Stablecoins Emerge as Key Component in Institutional Finance, Moody's Reports
According to Cointelegraph, stablecoins are transitioning from a crypto-native tool to a fundamental element of institutional market infrastructure, as highlighted in a recent cross-sector outlook report by Moody's. The report, released on Monday, indicates that stablecoins are projected to handle approximately 87% more settlement volume in 2025 compared to the previous year, reaching an estimated $9 trillion in activity. This growth is based on industry estimates of on-chain transactions rather than traditional bank-to-bank flows.
Moody's suggests that fiat-backed stablecoins and tokenized deposits are evolving into 'digital cash' for liquidity management, collateral movements, and settlements within an increasingly tokenized financial system. The report places stablecoins alongside tokenized bonds, funds, and credit products, marking a convergence between traditional and digital finance. In 2025, banks, asset managers, and market infrastructure providers conducted pilots on blockchain settlement networks, tokenization platforms, and digital custody to enhance issuance, post-trade processes, and intraday liquidity management. The report estimates that over $300 billion could be invested in digital finance and infrastructure by 2030 as firms develop the necessary frameworks for large-scale tokenization and programmable settlement.
Stablecoins and tokenized deposits are increasingly serving as settlement assets for cross-border payments, short-term secured loans, and collateral transfers. Moody's notes that regulated institutions utilized cash and US Treasury-backed stablecoins in 2025 to facilitate intraday movements between funds, credit pools, and trading venues, with trials conducted by banks such as Citigroup and Société Générale. JPM Coin is highlighted as an example of a deposit token model that integrates programmable payments and liquidity management into existing banking infrastructure, demonstrating how 'digital cash' can be layered onto traditional systems.
The report also addresses the regulatory landscape, noting that regulation is beginning to align with these developments. It highlights the European Union's Markets in Crypto-Assets Regulation (MiCA) framework, US stablecoin and market structure proposals, and licensing frameworks in Singapore, Hong Kong, and the United Arab Emirates as evidence of a global approach to tokenization, custody, and redemption rules. In Europe, initiatives like Société Générale-Forge’s EURCV are cited as examples of bank-issued products developed under the EU’s emerging stablecoin framework. Meanwhile, in the Gulf, banks and regulators are exploring UAE dirham-referenced payment tokens and broader digital money architectures.
However, Moody's emphasizes that this transformation is not without risks. As more value transitions to 'digital rails,' the report warns of potential smart contract bugs, oracle failures, cyberattacks on custody systems, and fragmentation across multiple blockchains, which could introduce new operational and counterparty risks. The agency argues that security, interoperability, and governance will be crucial, alongside regulatory clarity, to ensure stablecoins function as reliable institutional settlement assets rather than new sources of systemic vulnerability.
