Stablecoins have long been considered “cash” in cryptocurrency markets, providing a way to trade Bitcoin, move liquidity between exchanges, and avoid volatility without ever leaving the blockchain.
Now, traditional consumers are also embracing stablecoins. In the past year alone, stablecoin frameworks have been introduced by regulators. Meanwhile, stablecoin routes have been integrated by payment giants, and companies are experimenting with them for cross-border payments.
Naturally, this raised an important question: Will stablecoins replace banks?
Cross-border payment mechanism
To put things into perspective, traditional cross-border payments still rely on pre-funded Nostro accounts, SWIFT messages, and correspondent banks. This makes transfers expensive, time-consuming, and opaque.
However, businesses now have a faster and less expensive way to settle international payments. Stablecoins help complete transfers in seconds and operate 24/7, without the need for correspondent banks or pre-funded accounts.
This benefit is what causes adoption.
Metrics supporting the stablecoin adoption race
MasterCard, for example Agreed To buy BVNK for up to $1.8 billion, Visa stablecoin settlement volume Reached a multi-billion dollar annual run rate by late 2025, and Embedded bridge scheme in its payment system.
This proves that banks are not being replaced by stablecoins. Although it enhances payment infrastructure, it does not provide credit origination, lending, or deposit insurance.
According to Mackenziestablecoin payments will total about $400 billion in 2025, while token bank deposits are expected to transfer about $4 trillion annually.
Additionally, only 15% of every $1,000 converted into USDC or USDT goes back to banks as reserves, which explains why banks tokenize deposits to maintain funding while increasing blockchain efficiency.
This has prompted the Bank of England to ease planned restrictions on stablecoins.
Mixed opinions from industry leaders
In an email sent to AMBCrypto, Shannu Saxena, CEO and founder of Encryptus, a regulated cross-border payments infrastructure provider, noted:
The Bank of England’s decision to scrap individual ownership limits and lower reserve requirements is a welcome step forward, but the £40bn issuance limit suggests policymakers are still focused on the wrong risks.
Although a large portion of demand is driven by cross-border payments, Saxena believes the framework assumes that stablecoins primarily compete with local bank deposits.
He added,
Placing a £40 billion cap on sterling-denominated stablecoins may seem generous, but it effectively maintains the infrastructure at a pilot scale, while dollar-denominated stablecoins issued elsewhere already support real remittance flows.
Pablo Hernandez de Cos, Director General of the Bank for International Settlements Similar opinions were expressed During his April speech at a Bank of Japan seminar, where He said,
If widely adopted in their current form, stablecoins would pose policy challenges in many areas, from credit provision to monetary policy. It is important for policymakers to consider how these challenges differ from those that arise in today’s two-tier banking system.
Critics of stablecoins still exist
However, in a recent email to AMBCrypto, Maxim Sakharov, CEO and co-founder of WeFi, disputed this view.
Stablecoins put pressure on the weakest parts of the cross-border infrastructure: settlement delays, too many intermediate steps, unclear costs, and slow settlement. It makes it more difficult to ignore the need to improve infrastructure.
In addition, although his bank has developed around the product, JP Morgan CEO Jamie Dimon has adopted a more skeptical stance. He says he doesn’t understand why anyone would choose a stablecoin over a traditional payment method.
However, he also reiterated that JPMorgan “will be involved and learn a lot” anyway, as it operates both its own deposit token and third-party stablecoin mints at the same time.
Where will this go over the next decade?
However, the stablecoin market cap has already reached $312 billion, with Circle and Tether controlling about 85% of the supply and 99% of it denominated in US dollars.
Interestingly, it also exceeds the reserves of 95 countries.
Here, Sakharov added what the stablecoin market needs to grow further.
True adoption is evident when stablecoins solve recurring financial problems. A freelancer who gets paid from an international client, a company that settles with suppliers, or a company that manages cross-market treasury uses stablecoins for access, speed, and predictability.
Therefore, it is safe to conclude that coexistence rather than substitution is most likely a result of the rise of the stablecoin market.
While banks still provide services such as deposits, lending and compliance, stablecoins are replacing the slow and expensive payment methods that underpin traditional banking.
Final summary
- The stablecoin market has reached a market cap of $312 billion, with Circle and Tether controlling around 85% of the supply.
- Amid concerns about stablecoins replacing banks, adoption and regulations are changing attitudes.
