Major Banks Race to Launch Stablecoins as $300B Market Matures
Tier 1 banks including ANZ and ABN AMRO are now actively issuing their own stablecoins, joining regional players like Brazil's Braza Bank, Banking Circle, and French institution Oddo. The shift marks a decisive move by traditional finance to capture a stablecoin market that has swelled past $300 billion in total supply.
The strategic logic isn't complicated. Banks want to keep client deposits within their regulated perimeter while offering the speed and programmability that crypto-native alternatives provide. Lose the stablecoin race, and corporate treasury flows start moving elsewhere.
The Infrastructure Problem Nobody Talks About
Spinning up an ERC-20 token takes an afternoon. Building one that won't blow up in your face? That's the actual challenge.
Consider what happened to Paxos in October 2025. A fat-finger error accidentally minted $300 trillion worth of PayPal's PYUSD—more than twice global GDP. The excess was burned within 22 minutes, but the incident exposed something uncomfortable: the infrastructure allowed it to happen in the first place. No automated safeguards stopped the transaction before execution.
For banks, this kind of operational risk is existential. Minting controls, governance structures, compliance policies, and asset recovery mechanisms all get baked into smart contracts at deployment. Retrofitting institutional-grade controls afterward ranges from extremely difficult to architecturally impossible.
Four Requirements Banks Can't Skip
Infrastructure provider Fireblocks, which works with several of these banking clients, identifies four non-negotiables for regulated stablecoin operations:
Key distribution: Billions in token supply can't depend on cryptographic keys that exist whole in any single location. MPC (multi-party computation) architecture ensures no individual can authorize minting alone.
Pre-settlement compliance: AML screening and sanctions checks must execute before transactions settle—not after. Blockchain finality happens in seconds. Reactive compliance reviews are useless when the money's already moved.
Custody that actually works: Reserve assets need institutional-grade security, but operations teams also need to mint and redeem 24/7 based on market demand. Traditional custody wasn't built for this tempo.
Audit readiness from day one: Transaction history and proof of reserves can't be reconstructed after the fact. Regulators are setting precedents with every digital asset examination, and early movers are shaping standards everyone else will face.
Regulatory Fragmentation Complicates Scaling
The regulatory picture remains fractured. Banking Circle launched what it calls the first MiCA-compliant bank-backed stablecoin (EURI) in Europe. Meanwhile, South Korea is preparing to propose its own stablecoin regulatory bill, and the SEC just issued guidance pushing stablecoins closer to cash status for certain purposes.
A White House meeting on February 23 brought banking and crypto stakeholders together for the third time, with discussions touching on innovation exemptions and stablecoin frameworks. The takeaway: institutions building solely around one regulatory regime risk costly re-engineering as they expand across borders.
The Balance Sheet Trap
There's a subtler risk banks are starting to recognize. Using third-party stablecoins for settlement means corporate deposits effectively leave the bank to sit in an external issuer's reserve accounts. Issue your own stablecoin, and those funds stay on your balance sheet.
Whether to issue independently or join consortium efforts carries significant implications for governance, distribution, and competitive positioning. Banks that establish infrastructure now are building operational muscle—compliance playbooks, client integrations, internal expertise—that later entrants won't easily replicate. Corporate treasury clients are already asking for stablecoin capabilities, and the infrastructure decisions made today will likely determine competitive positioning for years.