Stablecoins could make borrowing more expensive. That was the warning from Bank for International Settlements chief Pablo Hernández de Cos on August 28, as banks expand into digital money.
These digital assets are becoming an awkward asset class for banks. Because it’s almost killing their business model and forcing them to introduce new products.
The stablecoin market now holds roughly $304 billion, including about $183 billion in Tether and $74 billion in USDC. Federal Reserve researchers describe these tokens as potential competitors to traditional transaction accounts.
Arthur Firstov, Chief Business Officer at Mercuryo, told BeInCrypto why that matters.
“Stablecoins stopped being a crypto product and became a payments product. For years banks could wave it off as ‘crypto infrastructure’ – that’s a much harder line to hold when stablecoins are being used for payments, treasury, cross-border settlement, cards, merchant payouts, and institutional settlement. At that point they’re competing directly with one of the most valuable products a bank has: the transaction account.”
Banks are responding. A Federal Reserve survey in September 2025 found roughly half of respondents were prioritizing growth in at least one stablecoin or digital-asset area over the following three years.
What Happens to the Deposit?
J.P. Morgan’s JPM Coin represents a bank deposit on a blockchain. Société Générale-FORGE’s CoinVertible is a MiCA-regulated stablecoin backed by segregated collateral. Similar technology carries different promises to customers.
Nitin Gaur, Head of Institutions at Nethermind, explains the distinction.
“The interesting question stopped being whether a bank can issue and became what a bank is issuing. A tokenized deposit and a bank-issued stablecoin are two different liabilities with different legal character, different capital treatment, different insurance status and different settlement properties.”
A tokenized deposit remains bank funding. Under the US GENIUS Act, payment stablecoins require at least one-to-one backing with eligible reserves, such as cash or short-dated Treasuries. Treasury proposed implementation rules on August 17.
Gaur describes what that can mean for a bank’s balance sheet.
“A stablecoin issued under a GENIUS pathway is not a deposit. It is a payment instrument backed by segregated reserves the issuer cannot lend against. When a treasurer moves a hundred million from a demand deposit into the bank’s own coin, the bank has converted a funding source into a matched, non-lendable reserve pool,” Gaur said.
The wider effect depends on where reserves end up. Money deposited back at banks can still provide funding, although it may be more concentrated and quicker to leave.
Adrian Wall, Managing Director of the Digital Sovereignty Alliance, identifies the risk.
“If stablecoin adoption ultimately shifts funding away from bank deposits rather than recycling those funds back into the banking system, banks could face higher funding costs and potentially less capacity to extend credit.”
Payments Beyond Banking Hours
Customers already have reasons to use these products. In July, Citi reported a dollar payment from London to Thailand over a US holiday weekend, using its tokenized-deposit service alongside round-the-clock clearing.
Western Union launched USDPT in May, with Anchorage Digital Bank issuing the stablecoin on Solana.
The models are growing at different scales. J.P. Morgan reports around $7 billion in daily activity across Kinexys products. CoinVertible reported €156.6 million of euro tokens and $12.55 million of dollar tokens outstanding on August 31.
Those figures measure transaction volume and circulating supply respectively, so they cannot establish which model is winning.
37 Banks, One Coin
As more banks enter, separate coins could leave money scattered across smaller pools, with users having to exchange one bank’s token for another. Connecting the technology does not guarantee conversion at face value during market stress.
Europe’s Qivalis has assembled 37 banks across 15 countries around a planned euro stablecoin. It targets a launch in the second half of 2026, subject to regulatory authorization.
Ernesto Olmedo Pereira, Head of Strategy & DeFi at Qivalis, says sharing the currency is deliberate.
“If every bank launches its own token, you get dozens of thin, incompatible pools instead of one deep, liquid euro instrument. Qivalis, an independent company backed by 37 banks, exists precisely because the banks behind it decided to build one shared, interoperable euro rail together rather than compete with 37 separate ones.”
Banks could then compete through services surrounding that money, such as foreign exchange and corporate lending. The shared coin would carry payments between them.
Qivalis’s launch will test whether that cooperation can attract regular business beyond its founding banks.
Customers need money they can use across banking relationships. Banks will have to show that the services sold around those payments justify any higher cost of funding their loans.
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