Stablecoins, once dismissed as crypto’s training wheels for traditional finance, have spent the past year pedaling into the financial mainstream.
While they remain a relatively small, even puny, portion of global finance, as regulatory policies clarify favorably, stablecoins have come to occupy a growing operational space that intersects with the core activities of banks and payment providers.
The increasingly porous boundaries between blockchain finance and traditional finance were the subject of a recent departmental paper from the International Monetary Fund (IMF) entitled “Understanding Stablecoins.” The report offers a comprehensive assessment of how stablecoins function, where they are growing and what their expansion implies for financial systems.
Taken together, three overarching themes stand out from the IMF’s analysis: stablecoins are increasingly interacting with deposit markets and cross-border payments; tokenized assets will require digital settlement instruments that resemble or compete with existing money forms; and early developments in custody, issuance and stablecoin integration are creating new technical and operational roles across the financial sector.
None of these trends represent definitive outcomes. But each point toward structural considerations that banks and payment companies may need to evaluate as digital finance evolves.
After all, U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins has said he expects the entire U.S. financial market to migrate to blockchain infrastructure within the next two years.
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Stablecoin Risks Across Banking and Payments
Stablecoins are used predominantly as settlement instruments within the crypto-asset ecosystem, where they serve as a bridge between fiat money and volatile unbacked tokens. However, their role is gradually widening. The IMF report noted that stablecoin issuance has doubled since 2024, reaching approximately $300 billion by September 2025, and their cross-border usage is already significant relative to their market capitalization.
Banks are wary of feeling the pressure first in their core business: deposits. Stablecoins can offer an attractive alternative for customers who want instant global mobility, programmable money, or access to digital asset markets without surrendering to cryptocurrency volatility.
The challenge is not simply the loss of deposits; it is the speed at which they can vanish. If an institution holding large stablecoin reserves runs into trouble, issuers could withdraw billions in seconds. The IMF calls this a new form of concentration risk: stablecoin issuers tend to keep funds with a small number of banks, which amplifies liquidity pressures during stress.
From a risk-management perspective, banks can be suddenly exposed to depositors that behave more like algorithmic trading firms than retail customers.
Payment providers face a different kind of pressure. Their value proposition has long rested on networks. Think: card networks, correspondent banks, foreign exchange intermediaries, each taking a small cut to move money from A to B. Stablecoins, which can travel across borders with minimal intermediaries, threaten that economic model.
The IMF highlights that stablecoin flows reached roughly $1.5 trillion in 2024, with particularly high shares in corridors involving emerging market and developing economies. These flows remain small compared to the approximately one quadrillion dollars in global cross-border payment activity but are non-trivial in specific regions and use cases.
Read also: Stablecoin Orchestration Becomes New Blockchain Battleground
Stablecoins as Financial Infrastructure
A second theme emerging from the report concerns the relationship between stablecoins and the broader movement toward asset tokenization. Tokenization refers to representing traditional assets on distributed ledgers, enabling programmability, peer-to-peer transfer and automated settlement.
This infrastructure function — not just their role as a payment method — helps explain why stablecoins feature prominently in emerging tokenized markets. Smart contracts can only perform atomic settlement (simultaneous exchange of assets and payment) if both legs of the transaction exist on the same ledger or interoperable ledgers. Stablecoins provide the payment leg in many existing experiments.
The IMF’s assessment of future demand for stablecoins is agnostic but acknowledges that if tokenized assets expand significantly, demand for stable settlement instruments could rise.
At the same time, digital finance is increasingly reshaping operational responsibilities across the financial system.
Stablecoins rely on custodians to safeguard their reserve assets, which consist mainly of short-term U.S. Treasury bills, reverse repos and bank deposits. For banks and asset managers, this highlights a growing role in digital-asset infrastructures, even for institutions that do not issue stablecoins directly. The management, custody and reporting of reserve assets are becoming intertwined with blockchain-based financial activity.
Tokenization pilots in bond markets also illustrate that financial institutions may increasingly issue assets directly on programmable ledgers. The IMF notes that smart contracts reduce reconciliation steps, automate servicing and potentially lower counterparty risk. However, they also introduce new operational and legal risks, such as errors embedded in smart contracts, cyber vulnerabilities and uncertainties around settlement finality.
These developments shift the nature of issuance from a static event to an ongoing technical operation.
Ultimately, integrating stablecoins requires compliance tools, risk monitoring for on-chain transactions and mechanisms to manage wallet-based interactions. Whether firms choose to integrate stablecoins or alternative digital settlement assets, the existence of these new rails is already broadening the technical landscape.
