How Stablecoins and Tokenized Deposits Could Reshape U.S. Financial Services

The financial services industry is in the midst of profound change. As blockchain technology matures and digital assets evolve, stablecoins and tokenized deposits are shifting from technological curiosities to essential instruments in the digital economy. 
With the U.S. moving towards greater regulatory clarity–including the Senate’s passage of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act–the future of payments is becoming more immediate and actionable for financial institutions.

Understanding Stablecoins and Tokenized Deposits

Stablecoins are blockchain-based digital assets, typically issued by non-bank fintechs or crypto firms, and pegged 1:1 to fiat currencies such as the U.S. dollar. Their operation on public, permissionless blockchains allows for global, fast, and low-cost transactions. Currently dominated by players like Tether (USDT) and Circle’s USDC, the stablecoin market reached a whopping $260 billion in circulating supply as of mid-2025, with $30+ trillion in transaction volumes outpacing Visa and Mastercard combined.

Tokenized deposits, in contrast, are issued by regulated depository financial institutions on digital ledgers, often private and permissioned. These digital representations of traditional deposits function much like the banking deposits clients are used to, maintaining fractional reserves and benefiting from federal deposit insurance eligibility. Their programmability and 24/7 settlement ability differentiate them from traditional banking products, while their compliance with established rules sets them apart from stablecoins.

Market Momentum and Recent Developments

The adoption of stablecoins and tokenized deposits has accelerated, with significant milestones reached in 2025:

• The GENIUS Act established a framework mandating full reserve backing, monthly audits, and strict compliance measures for stablecoin issuers, signaling that these digital assets are no longer operating in a regulatory grey zone.
• Major banks, including J.P. Morgan (with its Kinexys Digital Payments, formerly JPM Coin), Bank of America, Wells Fargo, and Citigroup, have announced a fiat-backed stablecoin potentially leveraging Zelle and The Clearing House rails for settlements.
• Networks like Mastercard and Visa have started direct stablecoin integrations; Mastercard’s Multi-Token Network now supports major stablecoins, and Visa launched their Visa Tokenized Asset Platform (VTAP) providing financial institutions with the capabilities to issue and manage fiat-backed tokens on blockchain.
• Fintech and merchant players aren’t far behind. Shopify teamed up with Coinbase and Stripe to roll out USDC payments, reducing merchant fees significantly. At the same time, rumors surrounding Amazon and Walmart suggest that proprietary stablecoin integrations may soon disrupt retail payments further.

Strategic Impact for Financial Institutions

For financial institutions, this evolution brings both opportunities and existential threats. On the one hand, blockchain-based rails threaten traditional sources of fee income; interchange and correspondent banking fees face pressure as near-instant, low-cost peer-to-peer transfers replace legacy systems. Stablecoin transactions on networks like Solana cost less than a cent and settle in seconds, posing direct competition for slower, more costly SWIFT-based payments.

On the opportunity front, financial institutions can seize new revenue streams through:

• Custody services for digital assets
• Fees on issuance, redemption, and conversion between digital and fiat assets
• Branded digital wallets that deepen client engagement
• Monetizing APIs for fintech and platform integrations
• Enhanced treasury and liquidity services via programmable money and real-time settlements

Tokenized deposits, with their built-in alignment to federal insurance and established regulatory frameworks, also support traditional models—allowing innovation without sacrificing compliance or risking trust.

Navigating Risks and Regulation

Risks naturally abound in this fast-changing space—liquidity runs, operational flaws in smart contracts, regulatory uncertainty, cybersecurity threats, and reputational damage due to illicit activities. The GENIUS Act’s oversight framework and recent agency guidance withdrawals (such as restrictive Biden-era crypto rules) are significant risk mitigants, enabling financial institutions to pursue stablecoin activities under established safety and soundness oversight. Meanwhile, institutions should implement advanced transaction monitoring, custody solutions, and compliance analytics to manage new threats.

Strategic Recommendations for Leaders

With Citi forecasting the stablecoin market to reach up to $3.7 trillion by 2030, the question is not whether to engage, but how and when. Here are clear steps forward:

1. Educate organizational leadership: Stay informed through Federal Reserve and BIS research to develop digital asset fluency at the executive level.
2. Develop a migration roadmap: Pilot digital wallets, explore integration with stablecoin networks (like Mastercard’s Multi-Token Network), or experiment with tokenized deposit platforms.
3. Leverage consortia: Pool development and infrastructure risk through consortia or clearinghouse models, such as the emerging Ubyx network.
4. Advance pilot programs: Demonstrate value through internal pilots—particularly for cross-border payments and B2B use cases.
5. Enhance compliance and user experience: Employ blockchain analytics for monitoring and ensure user interfaces match the ease of traditional banking.
6. Engage proactively with regulators: Maintain a collaborative approach with federal agencies to shape and comply with emerging guidance.

Conclusion: Time to Build

Stablecoins and tokenized deposits are poised to reshape payment and treasury models across banking, retail, and institutional markets. The winners will be those financial institutions that invest, experiment, and deploy now, ensuring they do not cede payments innovation to tech giants or fintech disruptors. By taking decisive action, financial leaders can turn regulatory clarity and technological change into a competitive advantage, cementing their place in the digital economy’s future.

Larry Pruss has over 30 years of experience as a trusted adviser, strategist, author, speaker, and futurist. As the Managing Director of SRM Perspectives, Larry leads SRM’s expanding thought-leadership initiatives. He also hosts SRM’s Perspectives Live! webinar series, serves as a member of the U.S. Faster Payments Council, and is a Fellow at the Digital Euro Association. Larry’s career includes leadership roles at prominent financial institutions such as Bank of America and Banque Nationale. Connect with Larry at lpruss@srmcorp.com or on LinkedIn.