The Financial System Stablecoins Are Building
Inside the four sectors stablecoins are transforming: from T-bills and tokenization to real-time payments and programmable money.
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Stablecoins Are Reshaping Finance. Here’s Where the Real Opportunity Lies
When people talk about the future of money, they tend to imagine central bank digital currencies, crypto speculation, or a cashless society. But Bank of America’s latest research points to something much more immediate and structural: stablecoins are becoming the backbone of real economic infrastructure.
Over the next three to five years, stablecoins are expected to drive one of the most significant transformations in how value moves across borders, asset classes, and financial networks. As regulation catches up and institutional adoption scales, this transformation won’t just affect crypto markets. It will touch everything from bond yields to global payments to the structure of bank deposits. In this newsletter, we explore Bank of America’s core insights, the four sectors they predict will be most affected, and where businesses, builders, and institutions should focus their efforts now.
1. Payments: Stablecoins Are Rewiring the Financial Plumbing
Stablecoins are enabling near-instant, low-cost, programmable transactions. Their settlement speed and 24/7 availability make them uniquely suited for global commerce.
Use Cases:
Cross-border payroll for contractors and gig workers, with lower FX fees and faster disbursement.
Retail and e-commerce checkout integrations using stablecoins to reduce transaction fees and improve speed.
DeFi wallets and superapps that embed stablecoin payment layers (e.g., Eco, Strike).
Actionable Insight:
Traditional payment providers and fintech startups should integrate stablecoin payment rails and consider stablecoin treasury management to reduce fees and FX friction. Evaluate integrating providers like Flexa, Eco, or Circle’s USDC APIs to offer stablecoin acceptance and disbursement.
2. Tokenization: Stablecoins Unlock Real-World Asset Liquidity
Tokenization of real-world assets (RWAs) is not new, but stablecoins are the enabler that turns these assets into programmable, composable financial products. Combined with tokenized T-bills, stablecoins form a liquidity layer that is compatible with both CeFi and DeFi.
Use Cases:
Tokenized T-bills or corporate bonds, earning yield and offering liquidity in DeFi protocols.
Collateral for loans or stable yield, allowing users to stake RWAs with stablecoins as counterparty currency.
Treasury management for DAOs and startups using on-chain instruments paired with stablecoins.
Actionable Insight:
Asset managers, fintechs, and startups should explore platforms like Ondo Finance, Matrixport, or Franklin Templeton’s tokenized funds. Look for regulated platforms offering tokenized assets denominated in stablecoins (e.g., USDC or EURC), especially under upcoming MiCA frameworks in the EU.
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3. Layer-1 Blockchains: Where Stablecoin Activity Lives, Value Flows
Stablecoins generate on-chain activity, and that activity creates value for the blockchains that host them. Bank of America reports that Ethereum now hosts over 50% of stablecoin volume, with Solana, Base, and Tron also experiencing significant inflows.
Use Cases:
Transaction fees and validator rewards increase with stablecoin throughput.
New app ecosystems built around payments, remittances, and gaming using native stablecoins.
Bridges and rollups leveraging stablecoins for cross-chain liquidity.
Actionable Insight:
Developers and investors should track where stablecoin liquidity is moving, and prioritize building on or integrating with chains that are capturing volume (e.g., Base, Solana, Tron). Projects building on L1s with high stablecoin velocity should align their tokenomics with stablecoin incentives.
4. Issuers and Banks: The New Stablecoin Powerhouses
Stablecoin issuers are becoming central players in financial infrastructure. From Tether and Circle to PayPal and JPMorgan, issuers are moving beyond crypto-native use cases and into mainstream financial products.
Use Cases:
Yield generation from T-bill-backed reserves, as a new revenue stream for fintechs and banks.
Bank-issued stablecoins like JPM Coin or Euro-denominated stablecoins by Société Générale for regulated B2B settlement.
Consumer applications via fintech apps issuing spendable stablecoins (e.g., PayPal USD, Venmo integration).
Actionable Insight:
Banks and regulated fintechs should begin scoping stablecoin issuance strategies in jurisdictions with clear regulatory guidance (e.g., MiCA in the EU, proposed U.S. GENIUS Act). Non-issuers can build services around custody, KYC, or FX for stablecoin use in consumer finance and trade.
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What’s Next: From Compliance to Competition
The most significant tailwind in this transformation is regulation. Bank of America and other institutional voices point to legislation like the GENIUS Act in the U.S. and MiCA in the EU as critical enablers of stablecoin adoption. These laws mandate full fiat backing, clear disclosures, and compliance requirements that will normalize stablecoin use among traditional financial actors.
But regulation is just the beginning. The next phase is competition among issuers, blockchains, and financial platforms. As stablecoins become programmable units of value that can move globally, the question shifts from “Are stablecoins safe?” to “Who builds the best products with them?”
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The latest developments:
📌 Citi vs J.P. Morgan: Stablecoin stratagem
– Citi doubling down on tokenized deposits and cross-border rails
– JPMorgan’s closed-loop JPM Coin vs Citi’s ambition for interoperability More
📌 Bank of America is entering the ring
CEO Brian Moynihan revealed BofA is working on a stablecoin, pending legal clarity, and may partner with other firms. More
📌 Morgan Stanley takes notice
MS is evaluating stablecoin use for institutional clients, though timing remains uncertain. More
📌 Legislative boost: GENIUS Act advances
Senate passed the GENIUS Act 68–30 on June 17; House is debating this week. This federal framework allows banks and nonbanks to issue regulated stablecoins. The House will vote on a bill to regulate stablecoins during ‘Crypto Week`. More
Central bank scrutiny
Bank of England’s Andrew Bailey warns private bank-issued stablecoins may destabilize money supply, urging regulation. More
Infrastructure plays picking up
– Fiserv launched FIUSD for community banks, enabling instant, low-cost stablecoin payments via existing rails. More
– Tether acquired a South American agri firm to embed USDT into commodities trade, linking onchain stablecoins to real assets. More
Broader ecosystem ripple effects
Bank of America expects stablecoins to impact payments, L1s like Ethereum, and tokenized assets, upending traditional finance. More
Monad Foundation Acquires Stablecoin Infrastructure Project Portal to accelerate stablecoin and payments strategy. More
Dakota Raises $12.5M Series A to Build "Internet Age" Business Banking. More
As regulation crystallizes and institutions prepare, stablecoins are shifting from the fringe to the financial core, impacting payments, treasuries, global finance, and infrastructure.
Final Thought: Don't Miss the Infrastructure Phase
This moment in stablecoins is comparable to the early days of the internet’s infrastructure phase. The products aren’t flashy, but the protocols, issuers, and blockchains being built now will become tomorrow’s financial rails.
Whether you’re a startup, bank, investor, or builder, this is the time to get involved. The next wave of financial applications will be built on stable, trusted units of programmable value.
The only question is whether you’ll be using them or building with them.
Recommended Reads
For a clear breakdown of the different types of stablecoins and how they maintain their peg, read our primer: How Stablecoins Work. It covers the mechanics behind fiat-backed, crypto-collateralized, and algorithmic stablecoins, along with real-world examples and use cases, essential context for understanding their growing role in payments, tokenization, and digital finance infrastructure.
How stablecoin issuers actually make mone? Why institutions are entering the space? Stablecoin Monetization Demystified breaks down the core revenue models, from reserve yield strategies to payment fees, and explains what’s at stake as banks, fintechs, and protocols compete for stablecoin dominance.
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