In a recent cross-industry outlook report, Moody's has indicated that stablecoins are transitioning into essential components of institutional market infrastructure. This evolution marks a significant step from their origins as tools primarily used within the cryptocurrency ecosystem. The report highlights an estimated 87% year-over-year increase in settlement volume processed by stablecoins in 2025, reaching approximately $9 trillion.
Driving Forces Behind Stablecoin Adoption
Several factors are contributing to the growing prominence of stablecoins. Regulatory clarity, particularly with the introduction of frameworks like the GENIUS Act in the United States and MiCA in the EU, is fostering greater trust and encouraging adoption by banks, fintech companies, and retailers. These regulations address key concerns around reserve backing, custody, and governance, making stablecoins a more credible payment instrument. The rise of "Stablecoin 2.0," or yield-bearing stablecoins, is also attracting investors by offering returns derived from underlying assets like tokenized US Treasuries and DeFi lending.
Transforming Financial Operations
Stablecoins are increasingly being used as "digital cash" for various institutional purposes, including liquidity management, collateral transfers, and settlement. Traditional financial institutions are actively piloting blockchain settlement networks and tokenization platforms, further integrating stablecoins into their operations. Banks, such as Citigroup and Société Générale, utilized cash and US Treasury-backed stablecoins in 2025 to facilitate intraday movements between funds, credit pools, and trading venues. Moreover, stablecoins offer settlement efficiency, bypassing interchange fees and reducing delays associated with traditional cross-border payments. Faster settlement also improves cash flow, appealing to global retailers.
Regulatory Landscape and Challenges
The regulatory landscape for stablecoins is evolving globally, with frameworks emerging in the EU, the United States, Singapore, Hong Kong, and the UAE. In the U.S., the GENIUS Act establishes a federal structure for payment stablecoins, defining who may issue them, how they must be backed, and what must be disclosed. The FDIC has also proposed a rule creating a bank-centric process for issuing payment stablecoins, further integrating them into the traditional financial system. Despite these advancements, challenges remain. The lack of international legal frameworks regulating stablecoin issuers and transfers poses a hurdle. Interoperability with traditional banking systems and the absence of global ISO 20022 messaging standards can also complicate corporate payment transactions. Additionally, as more value migrates to digital rails, vulnerabilities in smart contracts, oracle failures, and cyberattacks could introduce new operational and counterparty risks.
Future Outlook
Looking ahead, the stablecoin market is expected to continue its expansion, potentially reaching a $1 trillion market cap by 2026. This growth will be driven by institutional adoption, regulatory clarity, and the rise of yield-bearing stablecoins. Stablecoins are poised to underpin institutional treasury and liquidity management, delivering instant settlement, programmable flows, and yield on demand. They are also expected to see increased use in cross-border B2B payments, digital asset settlement, and on-chain liquidity management. However, some experts predict stablecoins could challenge governmental control over fiat currencies as adoption increases. Despite the potential challenges, the overall outlook for stablecoins remains positive, with experts viewing them as a key component of the future financial landscape.
