Banks are approaching stablecoins cautiously despite rapid market growth, reflecting an early strategy and rising 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 last, but how they will reshape business models, infrastructure and revenue. For banks, the balance is sharp and spans deposit risk, modernization costs and new competition.
A wait-and-see attitude still dominates. S&P Global’s Q1 2026 US Bank Outlook survey found that only 7% of 100 mostly smaller institutions are developing frameworks with none actively piloting, underscoring how exploratory strategies remain.
“Most financial institutions remain early and cautious,” Jordan McKee, director of fintech research at S&P Global Market Intelligence, said in emailed comments. “Our survey of US banks shows that the stablecoin strategy is still largely exploratory, with limited internal development and no active pilots among smaller institutions.”
Stablecoins, digital tokens tied to assets such as fiat currencies or commodities, have become a core layer of payments and settlement in crypto, widely used in trade and cross-border flows. The market is dominated by Tether’s USDT, followed by Circle Internet’s (CRCL) USDC.
The stablecoin market has grown rapidly into a sector worth more than $300 billion, with the total market capitalization exceeding $316 billion by early 2026 after nearly doubling since 2023, according to multiple data sources.
Transaction volume has also risen to tens of trillions annually, underscoring increasing use in commerce, payments and cross-border transfers, while forecasts point to continued expansion, potentially reaching $500 billion or more in the near term as institutional adoption accelerates.
The pressure builds. The report pointed to growing concerns over deposit cannibalization and customer migration, alongside an increase in stablecoin mentions on earnings calls following the passage of the GENIUS Act in July 2025.
The competition is also intensifying. S&P Global highlighted a wave of non-banks pursuing charters to house stablecoin issuance, custody and settlement within regulated entities, positioning themselves as credible alternatives.
Banks are also wary of yield-like incentives in stablecoin ecosystems that could compete with deposits, although direct interest payments remain limited.
Answers will vary. S&P Global analysts expect major global banks to explore issuing tokenized deposits or bank-backed digital assets, while regional and mid-sized lenders focus on facilitating access via fiat on- and off-ramps. Regardless of strategy, banks will remain important gateways between fiat and stablecoin networks, but doing so will require significant upgrades to legacy systems ill-suited to real-time digital asset activity.
Cross-border banks face the strongest pressure to modernize as payments shift to multi-rail systems that combine traditional, real-time and tokenized networks. Interoperability and wallet infrastructure will be critical, with large banks building multi-network connectivity and smaller firms leaning on fintech partners. Secure custody and embedded compliance are expected to become standard, the report added.
Read more: Stablecoin reward restrictions may slow but not stop Circle’s USDC, says Citigroup
