Just a few years ago, stablecoins were considered a niche tool, but today their turnover has surpassed $300 billion and continues to gain momentum. According to analysts, this market could reach $4 trillion in the coming years. Such acceleration is due not only to technological development but also to growing interest from younger users, as well as the emergence of new non-traditional financial sector entrants. A logical question arises: how are stablecoins changing the financial landscape, and what risks and benefits does this bring for banks?
Technology and Differences from Other Digital Assets
To understand the essence of the phenomenon, it is important to know how stablecoins work. These are digital tokens created using blockchain technology, whose value is pegged to real currencies such as the dollar or euro. This approach eliminates the problem of high volatility faced by holders of Bitcoin or Ether and allows stablecoins to be used for payments and as a store of value.
Unlike classic cryptocurrencies, stablecoins are backed by reserves, most often in fiat money or liquid assets. This makes them more predictable and convenient for everyday transactions. Another key feature is instant settlements: transfers can be made anywhere in the world in a matter of seconds, bypassing traditional intermediaries.
It is important here to distinguish between several types of stablecoins:
- Fiat-backed, secured by reserves in dollars, euros, and other currencies – they account for over 99% of the market
- Backed by other assets, such as securities or gold
- Algorithmic, maintained by algorithms, without physical backing
Examples of Stablecoin Use
As market experts explain, today stablecoins are actively used by both individuals and large corporations. Non-bank projects remain the leaders: Tether with the USDT token and Circle with USDC. The iGaming sector was among the first to introduce the practice of using stablecoins for payments and withdrawals. In addition, initiatives such as JPM Coin by JP Morgan have appeared on the market, as well as attempts by major companies like Amazon and Walmart to experiment with their own solutions.
Practical scenarios include international transfers, settlements between users from different countries, transactions with digital assets, and even use for interbank operations. Stablecoins allow small businesses to significantly reduce costs on cross-border payments. Citizens of countries with unstable banking systems gain access to stable stores of value without the need to open a bank account.
The gambling sector was among the first to widely adopt stablecoins for transactions and reducing operating costs. In the iGaming industry, there is a highly competitive environment requiring fast and reliable payment tools, so many services adopted USDT and USDC long before traditional banks.
It is worth adding that among the many online casinos, there are also those that operate exclusively with stablecoins. Users who prefer to use cryptocurrencies turn to aggregator websites for gambling projects to find the most convenient solution for themselves.
There are two ways to use stablecoins in online casinos: to make a deposit with them or to receive them as a bonus. While writing this article, we decided to check this and found a selection of casino bonus codes, many of which provide bonuses in the form of USDT and BTC after entering a code. The abundance of such offers usually indicates major iGaming services. This, in turn, creates new competition for traditional financial instruments, including banking solutions.
As a result, banks face new challenges: competitors from the technology sector and non-bank startups are quickly attracting a young audience and users previously outside the formal financial system.
Risks and Challenges for Banks, Clients, and the Financial System
However, rapid growth is not without problems. The key threat is the possible deviation of the stablecoin’s value from its peg during crisis events, when the issuer cannot guarantee full redemption. For example, in 2023 there was an incident with USDC, when part of the reserves was frozen due to the bankruptcy of Silicon Valley Bank, which led to a temporary loss of trust.
Another risk is related to insufficient reserves: if the issuer does not have enough backing, there is a danger of mass withdrawal of funds, which can lead to systemic disruptions. In recent years, regulators have repeatedly raised claims against some projects, such as Tether, for lack of transparency in reserve reporting.
Users face a lack of customary protections such as deposit insurance. There are risks of fraud, anonymity, and money laundering. For banks, the problem is a decline in fee income, increased competition for deposits, and the need to invest in new technological solutions to keep up with the market.
Approaches to Stablecoin Regulation
Against this backdrop, stablecoin regulation is developing rapidly but unevenly. Different countries offer their own approaches, seeking to simultaneously minimize risks and foster innovation.
Mandatory requirements for stablecoins include: full backing by liquid assets, transparent reserves, regular audits, instant and reversible conversion, and no interest payments.
In the US, a law has been adopted that creates a unified framework for banks and non-bank issuers. New rules are expected that should reduce uncertainty for market participants. In the European Union, the MiCA regulation is in effect, which sets requirements for issuers, limits participants, and protects consumer rights.
In the United Kingdom, the integration of stablecoins into the existing payment system is being discussed, and the Bank of England is conducting consultations on issuer regulation. Hong Kong has established a licensing system which, according to experts, has attracted the interest of major technology companies, although additional restrictions have been introduced for Chinese players.
Singapore, Australia, and South Africa are at various stages of developing their own standards. At the same time, problems remain: lack of international coordination, differences in requirements, bankruptcy issues, and questions of user asset ownership.
New Opportunities and Challenges for Banks and How to Respond to the Development of Stablecoins
In such turbulent times, banks can no longer remain passive observers. Modern clients, especially young ones, expect fast, cheap, and convenient solutions, and stablecoins are becoming one of these tools.
New horizons are opening up for the banking sector: development of services for corporate clients, implementation of smart contracts, participation in international payments, and creation of unique financial products. However, the path to these opportunities comes with costs—investments in infrastructure, staff training, and ongoing compliance costs.
The largest banks, including JP Morgan, are already launching their own solutions for internal settlements and testing new approaches. At the same time, competition with technology companies and regulatory differences for domestic and foreign players create an uneven playing field.
Banks must constantly monitor changes in legislation and adapt product policies flexibly so as not to be left behind in the new financial reality.
What Awaits Banks and Clients Amid the Stablecoin Wave
According to analysts, stablecoins can accelerate not only global settlements but also lead to new business models, increase trust in digital money, and stimulate innovation across various sectors.
At the same time, it is important to clearly distinguish fiat-backed stablecoins from riskier algorithmic or other crypto assets that have no real backing and are subject to high volatility.
Questions remain that have no clear answer yet: how will the global banking system develop, will banks retain control over payment infrastructure, and what will be the long-term consequences of the mass adoption of digital currencies?
Today, the main challenge on the agenda for banks and their clients is how ready they are for a new reality in which stablecoins become a familiar and widespread tool, and the rules of the game are changing at an unprecedented pace.