Vijay Oddiraju, CEO at Volante Technologies
Stablecoins are moving beyond experimentation. As regulatory frameworks take shape across major financial hubs, digital cash is shifting from concept to operational reality, with implications for payments, settlement and liquidity management. Yet much of the debate remains focused on deposit risk. In the US, community banks warn of rapid withdrawals, while larger institutions frame stablecoins as complementary rather than threatening. Similar discussions are emerging across other markets, most notably in the UK. These concerns are valid, but they risk distracting from a more critical question: is the infrastructure ready?
Why regulatory clarity matters
Although some criticise increased regulation as a restriction on freedom, it actually produces the opposite effect. Policy clarity, and the introduction of stablecoin legislation, play a pivotal role in furnishing stablecoin use with legitimacy, shifting it from an uncertain currency to a trusted digital payment instrument. From Europe’s MiCA legislation and last summer’s proposed US GENIUS Act, to incoming stablecoin licences in Hong Kong and the UK government’s recently stablecoin inquiry, economies around the world are embracing this new digital currency — though in a way, they have little choice. A survey conducted by EY-Parthenon last June found that stablecoins are used by 13% of financial institutions and corporations globally, and 54% of non-users expect to adopt them in the next six to 12 months. The debate over whether stablecoins are worthwhile is no longer relevant; the conversation we must have now should be focused on the when, where, and how they are best deployed.
Stablecoins and tokenised deposits are not interchangeable
Discussion around stablecoins often highlights how easily different forms of digital money can be confused. In the media, terminology is frequently used interchangeably even though it refers to distinct financial instruments. Stablecoins and tokenised deposits, for example, serve different, though complementary, roles. Tokenised deposits are digital representations of insured money and, when structured within existing deposit frameworks, generally carry lower risk while integrating smoothly into current financial architecture. Stablecoins, by contrast, are cryptocurrencies, typically pegged to fiat currencies, such as the US dollar, and most commonly operating on private or permissioned blockchain networks.
As Citi explains, these characteristics position digital payment instruments to serve different roles. Stablecoins are a great fit for crypto-native ecosystems, bridging the gap between digital assets and everyday commerce, and offering liquidity in areas of limited banking access. They have the potential to enable banks to offer near-instant cross-border transfers at lower cost, reducing reliance on intermediary networks. This also provides end-to-end visibility of transactions, making them especially useful for mid-tier banks managing high transaction volumes or complex correspondent relationships. EY-Parthenon’s research, based on survey responses, found most financial institutions and corporates estimate that between 5 and 10 percent of cross-border payments will be made using stablecoins by 2030, equivalent to between $2.1 trillion and $4.2 trillion.
However, as stablecoin regulation remains in its early stages, bank tokens, including tokenised deposits, still have an important role to play. By being anchored in the existing financial system, they offer the benefits of smooth, instant cross-border payment and settlement, while fitting in the framework of current compliance and regulation. However, that same anchoring can also present a potential drawback. While tokenised deposits fit neatly into today’s regulatory framework, their bank-specific nature makes global scalability and seamless interoperability a real constraint.
Making stablecoins work in practice
Stablecoins have now progressed to a new phase focused on execution. The window of theoretical debate and ad-hoc pilots is quickly closing; banks must now move beyond experimentation to deliberate decisions around how they will operate in a multi-rail, multi-asset payments environment. Driving real value from stablecoins and tokenised deposits does not come from isolated experiments or innovation labs. These digital payments must be embedded into core payment environments, operate alongside established rails, and meet the same standards of resilience, compliance, and operational control as any other production banking service. Institutions that approach stablecoins too cautiously — treating them as a peripheral risk and building parallel infrastructures — are only adding unnecessary complexity and constraining their future growth.
Consequently, architectural flexibility must become a strategic priority for financial institutions. A central payment orchestration layer enables banks to connect legacy payment rails, tokenised deposits, and blockchain-based networks within a single operational framework. This approach allows institutions to dynamically route transactions across networks based on speed, cost, liquidity, and regulatory considerations, while maintaining consistent governance, visibility, and risk controls across both fiat and digital transactions.
Cloud-native platforms offer this flexibility, allowing banks to embrace innovation in a controlled manner and minimise risk and disruption. Such platforms allow banks to add stablecoin capabilities gradually, scaling services as regulation and demand mature, and sidestepping the rigidity of large-scale, upfront transformation programmes. Crucially, they provide the foundation for continuous testing, monitoring, and optimisation, ensuring that stablecoin services meet enterprise-grade performance, security, and compliance requirements as they move into live operation.
While regulation will continue to develop and evolve, the greater challenge for banks lies in preparing their infrastructure for a payments landscape that is becoming increasingly diverse and technologically complex. Stablecoins and tokenised deposits are unlikely to replace existing systems overnight, but they are increasingly becoming part of the broader payments ecosystem. Financial institutions that begin building the flexibility to support these new rails alongside traditional infrastructure will be better placed as adoption grows. In the end, the opportunity is not simply about stablecoins themselves, but about ensuring payment systems are ready for the next phase of digital money.