Stablecoin: Crypto Curiosity To Corporate Priority

Once the preserve of crypto speculators and shadowy transactions, stablecoins are rapidly becoming a serious proposition for mainstream business and the White House alike. With companies from PayPal to Bank of America exploring or launching their own coins and the Trump administration preparing to roll out a formal regulatory framework, the shift from digital novelty to financial infrastructure is well under way.

The promise is straightforward: faster, cheaper payments that bypass traditional card networks and bank rails. But the implications for banks, consumers and global finance are far more complex.

Why Stablecoins Are Gaining Ground

Stablecoins are digital tokens pegged to real-world assets, typically the US dollar. They function like a digital cash voucher: easy to transfer, fast to settle, and largely outside the banking system. That last point is key. The traditional card infrastructure, dominated by Mastercard and Visa, comes with fees that can quickly add up. In the US alone, so-called ‘swipe fees’ totalled $224 billion last year, with domestic card issuers earning profit margins as high as 35%, according to consultancy CMSPI.

Card fees in Europe are capped at a fraction of a percent. In the US, they range between 1.5% and 2% per transaction. These costs are borne by merchants but are ultimately passed on to consumers. Stablecoins, by contrast, can cost mere cents or less per transaction. That economic logic is what’s drawing interest from corporates.

The appeal extends to cross-border payments too, where legacy systems can take days and impose steep currency conversion fees. With stablecoins, funds can be moved near-instantly, often at a fraction of the cost.

Big Business Eyes Big Benefits

PayPal launched its own stablecoin last year. Uber is reportedly exploring a similar move, as are Bank of America, Walmart and Amazon. For large firms, the upside is twofold: not only can they reduce payment processing costs, but they can also pocket the interest on the reserves that back their coins.

Under proposed US rules, stablecoins must be fully backed by safe and liquid assets, such as short-dated US Treasuries or money market funds. That backing can earn interest. In 2024, Circle, the firm behind the USDC stablecoin, made $1.7 billion from its reserves alone.

That creates a new revenue stream. If a major retailer issued its own stablecoin, it could cut card fees on transactions while simultaneously earning yield on the underlying assets. With over $250 billion worth of stablecoins now in circulation globally, the sums involved are not trivial.

Banks Feel the Pressure

The prospect of stablecoins replacing traditional bank deposits is causing concern in the sector. Bank of America chief executive Brian Moynihan recently warned that if customers begin using stablecoins for everyday payments, banks risk losing deposits and the fee income tied to them.

The Trump administration, meanwhile, has embraced the technology. The Genius Act, currently in its final stages of drafting, aims to provide regulatory clarity and encourage banks to issue stablecoins directly. Several large US banks are exploring a joint digital token that would mirror Zelle, the domestic peer-to-peer payments system.

Fiserv, a payments group that works closely with banks, recently launched a new interoperable stablecoin framework for financial institutions. JPMorgan is developing a “deposit token” it hopes will offer a compliant, bank-friendly alternative to existing stablecoins.

Takis Georgakopoulos, Fiserv’s COO, argued that a coordinated approach is essential. “It would create a highly inefficient banking system if every bank goes and develops their own stablecoin,” he said. “It’s like every bank having their own dollar printing machine.”

Beyond America: Global Experiments

The push isn’t confined to the US. Société Générale has issued a euro-backed stablecoin. In Japan, Sony Bank is piloting a yen-linked version. Payments firms such as Stripe are working on cross-currency bridges to enable stablecoin transactions to settle in local currency.

For developing markets, stablecoins could offer a route to cheaper remittances and faster trade settlements. But even in advanced economies, they present a challenge to the status quo.

Not Everyone’s Convinced

Despite the hype, central banks remain sceptical. Their chief concern is the fragmentation of money. While stablecoins are pegged one-for-one with fiat currency, they don’t always circulate interchangeably with it. That undermines what economists call the “singleness of money” the idea that one dollar is the same as any other.

There’s also the issue of fraud protection. Unlike credit cards, which allow chargebacks and offer robust consumer protections, stablecoin transactions are final. There’s no way to reverse a payment gone wrong. And while crypto-native users may accept this, it’s a sticking point for the broader public.

Rewards programmes are another factor. Americans in particular are loyal to their credit card points, airline miles and cashback perks. “Credit card payments are very sticky,” said Mizuho analyst Dan Dolev. “People love their rewards.”

The Regulatory Tightrope

The Trump administration is broadly supportive of stablecoins but wary of handing too much power to Big Tech. One proposal would prevent large technology companies from issuing their own coins without explicit approval from the Office of the Comptroller of the Currency. Critics argue the draft is poorly worded and could be sidestepped using subsidiaries.

This echoes the experience of Meta (formerly Facebook), whose Libra project was effectively shut down by regulatory pushback. Privacy concerns and fears over financial stability torpedoed the plan. That history continues to colour how lawmakers approach the issue.

Adoption Remains the Wildcard

For all the boardroom enthusiasm and regulatory movement, the success of stablecoins will ultimately depend on end-user behaviour. Consumers must see clear value in using them either through better user experience or meaningful cost savings.

Kunal Jhanji, a partner at Boston Consulting Group, says stablecoins are more likely to serve as transaction facilitators than full-blown alternatives to bank accounts. Citi’s Ronit Ghose agrees, noting they will become part of the payments mix, rather than displacing traditional money.

Stephen Richardson of Fireblocks, a digital infrastructure firm, said mass adoption will come “when the value to both end users and businesses is clear.”

Until then, stablecoins sit at a strategic crossroads: once a crypto fringe curiosity, now a tool that could redefine how businesses and perhaps eventually consumers move money in a digital age. Whether they can live up to that promise remains an open question. But for now, the race is on.