Stablecoins: Built to Replace Banks, Now Becoming Them
They were supposed to be the ultimate bank-killers. Now, they're starting to look suspiciously familiar.
The Irony of Success
Stablecoins launched with a revolutionary promise: cut out the middleman. No more waiting for bank transfers, no more hefty fees, no more asking permission. Just pure, borderless value transfer. They bypassed traditional finance's gatekeepers—and users flocked in. Adoption soared, transaction volumes hit records, and the market cap ballooned into the hundreds of billions. The old system was on notice.
The Regulatory Reckoning
Success attracts attention—and handcuffs. Governments and watchdogs, initially baffled, now see a shadow banking system operating in plain sight. They're moving fast. New frameworks demand reserves, audits, and licenses. The very decentralization that defined the space is getting boxed in by compliance departments. It's the classic playbook: can't beat them, regulate them—and maybe tax them while you're at it.
Becoming the Thing You Swore to Destroy
Look at the top stablecoins today. They hold massive treasuries, manage complex liquidity pools, and act as the primary settlement layer for entire ecosystems. They issue credit (through DeFi), facilitate savings (via staking), and process more transactions than some national payment networks. Sound like a bank? To a regulator with a hammer, everything looks like a nail—especially a profitable one.
The system always co-opts its greatest threats, turning rebels into bureaucrats with better UX. The future of finance isn't a revolution—it's a hostile takeover followed by a merger. The banks might not have won, but they're certainly writing the new rulebook.
Regulation turning stablecoins into regulated payment networks
In America, the GENIUS Act established a federal framework for payments with stablecoins—who can issue them, how to back them up, and how they’re regulated. In Europe, MiCA regulation (Markets in Crypto-Assets) became applicable in 2024 and set strict requirements for stablecoins under categories like “e-money tokens” and “asset-referenced tokens.”
These regulations foster legitimacy and safety, but at the same time push stablecoin issuers into the world of banks. When issuers need to comply with reserve, audit, KYC, and redemption requirements, the structure and essence of stablecoins shift. They become centralized gateways rather than peer-to-peer money. Over 60% of corporate stablecoin usage is cross-border settlement, not consumer payments. Stablecoins are becoming more institutional tools and fewer tokens for individuals.
The danger: becoming the next SWIFT
What does it mean to “become the next SWIFT”? It means evolving into the go-to rail for institutions; efficient yet opaque, centralized yet indispensable. SWIFT transformed global banking by enabling messaging between banks; it did not democratize banking access. If stablecoins mirror that evolution, they’ll deliver faster rails for existing players rather than empowering the unbanked.
Crypto’s promise was programmable money—cash that moves with logic, autonomy, and user control. But when transactions require issuer permission, compliance tagging, and monitored addresses, the architecture changes. The network becomes compliant infrastructure, not money. That subtle but profound shift may make stablecoins less radical and more reactionary.
A better path to open rails with compliance baked in
The challenge is not regulation; it’s design. To uphold the promise of stablecoins while adhering to regulatory demands, developers and policymakers should embed compliance in the protocol layer, maintain composability across jurisdictions, and preserve non-custodial access. Back in the real world, initiatives like the Blockchain Payments Consortium provide a glimpse of hope that standardizing cross-chain payments is possible without sacrificing openness.
Stablecoins must work for individuals, not just institutions. If they serve only large players and regulated flows, they won’t disrupt—they’ll conform. The design must allow true peer-to-peer movement, selective privacy, and interoperability. Otherwise, the rails will lock us into old hierarchies, just faster.
Stablecoins still hold the potential to rewrite money. But if we allow them to become institutionalized rails built for banks rather than people, we will have replaced one central system with another. The question isn’t whether we regulate—stablecoins will be regulated. It’s whether we design for inclusion and autonomy, or lock in yesterday’s system behind digital wrappers. The future of money depends on which path we choose.
