As the future of digital money continues to take shape, stablecoins are fast becoming a focal point for policymakers, banks, and payment providers. Regulatory debate is intensifying globally, often framed around concerns about the impact of stablecoins on bank deposits. In the US, community banks have cautioned lawmakers about deposit flight, while larger institutions increasingly position stablecoins as a complementary instrument rather than a threat. Similar discussions are now emerging across other markets, underscoring the growing relevance of stablecoins to payments, liquidity management, and financial infrastructure.
Yet this focus risks overlooking a more important shift. Stablecoins are moving beyond experimentation toward regulated forms of digital cash, with clear potential to modernise cross-border payments, treasury operations, and settlement processes. As regulatory clarity improves, the conversation is evolving from whether stablecoins should exist to how they can be deployed safely, efficiently, and at scale.
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Regulation breeds legitimacy
While some may condemn increased regulation as an imposition on freedom, in reality it leads to the opposite. Policy clarity, and the introduction of stablecoin legislation, play a pivotal role in furnishing stablecoin use with legitimacy, shifting it from an uncertain currency to a trusted digital payment instrument. From Europe’s MiCA legislation and last summer’s proposed US GENIUS Act, to incoming stablecoin licences in Hong Kong and the UK government’s recently stablecoin inquiry, economies around the world are embracing this new digital currency — though in a way, they have little choice. A survey conducted by EY-Parthenon last June found that stablecoins are used by 13% of financial institutions and corporations globally, and 54% of non-users expect to adopt them in the next six to 12 months. The debate over whether stablecoins are worthwhile is no longer relevant; the conversation we must have now should be focused on the when, where, and how they are best deployed.
Stablecoins vs tokenised deposits
When discussing the use of stablecoins, some important clarification is needed. The language of digital payments is often used interchangeably in the wider media, even though certain terms are highly specific. For instance, stablecoins and tokenised deposits serve two very distinct, yet complementary roles. Tokenised deposits are digital versions of insured money and, as such, when structured within existing deposit frameworks, represent lower risk, while also being able to fit within existing financial architecture. In contrast, stablecoins are a cryptocurrency, typically pegged to a fiat currency such as the US dollar, and commonly operating on private or permissioned blockchains.
As Citi explains, these characteristics position digital payment instruments for different roles. Stablecoins are a great fit for crypto-native ecosystems, bridging the gap between digital assets and everyday commerce, and offering liquidity in areas of limited banking access. They have the potential to enable banks to offer near-instant cross-border transfers at lower cost, reducing reliance on intermediary networks. This also provides end-to-end visibility of transactions, making them especially useful for mid-tier banks managing high transaction volumes or complex correspondent relationships. EY-Parthenon’s research, based on survey responses, found most financial institutions and corporates estimate that between 5% and 10% of cross-border payments will be made using stablecoins by 2030, equivalent to between $2.1tn and $4.2tn.
However, with stablecoin regulation in its infancy, bank tokens, such as tokenised deposits, still have an important role to play. By being anchored in the existing financial system, they can offer the benefits of smooth, instant cross-border payment and settlement, while fitting in the framework of current compliance and regulation. That same anchoring can sometimes be a drawback. While tokenised deposits fit neatly into today’s regulatory framework, their bank-specific nature makes global scalability and seamless interoperability a real constraint.
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By GlobalDataFrom experimentation to execution
Stablecoins have entered a new phase: execution. The window of theoretical debate and ad-hoc pilots is quickly closing; banks must now move beyond experimentation to deliberate decisions around how they will operate in a multi-rail, multi-asset payments environment. Driving real value from stablecoins and tokenised deposits does not come from isolated experiments or innovation labs. These digital payments must be embedded into core payment environments, operate alongside established rails, and meet the same standards of resilience, compliance, and operational control as any other production banking service. Institutions that approach stablecoins too cautiously – treating them as a peripheral risk and building parallel infrastructures – are only adding unnecessary complexity and constraining their future growth.
Architectural flexibility, therefore, must become a strategic priority for financial institutions. A central payment orchestration layer enables banks to connect legacy payment rails, tokenised deposits, and blockchain-based networks within a single operational framework. This approach allows institutions to dynamically route transactions across networks based on speed, cost, liquidity, and regulatory considerations, while maintaining consistent governance, visibility, and risk controls across both fiat and digital transactions.
Cloud-native platforms offer this flexibility, allowing banks to embrace innovation in a controlled manner and minimise risk and disruption. Such platforms allow banks to add stablecoin capabilities gradually, scaling services as regulation and demand mature, and sidestepping the rigidity of large-scale, upfront transformation programmes. Crucially, they provide the foundation for continuous testing, monitoring, and optimisation — ensuring that stablecoin services meet enterprise-grade performance, security, and compliance requirements as they move into live operation.
The stablecoin conversation is no longer what it was a few years ago. While regulatory developments will continue to dominate headlines, banks cannot afford to remain reactive. Now is the moment to build the capabilities required to support stablecoins within core payment and settlement operations — and convert regulatory momentum into long-term strategic advantage.
Vijay Oddiraju, CEO at Volante Technologies
