Opinion by: Megan Knab, CEO, Franklin Payroll
The financial landscape is witnessing a significant transformation as banks, previously wary of crypto, now actively explore and adopt stablecoins. This shift marks a dramatic reversal from the era of widespread debanking of crypto-related businesses. For years, crypto startups faced challenges in securing and maintaining bank accounts, often facing stringent regulations and risk assessments.
Over the past three years, a significant portion of debanking complaints has been directed toward major American banks such as Bank of America, JPMorgan, Wells Fargo, and Citibank. However, with the relaxation of policies like “Operation Chokepoint 2.0” and the rescission of the controversial accounting rule SAB 121, the finance sector is now showing a newfound openness to blockchain technology.
For banks to remain competitive, understanding and integrating crypto, particularly stablecoins, is crucial. The strategic deployment of stablecoins will likely differentiate the industry’s winners and losers.
The Evolution: From Debanking to Stablecoins
Stablecoins have been around for a while, with institutions like JPMorgan and Santander experimenting with them for internal processes, such as treasury reconciliation and interbank settlements. These initial experiments primarily utilized private blockchains. However, limiting digital dollars to private chains overlooks the full potential of stablecoins’ innovation.
The use cases for stablecoins extend beyond international remittances. Stablecoins offer benefits like eliminating unauthorized payment disputes and enabling faster payment cycles. This is particularly relevant for payroll payments.
Payroll processes are complex, involving various systems like automated clearing houses, wires, and data files. Stablecoins’ programmability allows companies to streamline these processes, improving data management, processing times, reconciliation, and reporting.
Smaller banks are beginning to recognize the opportunity to incorporate permissionless, public network stablecoins into their workflows. Similar to the impact of AI tools like ChatGPT, banks are now exploring how stablecoins can revolutionize money movement.
Custodia Bank, for example, launched its own stablecoin, Avit, on Ethereum. This allows users to access fast, affordable banking services, setting a precedent for other financial institutions.
Increasing Stablecoin Adoption and Technological Advancements
The adoption of stablecoins is on the rise, driven by continuous technological improvements. According to Artemis and Dune, active stablecoin wallets increased significantly between February 2024 and February 2025. Furthermore, there are discussions about potential stablecoin legislation.
Stablecoin infrastructure has seen significant improvements, increasing confidence in their security. The majority of stablecoins are fiat-backed, with a smaller percentage backed by collateralized crypto assets. Riskier algorithmic stablecoins have become less popular.
Simplifications in UX also make stablecoins easier for non-crypto businesses to integrate. This, along with the increasing movement of assets onchain, means that payment companies using stablecoins on public networks like Ethereum will be better equipped for the future financial system. It’s important to note that earlier this year, BlackRock CEO Larry Fink expressed his desire for the SEC to quickly approve the tokenization of bonds and stocks, too.
Banks seeking a competitive advantage in a rapidly evolving financial landscape, with the rise of fintechs, shifting interest rates, and decreased consumer savings, may find that leveraging stablecoins to enhance their products and internal operations is a critical decision.
Key Benefits of Stablecoins for Banks:
- Enhanced Efficiency: Streamline payment processes and reduce reconciliation times.
- Reduced Costs: Lower transaction fees compared to traditional methods.
- Innovation: Offer new and innovative financial products and services.
- Competitive Advantage: Stay ahead of the curve in a rapidly changing financial landscape.
- Global Reach: Facilitate cross-border transactions with ease.
Opinion by: Megan Knab, CEO, Franklin Payroll.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
