Written by Helena Markou
The market is still arguing about token prices while the real shift is happening underneath: stablecoins and tokenized deposits are being redesigned as settlement infrastructure.
Crypto has a habit of misunderstanding its own breakthroughs. It fixates on market cap when the deeper story is plumbing. That is exactly what is happening with stablecoins now. The biggest development is not whether one issuer is gaining share on another or whether traders prefer USDT to USDC. The bigger development is that stablecoins are being pulled out of the purely crypto frame and recast as part of the future payments stack.
That shift is visible in the language of policy, banking, and market infrastructure. Brookings wrote this week that payment stablecoins and tokenized bank deposits are substitutes for cash or checking accounts that can make settlement faster, cheaper, available 24/7, and programmable. That is not how people describe speculative tokens. It is how they describe payment architecture.
The distinction matters because it changes the competitive map. Stablecoins are no longer only competing with each other. They are competing with bank deposits, correspondent banking rails, card networks, remittance incumbents, treasury systems, and eventually with tokenized forms of ordinary money issued inside the banking system itself.
| Payment instrument | Core strength | Core weakness |
| Payment stablecoins | Open networks, 24/7 transferability, programmability, broad wallet-based access | Greater exposure to AML, reserve, and redemption concerns |
| Tokenized bank deposits | Deposit insurance, bank supervision, lender-of-last-resort backstop, familiar compliance structure | More closed networks and less open composability |
| Legacy bank rails | Trust, scale, embedded regulation, broad integration | Slower settlement, limited hours, more friction across borders |
This is why the policy stack is suddenly so important. Brookings notes that the GENIUS Act requires payment stablecoins to be backed at least 1-to-1 by segregated pools of liquid, low-risk assets and gives regulators 18 months to put the framework into operation. CBIZ, writing on April 15, argued that the emerging U.S. framework treats tokenization as a delivery method rather than a new asset class and places payment stablecoins under banking-style supervision. Read together, those developments amount to something simple but profound: stablecoins are moving from tolerated edge case to supervised monetary instrument.
That does not mean banks are out of the game. If anything, it means the real contest is just beginning. Brookings argues that tokenized bank deposits are structurally different from stablecoins because they are backed by bank capital, deposit insurance up to statutory limits, and lender-of-last-resort access. That is a formidable package. It means the banking system is not watching the stablecoin story from a distance. It is preparing its own answer.
And the scale involved is no longer trivial. Brookings says USDT has roughly $190 billion in circulation and USDC about $80 billion, while the total volume of outstanding U.S.-dollar stablecoins was nearly $280 billion at year-end 2025. More importantly, the same Brookings analysis says monthly stablecoin transaction volume, after stripping out high-frequency and similar activity that likely does not represent settlement, averaged about $1.2 trillion. That is large enough to stop calling the category experimental.
The most revealing part of the story is not size, though. It is use case migration. Stablecoins began as exchange collateral and crypto market grease. They are still that. But Brookings says they are increasingly being used in cross-border payments and cites an EY Parthenon survey in which more than 50% of non-users expected to adopt them in the next six to twelve months, mostly for supplier payments and customer receipts. That is the transition point from crypto-native utility to business utility.
Once that happens, the debate changes. The main question stops being whether stablecoins are legitimate and becomes which institutions get to intermediate them. Crypto-native issuers want to preserve the advantages of open networks and direct wallet access. Banks want the efficiency gains of tokenization without surrendering control, compliance, or deposit franchises. Regulators want innovation without bank-run dynamics, sanctions leakage, or a shadow payments system beyond supervision.
Those interests will not align neatly. In fact, the next phase of the market may be defined by the friction between them. Stablecoins win on openness. Tokenized deposits win on trust architecture. Banks can promise familiar protections, but they struggle to match the composability and always-on settlement of public-chain assets. Stablecoins can move globally with extraordinary flexibility, but Brookings also warns that their more open networks create greater illicit-finance risks and place heavier weight on reserve quality, arbitrage structure, and AML controls.
This is why the most mature view is not “stablecoins will replace banks” or “banks will crush stablecoins.” The more realistic outcome is a layered system. Stablecoins will dominate where openness, programmability, and borderless settlement matter most. Tokenized deposits will dominate where regulated counterparties, existing banking relationships, and treasury workflows matter more. The losers will be the old rails that are too slow, too expensive, or too closed to justify their friction.
There is also a market implication that crypto investors still underappreciate. If stablecoins become ordinary settlement infrastructure, the value in the ecosystem may migrate away from the tokens themselves and toward the rails around them: custody, treasury management, compliance middleware, cross-chain routing, liquidity provisioning, tokenized cash management, and regulated issuance. The next winners may look less like cult assets and more like payment companies wearing blockchain underneath.
That should force a rethink across crypto markets. The real bullish case for stablecoins is not that they pump. It is that they disappear into everyday finance. Successful payment infrastructure becomes boring. It settles invoices, moves collateral, clears trades, and powers cross-border flows without demanding attention. Crypto has spent a decade wanting mainstream adoption while also craving spectacle. It may finally have to choose.
The direction of travel is obvious. Stablecoins are being normalized by policy, challenged by banks, adopted by businesses, and forced into more serious accounting and supervisory frameworks. That is what mainstreaming actually looks like. Not a meme. Not a slogan. A migration from product to rail.
And once money becomes software with serious regulatory scaffolding, the winners will not be the loudest networks. They will be the ones that become indispensable without becoming impossible to trust.
