What Do I Need To Know About Stablecoins? A Guide For Banks & Credit Unions

Stablecoins have quietly crossed a threshold.

Once viewed as just another crypto gimmick, they're now being seriously considered by regulators, embraced by fintechs, and tested by a growing number of banks. In fact, while newer survey metrics from providers like Fireblocks suggest wide interest, with 49% of their customers reporting usage and 41% planning pilots, real engagement with stablecoin issuance or compliance remains much more limited among traditional financial institutions. As recently as 2023, 85% of banks and credit unions cited regulatory uncertainty as a primary barrier to adoption, implying that fewer than 15% had moved beyond early exploration into active implementation (Fireblocks, 2025 Banking and Stablecoin Survey).

And yet, many banks - especially community and regional institutions in the US - still don’t know what to make of them.

Let’s change that.

First, What Are Stablecoins, Really?

At their core, stablecoins are digital tokens pegged to real-world assets like the U.S. dollar and backed by reserves such as cash or short-term Treasuries. They offer the stability of fiat currency with the speed and programmability of blockchain technology (Business Insider).

This makes them distinct from volatile cryptocurrencies like Bitcoin. They’re designed to remain stable in value, hence the name.

Current applications include:

• Real-time cross-border payments that bypass the cost and latency of SWIFT or the high-cost complexity of international wires.
  
  
• Treasury Services  liquidity and internal settlements across bank branches or business units
  
  
• Payouts to contractors, creators, or gig workers, regardless of the location or residency of the worker
  
  
• Remittance rails that circumvent high wire fees and currency volatility
  
  
• Rules based payments is an emerging use cases in programmable finance, like smart contracts for milestone-triggered payments
  
  
• Deposit Retention & Interest Income becomes a benefit for both institutions and consumers, keeping more assets within the FI that they can leverage and allowing both parties to stake their coins for additional revenue
  
  

These aren’t speculative assets. They’re infrastructure.

Where Are We Today?

As of mid-2025, the market capitalization of USD-backed stablecoins stands at approximately $217 billion, up over 16% quarter-over-quarter (World Economic Forum). Transaction volumes in 2024 topped $28 trillion, with tokens like Tether (USDT) and USDC holding dominant market share.

At the same time, regulators are catching up:

• In the U.S., the GENIUS Act was signed into law in July 2025, establishing federal guidelines for stablecoin issuance (White House Factsheet)
  
  
• Mastercard and Fiserv recently partnered to pilot stablecoin rails on select payment networks (Barron's).
  
  
• The EU's MiCA (Markets in Crypto-Assets) framework is already in effect, offering a clear path for compliant stablecoin issuance across Europe (European Securities and Markets Authority).
  
  

The signal is clear. Stablecoins are being normalized in regulated finance.

The Compliance Angle

The GENIUS Act has created the framework for institutions – banks and crypto companies – to issue stablecoins, but compliance for stablecoins will look different from business as usual. Institutions need to be prepared to adjust their anti-money laundering (AML) controls. 

• The GENIUS Act highlights that stablecoin issuers must be able to “burn payment stablecoins when legally required,” creating an entirely new compliance requirement beyond existing controls for freezing sanctioned assets (GENIUS Act).
  
  
• The Trump Administration is also actively pushing for Congress to update Bank Secrecy Act (BSA) legislation to modernize AML requirements specifically for companies involved in crypto and stablecoins (White House).

According to Peter Piatetsky, a former Treasury regulator and the CEO of AML compliance platform Castellum.AI, “Institutions that are exploring licenses to issue stablecoins, whether to serve for payment rails or other functions like treasury services, must adjust their AML compliance risk controls. Real-time compliance monitoring is a need to have, not a nice to have.”

Should Financial Institutions Care? Absolutely, But Strategically.

Benefits for FIs:

• Always-on settlement for cross-border and internal transfers, reducing time and cost (GFT)
  
  
• Opportunities for new fee-based services around stablecoin custody or exchange
  
  
• Programmable payments that enable smart disbursement models
  
  
• Client differentiation, especially for commercial banking clients or fintech partnerships
  
  

Risks to Understand:

• Potential deposit flight if stablecoin wallets replace checking deposits
  
  
• Regulatory complexity, particularly for U.S.-based institutions still awaiting final rules
  
  
• Technical overhead in managing custody, compliance, minting, and redemption
  
  
• Perceived reputational risk, depending on public understanding of crypto vs. stablecoin
  
  

It’s not a question of “if” FIs will encounter stablecoins, but when and how.

How Financial Institutions Can Get Started

For FIs exploring this space, consider the following pragmatic approach:

1. Regulatory Literacy
   Monitor GENIUS Act developments in the U.S. and MiCA in the EU. Understand your current legal parameters under OCC guidance on digital assets (OCC Interpretive Letters).
   
   
2. Low-Stakes Pilots
   Explore stablecoins in closed environments - like internal treasury settlement, vendor disbursements, or employee payouts. These limited pilots provide learning without customer exposure.
   
   
3. Trusted Partnerships
   Work with infrastructure providers like Fireblocks, Circle, or GFT that specialize in custody, reserve backing, and regulatory compliance (Fireblocks).
   
   
4. Educate Your Teams
   Ensure that treasury, risk, compliance, and IT leadership understand what stablecoins are and are not. Education is essential before integration.
   
   

At Neural Payments, we’re evaluating how stablecoin rails may eventually connect to our real-time payments engine, expanding the ways our partner banks can send money - without sacrificing security, compliance, or control.

What’s Next

As Bernstein analysts recently noted, stablecoins are not likely to replace card-based consumer payments any time soon. Interchange and adoption dynamics are too entrenched (Barron’s). But that misses the bigger point.

Stablecoins may not be the solution for your Starbucks checkout line, but they are increasingly the preferred infrastructure for real-time, cross-network money movement at scale.

Ignoring them may feel safe now. But staying out too long could mean missing the next wave of payments innovation.

We’re here to help our FI partners explore that wave; thoughtfully, securely, and strategically.

Want to learn more about how Neural Payments is changing the payments landscape? Book a demo by following the link here.

Mick Oppy is the visionary co-founder and CEO of Neural Payments, a fintech company transforming the way financial institutions approach digital payments. Starting as an idea of his in an MIT classroom, Neural Payments has introduced a scalable, fraud-protected payments engine that empowers banks and credit unions to offer modern payment solutions without sacrificing control, brand identity, or security.

Peter Piatetsky is the co-founder and CEO of Castellum.AI, the only financial crimes compliance platform with in-house risk data, AML/KYC screening and AI agents. Trusted by community banks, sponsor banks, leading crypto exchanges and financial services firms, Castellum.AI enables compliance teams to scale their operations while maintaining precision, accountability and oversight. For more information, visit Castellum.AI.