Stablecoins Are No Longer Just a Crypto Story

Stablecoins quietly crossed a threshold in 2025 that makes it harder for regulators, banks and investors to dismiss them as a peripheral crypto experiment. Transaction volumes rose 87% year on year to about $9 trillion, driven not by retail speculation but by large financial institutions using cash- and Treasury-backed tokens for cross-border payments, repo transactions and intraday liquidity management. 

What is changing is not just scale, but function: stablecoins are increasingly being treated as settlement instruments embedded in regulated workflows, rather than as volatile crypto assets sitting outside the financial system, according to Moody’s Ratings’ 2026 global digital economy outlook.

That distinction matters because it reframes the debate as the question is no longer whether digital assets can coexist with traditional finance, but whether traditional finance can continue to operate efficiently without adopting some form of programmable settlement. Banks such as Citigroup and Société Générale have already demonstrated that stablecoins can be deployed inside compliance-heavy environments to move liquidity across borders and trading venues in near real time.

The strongest case for adoption lies in costs.

Tokenised issuance and programmable settlement compress layers of manual processing that have accumulated over decades in capital markets. Early pilots suggest annual savings of 30–40 basis points compared with traditional issuance platforms, driven by automation of reconciliation, documentation and post-trade servicing, according to the Moody’s report.

Over a full lifecycle, the impact is larger, and a digitally issued five-year bond could cost up to 132 basis points less to issue and administer than a conventional bond, once underwriting, custody, corporate actions and capital efficiency gains are factored in. These are not marginal improvements; they are structural efficiencies that compound over time.

The savings explain why tokenisation is spreading beyond payments into bonds, funds and collateral management. Digital rails allow ownership to be recorded and transferred instantly, coupons and redemptions to be executed automatically, and collateral to be mobilised with far greater precision. For asset managers and banks, faster settlement reduces the need for liquidity buffers and intraday credit lines. For market infrastructure providers, it opens the door to rethinking the role of central clearing, custody and settlement services that were designed around slower, batch-based systems.

Yet this is not a frictionless transition. The infrastructure required to support digital finance at scale is capital-intensive and still incomplete. Industry plans point to more than $300 billion of cumulative investment in technology markets by 2030, much of it directed towards data centres, connectivity, security and interoperability. Digital finance is not a software overlay that can be bolted onto legacy systems; it requires rebuilding parts of the financial stack so that digital and traditional processes can operate side by side without creating new points of failure.

Fragmentation is the most immediate risk. The rush to launch new stablecoins and tokenisation platforms has produced a patchwork of public and permissioned blockchains, often with bespoke standards and limited interoperability. That fragmentation undermines liquidity, complicates collateral valuation and widens the attack surface for cyber risks. Ironically, the very technology designed to simplify markets can, if poorly coordinated, make them more complex. The next phase of investment will therefore be less about launching new tokens and more about stitching systems together through secure cross-chain messaging, trusted data feeds and robust governance.

According to Moody’s, regulation is beginning to catch up, but unevenly. The European Union’s Markets in Crypto Assets framework, legislative initiatives in the US, and licensing regimes in Singapore, Hong Kong and the UAE have provided greater clarity on custody, disclosures and operational resilience. This convergence has given regulated institutions the confidence to move from pilots to production. Still, gaps remain around redemption rights, asset backing and cross-border supervisory coordination. Without consistent global standards, the scalability of digital settlement will remain constrained, regardless of technological readiness.

This is where the strategic choice for policymakers becomes clearer. Trying to hold digital finance at arm’s length may preserve familiar structures in the short term, but it risks locking markets into higher costs and slower settlement at a time when capital is increasingly mobile. Embracing regulated stablecoins and tokenised infrastructure, by contrast, forces regulators to confront hard questions about oversight, legal finality, and systemic risk, while also offering a path to modernising market plumbing that has changed little in decades.

The likely outcome is consolidation. As digital rails mature, markets will gravitate towards infrastructure that is efficient, secure and interoperable. Regulated stablecoins are emerging as the preferred settlement asset for tokenised funds and digital securities, while hybrid models that combine blockchain networks with traditional custodians are narrowing the divide between decentralised and conventional finance. Platforms that fail to integrate with existing systems or to meet regulatory expectations will struggle to attract institutional liquidity.

The deeper implication is that digital finance is no longer a parallel system competing with traditional markets. It is becoming part of their core architecture. The institutions that treat stablecoins and tokenisation as temporary experiments risk being overtaken by those that recognise them for what they increasingly are: a new layer of market infrastructure that, once embedded, is hard to reverse.