Banks Explore Stablecoin Adoption Amid Fears of Market Share Erosion

Traditional financial institutions are accelerating their exploration of stablecoins as regulatory clarity emerges in the U.S. market. BitGo’s Ben Reynolds revealed at Consensus 2025 that banks are approaching the technology defensively, fearing deposit flight to digital dollar alternatives.

"They’re not embracing innovation for its own sake—this is pure self-preservation," Reynolds noted during a panel discussion. BitGo’s stablecoin-as-a-service platform has reportedly received significant interest from both domestic and international banks seeking to tokenize deposits.

The trend coincides with surging demand for yield-bearing stablecoins and tokenized money market funds, though these products still represent a fractional share of the broader financial ecosystem. Institutions appear focused on maintaining relevance rather than ceding ground to crypto-native alternatives.