Stablecoins are redefining settlement. Are banks ready?

Key points

• Stablecoins are becoming real settlement rails. They now move value at global scale, beyond traditional networks.
• Banks face a readiness gap. Instant, always-on settlement breaks legacy systems, risk models, and processes.
• The future is hybrid. Stablecoins, tokenized deposits, and bank rails will coexist across payments and treasury.

The headline number is hard to ignore: stablecoins processed roughly $33 trillion in transaction volume in 2025. That’s according to a recent report by Bloomberg. 

That figure is larger than Visa and Mastercard combined. It’s also a number that invites misunderstanding. 

Transaction volume is not the same as real-world payment volume.  

Why? Because a significant amount of activity involves trading reuse. A stablecoin can circulate many times in a day across exchanges and market makers.  

However, even allowing for that, the scale reveals something structural: stablecoins are now operating at a level that forces the financial system to respond. They’re evolving from speculative tools into a global, 24/7 settlement layer that exists outside the traditional banking stack. 

The question is: are banks ready? 

A new era

Transaction volume doesn’t tell us everything, but it tells us something important.

Stablecoin flows are increasingly happening outside of banks (known as decentralized finance) and inside exchanges like Coinbase and Tether, payment applications, cross-border corridors, and corporate treasury operations.  

That creates two big challenges for banks.

The first is about infrastructure: stablecoins are beginning to behave like payments plumbing. The second is readiness: the banking sector — and the frameworks around it — are not yet built for what happens next. 

Let’s start with infrastructure

Stablecoins offer something legacy infrastructure struggles to match: settlement that runs continuously. They use blockchain technology and smart contracts. So, with stablecoins, there are no cutoff times, no banking hours, and no correspondent chain. They run 24/7, settle instantly, and save users a lot of money.  

That’s why stablecoins are showing up wherever the traditional system is slow, expensive, or fragmented.

Cross-border payments, for example, are perhaps the strongest use case.

A traditional cross-border payment can involve a long chain of correspondent banks, which pass the payment to one another before it reaches its destination. Every bank performs a compliance check and takes a small slice for its part. That makes cross-border payments expensive and time-consuming. Stablecoins make them affordable and fast. 

Emerging markets also see huge benefits. As do business-to-business payments.

If the last decade of fintech was about improving the user experience on top of banking, stablecoins are different. They don’t just improve the surface-level experience of payments. They help to bypass cross-border delays, cut-off times, trapped liquidity, and fee opacity in existing rails. It is an entirely different foundation for settlement.  

The question, then, is where, by whom, and under what governance model will stablecoins be used in real-world settlements.

Ready, steady, flow

Which brings us to the second problem. Banks must be ready for the world in which stablecoins are fully adopted before it happens. 

The organizations moving fastest are running controlled pilots tied to real business flows. They’re modernizing payments architecture to be rail-agnostic, and building readiness across treasury, risk and compliance. They’re not treating stablecoins as a crypto product. They’re viewing it as settlement infrastructure — with all the operational discipline that implies. 

That said, these examples are few and far between.  

Most banks aren’t ready for stablecoins. Not because they are technologically incapable, but because stablecoins force banks to make decisions they have avoided. 

To operate in a stablecoin world, you must decide whether you want to: 

1. issue stablecoins, 
2. accept stablecoins, or 
3. integrate stablecoins into their settlement and treasury stack. 

Each option has real implications for risk, liquidity, and operating models.

Issuing creates redemption dynamics and reserve expectations. For example, when a bank issues a US dollar-denominated stablecoin, it commits to paying it back near-instantly if a user requests it, even if the bank may struggle financially to do so. What happens if the bank fails? That creates a lot of pressure. It’s not about the token itself; it’s the uncertainty around the accessibility and concentration of reserves held at a failed bank. It also impacts deposits. And that creates a lot of chaos in loans and lending. 

Accepting opens new pathways for compliance and fraud. A bank that accepts third-party stablecoins for deposits or payments must now find out where the wallet came from, monitor sanctioned addresses, and detect smart-contract-level exploits. These controls do not exist in ACH or wire systems.  

And integrating it means banks have to change how their systems actually work. On‑chain settlement collapses the legacy settlement model that banks rely on. When finality happens in seconds, every downstream process built around delays has to be re‑engineered. That breaks processes built around waiting, batching, and end-of-day balancing.  

Banks must manage cash in real-time, fund accounts continuously throughout the day, and rebuild reconciliation and risk systems that were designed for slower, delayed settlement. 

New risks

In other words, stablecoins introduce failure modes that legacy banking wasn’t designed to manage. Smart contract vulnerabilities and governance flaws, liquidity mismatches between reserves and redemption demand, issuer and counterparty risk, and interoperability failures when tokens are transferred across networks and custody models.

Even fully reserved stablecoins face liquidity risk when reserves are held in instruments that cannot be sold fast enough during a rush to redeem (corporate bonds, for example). 

Issuer and counterparty risk haven’t disappeared; they’ve just taken new forms. 

Stablecoins also pose a credible and widely recognized risk of disintermediating banks at the settlement layer. While not inevitable, the risk is significant enough that the Bank for International Settlements, the European Central Bank, and the Federal Reserve have all acknowledged the potential for deposit flight, liquidity fragmentation, and shifts in settlement dynamics.

Looking ahead, stablecoins are likely to function as a complementary settlement layer alongside traditional rails rather than replacing them entirely. Some flows may migrate fully, particularly in platform-native environments, but conventional systems will remain. The most probable outcome is a hybrid model: stablecoins for specific corridors and use cases, and traditional rails for others.

Things are moving fast

Frameworks like the GENIUS Act in the US and MiCA in Europe show that progress is underway, with licensed issuers, reserve transparency, and stronger AML expectations. The path is clear: stablecoins will not be able to scale meaningfully without becoming part of a regulated financial infrastructure.

However, how regulation is structured will shape where activity concentrates. Clear and consistent rules can lower risk, making stablecoins safer and more practical for enterprise use. Fragmented or inconsistent regulation, on the other hand, risks pushing activity toward less regulated regions. That could force banks to compete with offshore settlement providers on uneven terms.

Tokenized everything

That’s why many banks are exploring tokenized deposits as an alternative.

Tokenized deposits offer the same benefits as stablecoins — they are programmable and fast — but they keep deposits inside the banking system. That means they align with regulatory expectations, preserve consumer protections, and operate under an established governance framework. Lloyds Bank’s recent pilot, using tokenized deposits on the Canton Network to settle a tokenized gilt, offers a glimpse of how banks can embed digital assets into real flows while maintaining safeguards that stablecoins often lack. 

The future probably won’t be one model. It will be a multi‑rail ecosystem: 

• stablecoins for open settlement and platform‑level liquidity, 

• tokenized deposits for regulated, bank‑native settlement, and 

• interoperability layers connecting them. 

Stablecoins prove demand for instant settlement. Tokenized deposits show how banks can meet that demand within regulated frameworks. What matters now is execution. 

Banks and payment providers that lead will: 

1. Run controlled pilots tied to real flows (not demos) 
2. Modernize payments architecture to be rail‑agnostic and token‑aware, 
3. Build operational readiness across treasury, risk, compliance, and operations, and 
4. Engage regulators early on to discuss custody, liquidity, and consumer-protection requirements. 

The settlement layer, the most strategically valuable part of payments, is where disintermediation happens first. 

The takeaway?

Three conclusions are becoming hard to ignore: 

• Stablecoins are now high-scale settlement rails. They will sit underneath banks, and payment schemes for specific B2B, treasury, and platform pay-out flows rather than replacing the existing rails. 

• Regulation is accelerating enterprise adoption. 

• The market is shifting toward stablecoin-native treasuries and B2B payments, not just crypto trading. 

Most banks don’t need to issue a stablecoin. What they need is the ability to operate confidently in a world where stablecoins are widely used. 

The question is, will you integrate them as the next layer of settlement? Or watch it form around you?