Moody’s: Stablecoins Evolve into Institutional Digital Cash

Stablecoins Evolving Into Critical Infrastructure for Institutional Markets

Stablecoins are transitioning from niche crypto tools to essential components of the institutional financial ecosystem, according to a recent report by Moody’s. The research highlights a significant surge in stablecoin activity, with processed settlement volumes jumping by approximately 87% in 2025 to reach an estimated $9 trillion, driven by on-chain transactions used for liquidity management, collateral transfers, and settlement processes.

Key Takeaways

• Stablecoin settlement volume soared in 2025, indicating their growing role in institutional finance.


• They are increasingly integrated into the infrastructure of digital and traditional finance, complementing tokenized bonds, funds, and credit products.


• Major banks and asset managers are piloting blockchain settlement networks, tokenization platforms, and digital custody solutions, with projected investments surpassing $300 billion by 2030.


• Regulation is beginning to adapt, with frameworks such as the EU’s MiCA and various licensing initiatives worldwide shaping the landscape, but operational risks remain significant.

Tickers mentioned: None

Sentiment: Optimistic about the technological shift, cautious regarding regulatory and operational risks.

Price impact: Neutral. While institutional adoption is increasing, regulatory clarity and security measures are critical for sustainable growth.

Market context: The move toward digital cash infrastructure aligns with broader trends of tokenization and blockchain integration across conventional financial markets.

Market Adoption and Infrastructure Development

According to Moody’s, stablecoins—particularly fiat-backed variants and tokenized deposits—are serving as the backbone for cross-border payments, repo transactions, and collateral transfers in the evolving digital economy. These assets act as "digital cash," enabling seamless liquidity and settlement functions in a growing tokenized financial environment.

Moody's Digital Economy – Global 2026 Outlook. Source: Moody's

Financial institutions such as Citigroup and Société Générale have conducted successful trials using stablecoins for intraday liquidity and funds transfers, demonstrating the integration of these digital assets into existing banking systems. JPMorgan's JPM Coin exemplifies the use of deposit tokens that facilitate programmable payments and liquidity management within traditional banking infrastructure.

Regulatory and Security Challenges

The report emphasizes that regulation is progressively evolving to accommodate these changes, with frameworks like Europe’s MiCA and licensing schemes in the Gulf region providing legal clarity. However, the transition introduces new risks such as smart contract bugs, oracle failures, cyberattacks, and interoperability issues across multiple blockchain networks. Moody’s stresses that security, governance, and interoperability will be pivotal for the reliable functioning of stablecoins as systemic settlement assets.

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