Stablecoins were built to solve a crypto problem. Now they're being deployed to solve a problem for banks and multinational corporates.

What started as back-office plumbing for digital asset trading has become a strategic priority for the future of money movement. The reason is simple: Wholesale banking has a friction problem. It’s full of trapped capital, persistent risk exposure, and operational complexities that compound across time zones. Digital cash instruments, which include stablecoins and tokenized deposits, are digital representations of fiat currency: programmable, always-on, and able to move instantly across borders without going through the correspondent banking system. With stablecoin supply projected to grow fivefold to 12-fold by 2030, the question for banks is no longer whether this matters; it's where to move first and how fast.

Where capital gets stuck

In wholesale finance, what impedes the movement of money is not speed alone but persistent risk exposure and pre-funded liquidity tying up capital. These structural frictions carry economic costs for wholesale banks and multinational corporates. For example, when we surveyed CFOs last year, they named cross-border complexities as their leading pain point.

The most persistent frictions include cross-border/foreign exchange (FX) liquidity remaining fragmented, derivatives margining absorbing significant liquidity, and corporate treasury operations remaining segmented across subsidiaries and currencies.

Cross-border/foreign exchange liquidity remains fragmented. The Bank for International Settlements estimates that $9.6 trillion traded daily in FX markets as of April 2025. A meaningful share settles without payment vs. payment protection, particularly in emerging market pairs, among non–continuous linked settlement participants, and in off-hours trades. If one currency leg delivers before the other is confirmed, participants are exposed to full principal risk. Time zone mismatches require banks to pre-fund nostro accounts across jurisdictions. Cutoff times impose batch processing. With FX markets open only five and a half days per week, settlement gaps constrain hedging flexibility. This leads to increased risk, inefficient operations, idle balances, and reduced capital velocity.

Derivatives margining absorbs significant liquidity. Variation margin is calculated daily but often settled with delays of up to two business days. Initial margin buffers are conservative because margin exposure periods of risk persist. During episodes of volatility, collateral calls spike, amplifying liquidity strain across counterparties and across clearing members. Even modest delays translate into billions of dollars in temporarily immobilized collateral.

Corporate treasury operations remain segmented across subsidiaries and currencies. Multinational companies typically manage several treasury systems that involve multiple banking relationships with fragmented cash pools across jurisdictions, triggering internal funding transfers that are slow, operationally intensive, and dependent on banking cutoffs. Industry estimates point to trillions of dollars in idle nostro and corporate liquidity globally, balances that earn little while consuming balance sheet capacity.

In response, stablecoins and tokenized deposits supplement core infrastructure, functioning as liquidity mobility layers. By enabling near-instantaneous transfer of value with programmable settlement conditions, they can reduce exposure windows and increase intraday reuse of capital. Even incremental efficiency gains compound.

Shortening the margin period of risk in derivatives markets even modestly can reduce excess initial margin requirements. Velocity becomes as important as volume. When liquidity can be reused multiple times per day, required balances and buffers decline.

These gains materialize only if on-chain settlement synchronizes seamlessly with off-chain systems. Technology enables speed; value depends on integration.

Limited scale without seamless compliance

Technology can move tokens instantly; institutions cannot.

The binding constraint to scaling wholesale digital cash instrument flows is no longer transaction throughput but seamless compliance and data integration. Travel rule obligations, transfer-of-funds regulations, sanctions screening, and transaction monitoring frameworks must operate consistently across on-chain and off-chain environments. Blockchain analytics feeds must reconcile with internal monitoring engines. Wallet ownership verification must meet bank-grade standards. And audit trails must align across distributed ledgers and internal books and records.

Today, these integrations remain fragmented. Pilots succeed in controlled environments with limited counterparties. Scaling up, however, introduces cross-jurisdictional regulatory interpretation, inconsistent data standards, and varying levels of counterparty maturity. Reserve requirements, reporting transparency, and balance sheet treatments for stablecoin may all differ from traditional regulations. Without harmonized data models and compliance workflows, operational risk will rise.

Compliance in this context should focus on core infrastructure, not a control overlay. Institutions that underestimate integration demands may find early experimentation straightforward but enterprise deployment difficult. Conversely, those that invest early in compliance-grade blockchain connectivity by integrating wallet orchestration, sanctions screening, transaction monitoring, and regulatory reporting into a unified architecture will earn trust from regulators, counterparties, and corporate clients.

Target friction first

Not all applications justify equal investment. The most credible near-term opportunities cluster where liquidity, capital efficiency, and risk exposure intersect.

Foreign exchange settlement beyond traditional continuous linked settlement currencies represents a practical starting point. Stablecoin-based or tokenized deposit–based payment vs. payment mechanisms can enable near-synchronous settlement of both currency legs, including in emerging market corridors or during off-hours trading. Their use carries reduced principal exposure, lower pre-funded balances, and improved settlement transparency benefits. Crucially, this approach complements existing infrastructure rather than displacing it.

Tokenized collateral in derivatives markets offers another pragmatic beachhead. Faster delivery of variation margin and the potential for intraday collateralization can compress exposure windows. While the immediate impact may be incremental rather than transformative, even small reductions in margin buffers can materially improve capital efficiency over time. Provided the regulatory environment evolves favorably, enhanced collateral mobility can be a lever for balance sheet optimization for banks with large securities inventories.

Corporate treasury liquidity mobility forms a third domain. Stablecoin rails and tokenized deposits can facilitate faster intercompany transfers and cross-border liquidity sweeps without requiring wholesale redesign of enterprise resource planning systems. Adoption will hinge on minimizing client-side disruption. The transition must feel evolutionary rather than revolutionary, embedding new rails within familiar treasury workflows.

The right moves in the right order

In adopting stablecoins and tokenized deposits within wholesale banking, the sequencing matters. Issuance without strategic distribution lacks volume. Distribution without custody limits control. Custody without aligned and seamless compliance prevents scale. A credible pathway unfolds in phases.

• Stablecoin acceptance: Banks build digital asset custody capabilities, compliant wallet orchestration infrastructure, and regulated on-ramp and off-ramp connectivity. Acting as reserve institutions or distributors for established digital cash instruments allows participation without immediate balance sheet expansion.
• Targeted wholesale pilots: Institutions deploy programmable settlement rails in specific FX corridors, collateral workflows, or liquidity mobility use cases with anchor clients. Several bank-led platforms are already processing billions of dollars in daily on-chain wholesale payments, demonstrating that programmable settlement has advanced to real operation.
• Issuance, if justified by scale: Proprietary or consortium-based stablecoin or tokenized deposit issuance becomes rational only once internal and client flows reach sufficient density to justify the operational complexity and regulatory scrutiny. Issuance is not necessarily the starting point; it is the outcome of proven utility and network participation.

Banks that sequence deliberately can defend deposits, protect wallet share, and maintain customer experience and influence over evolving liquidity standards.

Use cases Instruments Infrastructure Partnerships and ecosystem

• Use cases
• Instruments
• Infrastructure
• Partnerships and ecosystem

The network effect advantage

Wholesale settlement infrastructure operates on powerful network dynamics in which first movers gain significant advantages. Governance structures, currency coverage, interoperability standards, and membership models differ, and in these early stages, the participants and platforms influence each other.

Banks that engage early help define interoperability frameworks, shape network design, and can strategically participate in the public-private exchange that informs regulatory developments. Banks that delay may ultimately participate, but they’ll do so on terms set by others, having missed their opportunity to shape the market and thus ceding strategic control, client goodwill, and ultimately business volume to earlier adopters.

Two rails, one system

Stablecoin and tokenized deposit use in wholesale banking aims to augment, not replace, existing financial instruments and infrastructure.  Here, a key challenge is how to orchestrate liquidity across both environments without fragmenting it.

Digital asset custody must embed within existing risk frameworks. Wallet infrastructure must connect seamlessly to corporate and institutional client channels. Blockchain connectivity should span permissioned and public networks where appropriate. Real-time reconciliation between on-chain transactions and internal ledgers must become standard practice.

Without careful design, tokenized rails risk splitting liquidity pools across fiat and digital channels, increasing rather than reducing capital inefficiency. Institutions must ensure fungibility across both environments, enabling treasurers and trading desks to deploy capital where it earns the highest risk-adjusted return.

Regulators will demand transparency, auditability, and risk controls equal to or exceeding traditional systems. Therefore, institutions that treat compliance as an enabler rather than an obstacle will build trust more rapidly. Globally aligned regulation will unlock further adoption and momentum. While several jurisdictions have strong regulations in support of stablecoins, these are not yet aligned and cause friction. As regulation evolves globally, alignment will become the unlock.

The great rewiring

The greatest opportunity for digital cash instruments lies in wholesale money movement, where trapped capital and cumbersome timelines intersect. It offers structural improvement in capital efficiency, settlement certainty, and cross-border liquidity mobility.

Institutions that succeed will focus on high-friction use cases first, invest early in compliance-grade integration, and pilot corridor by corridor. They will differentiate clearly between stablecoins and tokenized deposits, issuing them only when scale justifies complexity. Importantly, they will treat settlement network participation as a strategic decision, not a technical one.

Regulatory evolution and technology maturity are still significant unknowns. But the greater risk is complacency. Infrastructure shifts rarely announce themselves as revolutions. They begin as incremental efficiency gains that compound over time. Liquidity moves faster. Capital turns more frequently. Clients notice.

Stablecoins and tokenized deposits are unlikely to transform wholesale banking overnight, yet they are already reshaping the economics of money movement. Institutions that help design the new wiring will be best positioned to run on it and to capture the value it creates.