, backed by USDC, USDT, and BUIDL, now has a $540 million supply, reinforcing stablecoins' role in institutional finance
- Circle's Hashnote Tokenized Money Market Fund (TMMF) integrates USYC with USDC, offering seamless access to yield-bearing assets for exchanges, custodians, and prime brokers
The growth of tokenized treasuries and money market funds signals a broader trend: a shift from speculative crypto investments to structured, regulated financial instruments offering liquidity and stability.
Regulatory Clarity
Recent domestic and global regulatory developments have provided much-needed clarity:
- The U.S. Congress and Senate are advancing policies that support stablecoin issuance and tokenized asset adoption
- The Bermuda Monetary Authority (BMA) has granted comprehensive licensing to Circle’s digital asset operations, highlighting increasing regulatory support for tokenized financial instruments
- The EU and UK are aligning on a policy direction that favors wholesale CBDC options with the settlement of tokenized wholesale transactions over stablecoins. In July 2025, following 2 years of trials, the European Central Bank’s (ECB) Governing Council approved a two-pronged plan that will enable settling DLT transactions using central bank money. The dual-track approach includes “Pontes,” a near-term solution connecting DLT platforms with TARGET Services, and “Appia,” a forward-looking, long-term initiative. The Bank of England has proposed a program of experiments in wholesale payments to test both wholesale Central Bank Digital Currency (wCBDC) and RTGS synchronization.
- As of June 2024, the EU’s Markets in Crypto-Assets Regulation (MiCA) established a comprehensive regime for stablecoin markets, setting enforceable standards for crypto-asset issuance, trading, and service provision. The UK is on a similar path, with its own framework expected to go live in mid-2026, signaling growing alignment across major financial jurisdictions.
- In the EU there seems to be a divergence in the approach to stablecoins. The European Commission is pushing for a regulatory environment that encourages stablecoin development. In contrast, the ECB and national central banks are taking a more conservative stance, citing unresolved concerns about its impact on financial stability.
Institutions need clear regulatory frameworks to allocate capital effectively and operate at scale. An uncertain or constantly shifting landscape introduces legal, reputational, operational, and liquidity risks that create barriers to growth. Regulatory certainty, however, provides a foundation for market participants, enabling them to engage with the broader ecosystem. This clarity translates into operational processes that bridge the gap between tokenized assets and traditional finance. It also drives adoption, allowing firms to invest in technology and infrastructure, which ultimately advances the industry.