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The Stablecoin Boom and the Role of Banks
As we close the chapter on 2025, the impact of stablecoins on the global financial market cannot be ignored. According to estimates, stablecoins processed an astounding $1.3 trillion in payments in 2024, a figure that has undeniably risen. This amount reflects actual, real-world transactions—cross-border settlements, vendor payments, and treasury operations—conducted outside the traditional banking system. Consequently, banks are losing visibility on these transactions and the resulting data.
Tokenized Deposits: A Competitive Response
Recognizing this shift, many banks are turning to tokenized deposits as a means to compete with stablecoins. The opportunity with tokenized deposits is promising, but fleeting. As more treasury managers become accustomed to using stablecoins for their transactions, the time to convince them to switch back to traditional banking could be running out. The real concern is not the existence of stablecoins, but rather their increasing prevalence as the preferred mode of transaction.
Understanding the Financial Impact
The emergence of stablecoins has led to significant changes in the financial landscape. For instance, Circle, a key player in the stablecoin market, reported earnings of $711 million in Q3 2025 from interest on its USDC reserves without paying out to token holders. Overall, the stablecoin market is estimated to be worth $305 billion, generating roughly $13 billion annually in float income. This income, once the prerogative of banks, now flows towards stablecoin issuers.
The Power of Tokenized Deposits
Despite the rise of stablecoins, tokenized deposits offer a compelling alternative. They provide the same benefits—24/7 settlement, instant cross-border transfers, programmable money—with added advantages such as FDIC insurance, regulated infrastructure, and established customer relationships. Furthermore, unlike stablecoins, tokenized deposits pay interest directly to holders. This fact alone could be a game changer. For example, a corporate treasurer holding $5 million in a tokenized money market fund earning 4.8% stands to gain $240,000 annually compared to earning nothing with a stablecoin like USDC.
The Trust Advantage
Among the many advantages of tokenized deposits, the most significant is trust. When banks offer tokenized deposits, they come with the backing of regulated banking products, FDIC insurance, and centuries of institutional credibility. This strong brand equity, coupled with a supportive regulatory framework, can instill customer confidence worth billions.
Challenges and Opportunities for Banks
The rise of stablecoins presents both challenges and opportunities for banks. On the one hand, banks risk losing visibility on payment transactions and the subsequent data insights. On the other hand, this development has created a unique opportunity for banks to utilize tokenized deposits to compete effectively. Having control over the customer relationship and a deep understanding of their cash-flow patterns and growth trajectories can be a significant advantage.
The Path Ahead for Banks
The infrastructure for banks to issue tokenized deposits already exists. Banks now need to act swiftly and adopt this innovative solution before the window of opportunity closes. The question is not whether payments will become programmable and instant—this is already happening. The real question is whether banks will choose to compete on this new playing field or risk losing control over the payment system. The banking industry must act decisively to ensure a competitive future in the era of stablecoins.
Editor’s note: The first, sixth and final paragraphs of this article have been updated to reflect a more accurate estimate of stablecoin payments volume.
Original Source: Here
