Stay in the know
Receive timely insights and briefings from HSF Kramer, tailored to keep you informed and ahead
Subscribe now
12 11월 2025
Insight
Global
As recently as 2019, the total value of stablecoins in circulation was just $1 billion. Today it’s nearly $300 billion, and forecasts suggest that figure could reach $4 trillion by 20301. Demand from Generation Z, active non-bank issuers, and a new payments paradigm mean that banks cannot ignore stablecoins. Where are we now, what’s next, and what does it mean for banks?
Stablecoin 101
Stablecoins store and transfer value, linking digital and traditional finance. This article focuses on payment stablecoins - digital tokens issued on a blockchain, with values pegged to fiat currencies, making them convertible at par. It is the currency peg that distinguishes payment stablecoins from other digital money like cryptocurrencies or CBDCs2, and also from stablecoins underpinned by commodities, cryptocurrencies or algorithms. Currently, 99% of stablecoins are pegged to the US dollar.
To date, non-bank issuers have been the biggest stablecoin players, led by Tether’s USDT and Circle’s USDC. Now, however, growing regulatory clarity and political support are encouraging a range of financial and other institutions including Amazon and Walmart to issue stablecoins.
The benefits of payment stablecoins (which from here we will refer to as simply stablecoins) include immediate settlement and payment, global wallet-based access, lower payment costs than legacy networks, liquidity benefits and interoperability.
Growing regulatory clarity and political support are encouraging a range of financial and other institutions including Amazon and Walmart to issue stablecoins."
Stablecoins have a wide range of use cases for individuals and institutions, including settling digital asset transactions, payments and remittances, capital markets settlements, and interbank transactions. They’re especially valuable to users unable to access or afford conventional banks – and, in this way, banks issuing stablecoins can attract new customers.
Like any instrument, stablecoins are not without risk. It is possible for values to deviate from par, at times of dislocation, as happened in 2023 when a slice of USDC’s reserves were jeopardised by the collapse of Silicon Valley Bank3. Where stablecoins have insufficient liquidity or reserves there is scope for a ‘run’ with potential systemic effects; in 2021 Tether settled a case alleging misrepresentation of reserves4.
In the event of a failure, whether arising from technological or reserving problems, holders would not be protected by conventional deposit protection. Users are also exposed to counterparty risks, like the 2022 collapse of digital exchange FTX. Finally, the anonymity of stablecoins creates obvious potential for their unregulated use to facilitate money laundering, terrorist financing or sanctions evasion.
Regulation: A shifting picture
Stablecoin regulation is evolving rapidly, with policymakers rushing to address potential risks and promote innovation. The geo-economic implications of stablecoins mean that a degree of ‘regulatory competition’ is also at work.
Key considerations include:
The features of reliable stablecoins are well understood: full backing by cash or fungible, liquid assets; convertibility at par; no payment of interest; segregated reserves; transparent reporting; and periodic external verification.
In practice though, different jurisdictions use a variety of regulatory techniques, sometimes via dedicated stablecoin legislation and sometimes via existing financial rules.
Recent and forthcoming changes in key jurisdictions include the following:
Across 143 reviewed emerging and established jurisdictions, approximately:
In short, the regulatory picture is far from settled. Even where laws have been enacted, regulations are yet to be implemented or tested. A range of risks could arise from regulatory gaps or conflicts, and there is uncertainty over insolvency procedures and ownership rights.
Regulatory philosophy varies too. This was illustrated at a recent conference, with US Fed governor Christopher Waller quoted as saying “you don’t want the government to decide which technologies are in or out” while Bundesbank president Joachim Nagel struck a more sceptical note, commenting “we cannot support innovation for innovation’s sake alone”11.
What does this all mean for banks?
At first glance, issuing stablecoins has limited appeal for banks. Issuance incurs technological, marketing and compliance costs, and threatens to cannibalise conventional deposits. Banks are also concerned about the threat to their funding from non-bank stablecoins, with US banks lobbying for the prohibition of payments by exchanges to stablecoin holders12.
Set against that, banks cannot overlook the reality that customers like cheap, easy payment and settlement. Banks that choose to ignore stablecoins risk losing both wholesale and retail business – especially among Generation Z, many of whom are already disengaged from traditional finance. Ultimately, disengaged banks could find themselves locked out of a new set of global payment rails.
There are potential upsides too. Banks’ compliance and risk management expertise mean they are ideally placed to exploit opportunities such as treasury management, advisory services or the incorporation of value-adding features via smart contracts.
The industry now appears to have reached an inflexion point on stablecoins. After a period of cautious testing – such as JP Morgan’s use of JPM Coin for internal settlements – many banks have shifted from asking “Should we?” to “Can we?”
Recent announcements include:
|
It is of course vital for banks issuing stablecoins to understand the regulatory, risk and cost implications associated with different jurisdictions. For example, EU stablecoin issuers need to draw up a marketing prospectus (a so-called 'white paper') with strict liability (also for the issuer's senior management) attached to it, while the UK requires banks to issue stablecoins via a separate solvent subsidiary.
Bank issuers should also be aware of the uneven playing field created by national regulation of a borderless asset. As well as the risks of regulatory gaps or conflicts, there is potential scope for extraterritoriality. For instance, non-EU issuers of stablecoins actively soliciting EU customers could be drawn into MiCA’s scope and, regardless of any territorial nexus, all stablecoins that reference an official EU currency are within scope.
The global market for stablecoins is evolving at pace, shaped by rapidly shifting trends in technology, regulation and demand. As with any innovation, significant questions remain unanswered. It is also essential that users distinguish between fiat-pegged stablecoins and other crypto assets like algorithmic stablecoins (which are not backed by any 'real-world' assets).
Even so, stablecoins seem certain to play a significant role in future financial systems. It’s vital for banks to engage actively with this fast-moving regulatory and commercial environment and, ideally, to play an active role in its development. Legal teams should stay on top of the latest thinking, ensuring they have the systems, skills and resources to navigate a shifting landscape. Meanwhile, product development functions should leverage banks’ existing strengths and shape an approach that leverages their strengths, allowing for differentiation in an increasingly crowded market.
As always when storing or transferring value, trust is critical. With deep expertise in payments, regulation and crime prevention, banks are well positioned to scale stablecoin offerings – creating value for customers and building public confidence in this financial innovation.
Chapters
- Global Bank Review 2025 – Innovating amid turbulence
- High standards – FCA General Counsel on opening in the US and Asia, emerging technology, and motor finance claims
- Splintering of the international capital framework?
- What do stablecoins mean for banks and the future of finance?
- The future of wealth management
- Reimagining the tech stack for a fragmented world
- Critical questions — How can banks bridge the cybersecurity gap?
- Making GenAI work – A strategic approach for in-house legal teams
- Embedding sustainability into banking – A strategic imperative
- More than a workplace – How banks are enhancing their offices
Key contacts
Charlotte Henry
Partner, Sydney
Chris Hurn
Of Counsel, London
Lisa Fried
Partner, New York
Chee Hian Kwah
Director, Prolegis LLC, Singapore
Dr Timo Bühler
Partner, Germany
Jenalee Harrison
Senior Associate, Johannesburg
Legal Notice
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills Kramer 2026