Stablecoins were until recently seen mainly as a technical tool for cryptocurrency traders. A new outlook report from Moody’s shows that their role is rapidly evolving. According to the report, stablecoins and tokenized bank deposits are becoming a core part of financial infrastructure and are starting to function as digital cash for banks, funds, and other institutional players.

One of the clearest signals of this shift is the rapid growth in transaction volumes. In 2025, stablecoins processed an estimated 87% more settlement volume than the year before, reaching roughly $9 trillion. Crucially, a significant share of these transfers took place directly on Blockchain, rather than within traditional banking systems. Stablecoins are gradually moving from the margins of finance to its center.

Digital cash for banks and funds

Moody’s describes fiat-backed stablecoins and tokenized deposits as a digital equivalent of cash. Financial institutions use them to manage short-term liquidity, settle trades, and move collateral between funds, markets, and trading venues. In doing so, stablecoins are becoming a connective layer between traditional financial products and an increasingly tokenized financial system.

According to the report, 2025 was marked by intensive testing. Banks, asset managers, and market infrastructure providers experimented with blockchain networks, tokenization platforms, and digital custody solutions. The goal was to simplify issuance, accelerate settlement, and improve intraday cash management. Moody’s estimates that more than $300 billion could be invested in digital finance and infrastructure by 2030.

Stablecoins in real-world use

In this environment, stablecoins are increasingly used as everyday settlement instruments. They support cross-border payments, short-term securities-backed lending, and collateral transfers between funds and trading venues. Moody’s notes that regulated institutions in 2025 used cash- or U.S. Treasury-backed stablecoins for intraday liquidity movements. Tests were conducted at banks including Citigroup and Société Générale.

The report also highlights JPM Coin as an example of a tokenized deposit that enables programmable payments and liquidity management within existing banking systems. This illustrates that digital money is not meant to replace banks but to technologically extend their capabilities.

Regulation is starting to catch up

As stablecoins gain importance, regulation is evolving alongside them. Moody’s points to Europe’s Markets in Crypto-Assets Regulation, which sets clear rules for issuing and operating stablecoins across the European Union. Similar initiatives are underway in the United States and in financial hubs such as Singapore, Hong Kong, and the United Arab Emirates.

In Europe, the first bank-issued stablecoins are already emerging under the new framework, including EURCV from Société Générale-Forge. In the Gulf region, digital payment tokens linked to local currencies, including the UAE dirham, are also being tested.

Security will shape the next phase

Moody’s also warns that moving money onto digital infrastructure introduces new risks. These include smart contract vulnerabilities, technical failures, cyberattacks on custody systems, and fragmentation across different Blockchains. For stablecoins to function as reliable digital cash, regulation alone will not be enough. Security, interoperability, and clear governance frameworks will be critical. Only then can stablecoins become a durable pillar of the financial system rather than a point of weakness.

Sources:

https://www.moodys.com/research/Digital-Economy-Global-2026-Outlook-Digital-finance-links-diverse-Outlook--PBC_1463256#290612199861c31d1036b185b4e69b75

https://cointelegraph.com/news/moodys-stablecoins-institutional-digital-cash-settlement-2026