Megan Knab, CEO and founder of Franklin Payroll, observes a dramatic shift within the financial industry – a move away from excluding crypto businesses and towards embracing stablecoins. This change is particularly evident considering the past three years, where over half of the complaints regarding “debanking” were lodged against four major American banks: Bank of America, JPMorgan, Wells Fargo, and Citibank. These institutions previously enforced policies like “Operation Chokepoint 2.0” and the recission of controversial accounting rule SAB 121, actively hindering the crypto sector. Now, with the repeal of these restrictive measures, a renewed openness to blockchain technology from the finance industry is emerging. It’s becoming increasingly clear that the banking industry must move beyond shunning crypto and, at the very least, begin to understand it, to maintain competitiveness in a rapidly evolving landscape. The implementation of stablecoins will ultimately determine which banks thrive and which will fall behind.
The concept of stablecoins is not new; numerous institutions, including JPMorgan and Santander, have previously experimented with them. These experiments typically centered on small-scale functions such as internal treasury reconciliation and interbank settlement. Many of these deployments took place on private blockchains created by the banks themselves. However, relying solely on private chains misses the core innovation of stablecoins, which fundamentally relies on public networks. While the use case of stablecoins for international remittances is readily apparent, the full potential of stablecoins operating on public networks is still largely untapped. For example, stablecoins can eliminate unauthorized payment disputes and significantly accelerate payment cycles.
Furthermore, the complexities of payroll payments – a web of automated clearing houses, wire transfers, comma-separated values files, and PDFs – can be effectively addressed through the programmability offered by stablecoins. Companies can streamline these data structures, reduce processing times, simplify reconciliations, and improve paycheck reporting. Many smaller banks are now recognizing the opportunity to incorporate permissionless, public network stablecoins into their workflows. This mirrors the growing interest among businesses in 2022 regarding the potential impact of AI, exemplified by the release of ChatGPT. Similarly, banks are now assessing how stablecoins might disrupt money movement.
A recent example is Custodia Bank’s issuance of its own stablecoin, Avit, on Ethereum. Custodia’s users gain access to quick, cost-effective banking services. This represents a valuable model for other financial institutions to emulate. The growing adoption of stablecoins is supported by ongoing technological advancements and increased confidence in their security. Notably, 91% of the stablecoin supply is fiat-backed, while only 8.5% is backed by collateralized crypto assets, reducing the risk associated with algorithmic stablecoins. Additionally, improvements in stablecoin UX are making them easier to use for businesses without a strong crypto background.
The movement of assets onto on-chain networks is also accelerating. Utilizing stablecoins on public networks like Ethereum allows payment companies to better prepare for the future financial system. This trend extends beyond stablecoins; earlier this year, BlackRock CEO Larry Fink stated on Squawk Box that he wants the SEC to “rapidly approve the tokenization of bonds and stocks.” For banks seeking a competitive advantage against powerful fintechs and amid shifting interest rates and decreased consumer savings, leveraging the power of stablecoins to enhance their products and internal operations could be a pivotal decision.
As of February 2025, active stablecoin wallets had risen to over 30 million, a significant increase from 19.6 million in February 2024, according to Artemis and Dune. President Donald Trump is aiming to have stablecoin legislation on his desk by August 2025, and Wyoming already enacted legislation in late March 2025. This development demonstrates a proactive approach to regulatory frameworks. Recent developments also involve Mastercard linking with Circle and Paxos for merchant stablecoin payments. The overall infrastructure surrounding stablecoins has improved substantially, fostering greater confidence in their security.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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