Banks are approaching stablecoins cautiously despite rapid market growth, reflecting an early-stage strategy and growing structural concerns, according to a report from S&P Global Market Intelligence.
According to Wednesday’s report, the question is no longer whether stablecoins will endure, but how they will reshape business models, infrastructure and revenue. For banks, the trade-offs are acute, encompassing deposit risk, modernization costs and new competition.
A wait-and-see posture still predominates. S&P Global’s Q1 2026 US Banking Outlook Survey found that just 7% of 100 mostly smaller institutions are developing frameworks, and none are actively testing them, underscoring how exploratory strategies continue.
“Most financial institutions remain early and cautious,” said Jordan McKee, director of financial technology research at S&P Global Market Intelligence, in emailed comments. “Our survey of US banks shows that stablecoin strategy is still largely exploratory, with limited internal development and no active pilots among smaller institutions.”
Stablecoins, digital tokens pegged to assets such as fiat currencies or commodities, have become a central layer for payments and settlements in cryptocurrencies, widely used in cross-border trade and flows. The market is dominated by Tether’s USDT, followed by Circle Internet’s USDC (CRCL).
The stablecoin market has rapidly grown to become a more than $300 billion sector, with the total market capitalization surpassing $316 billion by early 2026 after nearly doubling since 2023, according to multiple data sources.
Transaction volumes have also risen to tens of trillions annually, underscoring growing use in commerce, payments and cross-border transfers, while forecasts point to continued expansion, which could reach $500 billion or more in the near term as institutional adoption accelerates.
The pressure is increasing. The report noted growing concerns about deposit cannibalization and customer migration, along with an increase in mentions of stablecoins in earnings calls following the passage of the GENIUS Act in July 2025.
Competition is also intensifying. S&P Global highlighted a wave of non-bank entities seeking charters to house the issuance, custody and settlement of stablecoins within regulated entities, positioning themselves as credible alternatives.
Banks are also wary of performance-like incentives in stablecoin ecosystems that could compete with deposits, even as direct interest payments remain restricted.
The answers will differ. S&P Global analysts expect large global banks to explore issuing tokenized deposits or bank-backed digital assets, while regional and mid-sized lenders focus on facilitating access through fiat on- and off-ramps. Regardless of the strategy, banks will remain key gateways between fiat and stablecoin networks, but doing so will require significant upgrades to legacy systems that are not suitable for real-time digital asset activity.
Cross-border banks face the biggest push to modernize as payments move to multi-rail systems that combine traditional, real-time and tokenized networks. Interoperability and wallet infrastructure will be critical as large banks create multi-network connectivity and smaller businesses rely on fintech partners. Secure custody and integrated compliance are expected to become standards, the report added.
Read more: Stablecoin Rewards Restrictions May Slow, But Not Stop, Circle USDC, Says Citigroup
