Stablecoins Were Built to Bypass Banks. Now They’re Becoming Banks.

Inside the making of a new monetary system

The Dream of Digital Dollars

When stablecoins first appeared, they felt like magic. A digital token you could send instantly, pegged to the dollar, and spend anywhere in the world. No volatility like Bitcoin, no delays like bank wires. Just money that moved at the speed of the internet. The pitch was simple: one coin always equals one dollar. Stablecoins promised to be the digital cash of the future (IMF, 2023).

The appeal was obvious. All you needed was a phone, an internet connection, and a wallet app. A worker in California could send $200 to family in Mexico in seconds. The World Bank (2024) says traditional remittances cost an average of 6.4 percent, often more than $12 on a $200 transfer, with some corridors above 10 percent. A stablecoin transfer, by contrast, typically costs 0.1 percent to 1 percent (OECD, 2024). The recipient receives digital dollars instantly, no bank account required. Compared to those fees and delays, stablecoins looked like a revolution.

They were built to bypass banks. But survival is forcing them to become banks instead.

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The Early Promise

For a while, stablecoins lived up to the hype. Transfers cleared in seconds instead of days (McKinsey, 2025). Programmable features allowed for escrow, automated payments, and yield-bearing accounts (OECD, 2024). In countries like Argentina or Venezuela, where local currencies lost value by the day, stablecoins became lifelines. Chainalysis (2024) tracked billions flowing into dollar-pegged tokens as citizens tried to escape inflation. They seemed to offer freedom: borderless, anonymous, and efficient.

This is the story most people still tell, that stablecoins are outsiders reshaping money. But the real story unfolding today is different. Stablecoins are not breaking the banking system. They are being absorbed into it.

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A Transformation Underway

The two largest issuers, Tether and Circle, control more than 80 percent of the $282 billion market (MacroMicro, 2025). And both are racing into compliance. Circle now calls USDC “the most regulated and trusted dollar digital currency in the world” (Circle, 2025). Tether, long the rebel, launched a new U.S.-regulated token in 2025, with CEO Paolo Ardoino calling it “a hedge against being excluded from the American market” (Tether, 2025).

Why the pivot? Because the rules are changing. In Washington, the 2025 GENIUS Act forces issuers to hold reserves in U.S. Treasuries or cash, under federal oversight (Reuters, 2025). Europe’s MiCA law and Hong Kong’s Stablecoin Ordinance do the same. Survival now means playing by government rules, earning trust, and partnering with big banks.

Banks smell the opportunity. JPMorgan has run its own JPM Coin since 2019 and, in 2025, expanded into deposit tokens. It is also working with Bank of America, Citi, and Wells Fargo on a consortium-backed stablecoin (Reuters, 2025). Jamie Dimon, once a skeptic who dismissed crypto as a “pet rock,” now says JPMorgan “has to be good at” stablecoins, even if he is not sure why people need them (Investopedia, 2025). The rebels are turning into incumbents.

Industry observers are already calling mid-2025 the “Summer of Stablecoins,” as new projects in commerce, payments, and real-world finance took off at unprecedented speed. Citi projects issuance could reach $1.9 trillion by 2030 in a base case, $4 trillion in a bull case, and $0.9 trillion in a bear case. With a projected velocity of 50x, stablecoins could support more than $100 trillion in annual transactions by 2030, or as much as $200 trillion in a bull scenario. These numbers explain why stablecoins are no longer just crypto experiments. They are becoming infrastructure.

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When Stability Cracks

The irony is that “stable” has not always meant safe. TerraUSD’s collapse in 2022 erased $40 billion overnight (HKMA, 2022). Circle’s USDC briefly lost its peg in 2023 when part of its reserves were frozen in the Silicon Valley Bank failure (Federal Reserve, 2023). Even Tether, the giant, admits it could be forced to dump Treasuries in a crisis if too many users rush for redemptions (J.P. Morgan, 2025). Stability, it turns out, is fragile when confidence is tested.

Governments know this. The Bank of England warned in 2025 that “stablecoins could pose risks to financial stability if widely adopted without safeguards” (Bank of England, 2025). The response is more oversight, not less. The result: stablecoins increasingly resemble the very banks they were meant to bypass.

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Privacy and Taxes: The Vanishing Promise

In the beginning, stablecoins promised anonymity. Anyone could move money without leaving a trace. That era is ending. The GENIUS Act now requires issuers to verify identities and report suspicious transactions (Reuters, 2025). Europe’s MiCA adds similar rules. Transactions once thought invisible are now fully traceable.

Taxes compound the shift. In the U.S., every stablecoin payment can be treated as a taxable crypto event, no matter how small (IRS, 2024). That makes daily spending far more complex than advocates imagined. What began as a tool for privacy is becoming financial plumbing subject to the same oversight as banks.

The Unbanked and the Unbankable

Yet for millions, the promise remains real. About 1.4 billion adults worldwide are still unbanked (World Bank, 2021). Another 1.7 billion are underbanked, relying on costly services like payday loans (OECD, 2023). Even in the U.S., nearly 6 million households have no bank account, and 19 million are underbanked (FDIC, 2022). For these groups, all you need is a phone and an app to access digital dollars.

Citi notes the benefits are not uniform. In advanced economies, where domestic payment systems already work 24/7 at low cost, stablecoins may add little advantage. But in frontier markets where remittance fees are still high and currencies unstable, they remain lifelines. Visa’s CFO called stablecoins “a natural extension of what we already do in payments” (Visa, 2024). That is why Visa is piloting them in Latin America.

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The Stablecoin Dilemmas

The Consumer Dilemma

For the unbanked, stablecoins might still be the first bank account they ever have. All it takes is a phone and an app. Yet with new rules like the GENIUS Act and MiCA, every transaction can now be monitored. Oversight is being embedded directly into the code of payment rails. Will people accept this trade-off in exchange for access, or will privacy-first alternatives flourish in the shadows, creating a parallel ecosystem outside the regulated sphere?

The Banking Dilemma

Big banks are racing to issue or integrate stablecoins, while smaller banks risk losing deposits and fee income. Citi notes that the impact depends on where stablecoin reserves are held. This is “Narrow Banking 2.0,” with flows concentrating into Treasuries and cash-like assets. They also forecast that bank tokens could surpass stablecoins, with $100 to $140 trillion in transaction volumes by 2030, signaling banks are adapting rather than fading. The question is not only whether community banks get squeezed, but whether the very structure of bank funding shifts in ways that favor scale over local resilience.

The Global Power Dilemma

Stablecoins funnel demand into U.S. Treasuries, reinforcing Washington’s dominance and sanctions reach. But Citi highlights a more fragmented future. Non-USD stablecoins could still reach $136 billion in a base case and nearly $300 billion in a bull case by 2030, with Hong Kong and the UAE driving regional ecosystems. The battleground is not only geopolitical. It is also regulatory and technological, with different blocs building their own standards and rails. The result may be a patchwork of digital blocs rather than a single universal system.

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Conclusion

Stablecoins started as rebellion but are turning into infrastructure. What was once pitched as borderless, anonymous digital cash is now being absorbed into the regulatory system. Citi projects a market as large as $1.9 trillion by 2030, capable of powering over $100 trillion in annual transactions, and as much as $4 trillion in issuance and $200 trillion in transactions in a bull scenario.

The consumer benefit is still real. They make remittances faster and cheaper, and they give the unbanked access to dollars with nothing more than a phone. For people in Argentina, Nigeria, or the Philippines, stablecoins are not a fad. They are survival tools.

But the trade-offs are growing. Privacy is fading, taxes complicate daily use, and issuers increasingly resemble narrow banks. The promise of freedom is colliding with the reality of oversight.

Banks face their own reckoning. Big banks are embedding stablecoins and launching deposit tokens that may surpass them in transaction volume. Smaller banks risk disintermediation unless they adapt. This is not the destruction of banking, but its transformation into “Narrow Banking 2.0.”

And stablecoins are reshaping geopolitics. They extend U.S. Treasury demand but also push rivals to accelerate alternatives, from euro and yuan tokens to regional stablecoins in Asia and the Middle East. The future is likely to be fragmented, not unified.

The real story is not disruption or adoption. It is transformation at scale. Stablecoins will not destroy the old system. They are rebuilding it in digital form. The question is whether this makes money safer, or whether it simply hides old risks behind a shinier interface.

Juan Salas-Romer

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References

Recent Cases

• World Bank (2024). Remittance Prices Worldwide Q1 2024.

• IMF (2023, 2025). Stablecoin and Digital Money Reports.

• J.P. Morgan Research (2025). Stablecoin Reserves and Treasury Markets.

• Reuters (2025). Coverage on GENIUS Act, Visa LATAM rollouts.

• ESMA (2025). MiCA implementation reports.

• HKMA (2025). Stablecoin Ordinance guidance.

• Federal Reserve (2023). USDC and SVB De-Peg Analysis.

• Financial Times (2025). Stablecoin adoption in advanced economies.

• MacroMicro (2025). Stablecoin market concentration tracker.

• Visa (2024). Pilot announcements on stablecoin settlement.

• Chainalysis (2024). Crypto Adoption in Emerging Markets.

• Bank of England (2025). Consultation on user caps.

• Investopedia (2025). Jamie Dimon on JPMorgan and stablecoins.

• Circle (2025). CEO Jeremy Allaire statements on USDC.

• Tether (2025). CEO Paolo Ardoino statements on USAT.