Banks Show Increased Interest in Stablecoins Amid Regulatory Concerns
As competition in the stablecoin sector intensifies amid potential U.S. regulations, traditional financial institutions are increasingly concerned about losing deposits to digital currencies, according to Ben Reynolds of BitGo.
Key points from the discussion at Consensus 2025:
- BitGo's stablecoin-as-a-service has garnered significant interest from banks wanting to tokenize deposits or issue stablecoins.
- Banks are adopting a defensive approach due to fears of being left behind in the stablecoin market.
- The $230 billion stablecoin market includes rapidly growing yield-bearing stablecoins and tokenized money market funds, although they currently represent a small portion of the total market.
- Yield-bearing stablecoins primarily serve payment and transaction purposes, but could enhance collateral mobility across platforms.
- Institutional use of yield-bearing stablecoins can reduce friction when moving assets between crypto exchanges and brokerage accounts.
- Regulatory distinctions will impact the market, defining different classifications for tokenized Treasury funds versus stablecoins.
- Yield-generating tokens may increase access for underbanked investors compared to traditional mutual funds.