Will stablecoins survive once traditional banks catch up?

November 10, 2026, 9:00 a.m. EST

5 min read

Payward, the parent company of Kraken, has agreed to acquire Saldo Bank, an institution holding a digital banking license in Lithuania, through a transaction that grants the cryptocurrency exchange the European banking authorization it was previously reported to seek. This agreement still requires regulatory approval and is anticipated to finalize in 2027. It follows Kraken Financial becoming the initial digital asset institution to secure a Federal Reserve master account during March. Meanwhile, seven British banks successfully finalized their primary live customer transactions utilizing tokenized deposits, alongside 25 U.S. banks constructing a collective network to achieve identical functionality.

As cryptocurrency corporations and traditional lenders move closer together, it is reasonable to question what permanent advantages stablecoins actually maintain.

From the perspective of a corporate treasurer, the solution centers on fairly standard considerations: whether funds arrive dependably, the associated expenses, and the level of security included. If an existing financial institution can provide all three conditions, motivations for transferring capital to a separate stablecoin issuer diminish significantly.

The early advantage held by stablecoins is undeniable. However, should commercial banks deploy widely accessible and interoperable tokenized deposits, the primary competitive pressure facing stablecoins might stem from traditional financial institutions catching up. Four specific challenges will determine if that outcome materializes: whether bank-issued money can replicate stablecoin utility, if lenders can successfully collaborate, who retains the accrued interest, and the complex hurdles surrounding access and identity verification.

The technology isn’t exclusive to stablecoins

Consider the underlying technology first. A tokenized deposit represents a conventional bank liability recorded on a distributed ledger: it remains a claim against the institution while supporting the identical programmable payment capabilities found in stablecoins, executing automatically once predetermined parameters are satisfied.

Reserve-backed stablecoins operate differently. Owners depend entirely upon the issuer’s backing assets and redemption procedures, whereas a qualified bank deposit can accumulate interest and secure deposit insurance coverage within established statutory limits.

A research document released by Capgemini and Quant indicates that banking institutions can facilitate continuous round-the-clock transfers without redesigning their core infrastructure.

Furthermore, bank-created money is not restricted to closed networks. JPMorgan’s deposit token, JPM Coin, has deployed on Base and continues expanding onto Ethereum, although the financial institution retains authority over eligibility requirements. For corporate entities that have cleared identity checks, this restriction presents no barrier. Purely on a functional basis, stablecoins hold no permanent advantage.

The real test is whether banks can work together

Coordination represents the arena where stablecoins currently maintain dominance: they bridge digital wallets, trading platforms, and applications across various global markets, whereas a payment token restricted to a single bank offers limited utility.

Traditional banking addressed this challenge historically through established clearing and settlement mechanisms. Tokenized deposits demand identical foundational elements: standardized protocols, interoperable architectures, and interbank settlement executed in central bank currency. Issuing a digital token is straightforward; convincing rival financial institutions to honor each other’s liabilities presents the true obstacle.

Indications of advancement are visible. In the United Kingdom, the seven participants within the Great British Tokenized Deposit initiative have executed pilot transfers utilizing tokenized sterling balances. Within Germany, the Commercial Bank Money Token (CBMT) initiative finished its initial live institutional payments during May. Across the United States, The Clearing House is actively developing a tokenized deposit ecosystem supported by 25 lenders.

None of these three frameworks currently interface with one another, yet the structural coordination hurdle has successfully transitioned from theoretical discourse into operational reality.

Holders give up interest while issuers earn it

Another critical factor involves economic benefit. Prominent stablecoin operators generate revenue from the reserve assets supporting their tokens; general holders typically receive zero financial return.

Statutory mandates in the United States will soon enforce this dynamic. The GENIUS Act, scheduled to take effect in January, prohibits stablecoin creators from distributing interest to holders purely for maintaining token balances. Yield distributions facilitated through intermediary partners such as exchanges occupy an ambiguous regulatory space: guidelines issued in October by the Office of the Comptroller of the Currency, a federal banking regulator, dictate that such mechanisms will be evaluated on an individual basis.

Tokenized deposits possess the capacity to generate interest, although migrating a standard checking account onto a blockchain ledger does not inherently make a financial institution more generous.

A corporation managing significant capital reserves has valid grounds to question why it should forfeit potential earnings if banking products deliver equivalent payment functionality. Certain clients will determine that the convenience and connectivity offered by stablecoins justify the associated financial trade-off; traditional lenders will be forced to compete on those exact terms.

Access and identity are the harder questions

Ultimately, stablecoins retain distinct properties that commercial banks cannot easily duplicate. Self-custody capabilities, seamless integration with decentralized finance ecosystems, and deep liquidity pools remain critical for numerous participants.

For individuals unable to acquire a functional dollar-denominated account, particularly in regions where severe inflation or domestic banking mistrust complicates personal savings, dollar-pegged stablecoins provide extraordinary value.

Identity verification remains more problematic. Transactions executed between unhosted wallets appeal to users desiring complete anonymity, and public ledger transparency does not inherently reveal the true identities of participating entities. Legitimate financial access and illicit activities frequently rely on identical underlying infrastructure.

As verification standards applied to holders become increasingly rigorous, accessibility begins to mirror traditional banking procedures. Consequently, while stablecoins retain a vital function, their overall market scope becomes more constrained.

Final thought: digital money is joining the banking system

Taken together, the three emerging networks alongside Kraken’s bank acquisition signal a unified trajectory: rather than displacing regulated financial infrastructure, digital currency appears destined for integration within it.

Banking institutions that integrate into shared digital networks preserve deposits that might otherwise migrate toward stablecoin operators; institutions that remain isolated risk losing corporate client capital to competitor tokens.

The ultimate outcome depends heavily on regulatory bodies. The determination by Germany’s regulatory authority, BaFin, classifying CBMT tokens as recognized deposits is promising, but the more rigorous challenge involves cross-border harmonization occurring at the rapid pace set by the marketplace.

Stablecoins will likely endure, albeit within a framework that is substantial yet specialized. Their issuers have successfully demonstrated organic market demand. Traditional lenders have commenced cooperative development. Whether these banking networks mature before stablecoins become too deeply entrenched to replace, and whether regulators pave the way, will determine how much of that core demand stablecoins ultimately retain.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.