Banks Exploring Stablecoin Amid Fears of Losing Market Share, BitGo Executive Says
The burgeoning stablecoin market is attracting significant attention from traditional finance institutions, driven by concerns about losing market share to digital currencies. This increased interest is evident in the substantial demand for stablecoin-as-a-service offerings, as reported by BitGo’s managing director of stablecoins, Ben Reynolds, at Consensus 2025. Banks, both domestic and international, are actively exploring the potential of tokenized deposits and stablecoin issuance, primarily as a defensive measure against the disruption posed by digital alternatives.
While yield-bearing stablecoins and tokenized money market funds represent a rapidly expanding segment of the $230 billion stablecoin market, their current share remains relatively small. A16z’s Sam Broner highlights the primary use case of stablecoins as a payment and transaction mechanism, where yield is often a secondary consideration. However, the potential for “collateral mobility”—the seamless transfer of funds across different platforms—is identified as a key driver of future growth. This capability offers significant advantages over traditional money market funds, which are often constrained by lock-up periods, limited settlement times, and complex contractual requirements.
The benefits of yield-bearing stablecoins extend to institutional investors as well. Matt Kunke, crypto product strategist at BlackRock, emphasizes the friction associated with transferring funds between crypto exchanges and brokerage accounts. Yield-bearing stablecoins can significantly reduce this friction, benefiting DAOs, protocols, and market makers.
Regulatory distinctions will play a crucial role in shaping the stablecoin market’s future. The categorization of tokenized Treasury funds as securities, in contrast to traditional stablecoins, necessitates distinct market approaches. Joseph Saldana, CFO of the Wyoming Stable Token Commission, underscores the potential of yield-generating tokens to broaden investor access, particularly for the underbanked population, by removing the high minimum investment thresholds commonly associated with mutual funds. This increased accessibility aligns with the goal of providing broader access to financial instruments.
