Stablecoins and Banks: Hype, Reality, and the Business Value Question

Stablecoins have been dominating the headlines and fintech conferences lately. Recent large acquisitions and regulators' commentary suggest bank adoption is inevitable.

As someone leading digital assets strategy at a Saudi bank, I'm doing my best learning about this exciting and innovative payment method, such as attending KSA's first stablecoin event a few weeks ago. I've been bombarded at work with a lot of questions that I'm yet to find clear answers to in the market. These questions revolve around whether stablecoins can truly create business value for banks in markets that already enjoy deep USD liquidity, strong regulatory systems, and robust financial infrastructure.

The Reality of Stablecoin Usage

Let’s start with where stablecoins are actually used and where the issue starts for bank adoption.

1. Most stablecoin flows are tied to crypto trading and lack auditing. Despite stablecoins being touted as a fast-growing payment method, usage actually remains largely confined to crypto-asset trading, with minimal uptake in consumer payments, per Goldman Sachs. This is an area most banks have little strategic reason to enter. In addition, by far the most used stablecoins are USDT and USDC, but I understand that neither have undergone a full independent audit. I can't see this being acceptable for most banks to accept such stablecoins.
2. Stablecoins act as "digital dollars" in emerging markets. Those in countries facing currency volatility or restricted dollar access present a key use case for stablecoins, although I'm not convinced the banks in these countries wish to get involved. And as far as banks in countries like Saudi Arabia are concerned, they already have reliable access to USD and therefore the supposed advantage of US-denominated stablecoins looks much less compelling.

In other words, the value proposition for stablecoins is highly context-dependent. What solves pain points in one region and one market (e.g. crypto trading) may not solve them in another.

The GENIUS Act: Oversold for Global Banks

Another common claim is that regulatory moves like the U.S. GENIUS Act are catalysts for stablecoin adoption worldwide. There's a lot to unpack here but I think a key thing to remember is that the Act is most importantly a geopolitical playto reinforce USD dominance in developing markets.

Again, for banks in advanced financial systems, the GENIUS Act doesn’t magically erase challenges around compliance, KYC/AML, operational risk, or governance.

What Banks Should Really Consider

From a banking perspective, there are two key factors stablecoins are so far struggling to tick to enable adoption:

1. Safety and Trust: Without full audits and with unresolved KYC/AML concerns, stablecoins risk profile are so high that I don't see most banks approving development past PoCs at the moment.
2. Business Value: And beyond safety, is there a meaningful upside? Do stablecoins lower FX costs, expand cross-border reach, or boost customer satisfaction where there’s genuine demand? Potentially, but there's a strong argument tokenized deposits and CBDCs deliver the same benefits with much clearer regulatory guardrails.

A Message to Stablecoin Providers

If there’s one piece of advice for stablecoin companies approaching banks, it’s this: speak our language. Don’t assume that banks in mature systems share the same pain points as those in emerging markets. Focus on demonstrating:

• Auditability and independent verification of reserves.
• Clear solutions for KYC/AML and customer protection.
• And above all, the business value: can you drive FX revenue, reduce friction, or meet real customer demand in a way that complements — not conflicts with — tokenized deposits and CBDCs.