Over the past few years, stablecoins have been defined by a narrow reality: essentially a two-horse race between Tether’s USDT and Circle’s USDC (CRCL), with the bulk of activity focused on crypto-native exchanges.
What comes next looks significantly different, Alchemy co-founder and president Joe Lau told CoinDesk in an interview.
The near-term trajectory of stablecoins has many directions, Lau said, but one theme dominates: stablecoin adoption is “exploding.” The reason, he argued, is that stablecoins offer tangible benefits that traditional payment and banking systems struggle to match, including 24/7 settlement and digitally native money movement.
“Stablecoins and deposit tokens are quickly becoming the consumer and business layers of the modern Internet-native financial system. With this foundation, money can flow with the security of the banking system and the speed of the Internet,” Lau said.
Banks are increasingly evaluating stablecoins, he said, alongside fintechs creating money movement and payment products.
Lau highlighted payment platforms and processors, highlighting Stripe’s activity in the space, as well as payroll providers and enterprise treasury solutions that are now considering stablecoins as part of their operational stack.
Stablecoins are cryptocurrencies linked to assets such as fiat currencies or gold. They support much of the crypto economy, serving as payment channels and a tool for moving money across borders. USDT is the largest stablecoin, followed by USDC.
The total market capitalization of stablecoins reached $300 billion in September, an increase of 75% from the previous year, according to a report from Morgan Stanley Investment Management.
Wall Street giant Citi (C) said the stablecoin market is growing faster than expected. This prompted the bank to recently raise its 2030 issuance forecast to $1.9 trillion in its base case and $4 trillion in an upward scenario, from $1.6 trillion and $3.7 trillion respectively.
Lau also said regulatory clarity is attracting more traditional players to the sector.
As the rules become clearer, he expects broader adoption by traditional finance – banks, neobanks, money transfer-focused fintechs and large payments companies – as stablecoins connect directly to the types of use cases these companies already serve.
A force majeure
However, Lau sees another major force shaping the future: banks are launching token deposits., which he describes as a complementary “alternative” to stablecoins.
In this model, Lau said, banks can offer their customers many of the same benefits associated with stablecoins, low transfer fees and faster settlement, but do so within existing regulatory frameworks, with the funds remaining in the bank.
Today, he says, moving money from a standard bank account can still involve transfers, fees and friction. With tokenized deposits, such as JPM Coin, customers can benefit from more stable features without leaving the banking environment. Lau added that HSBC has also expressed interest in token deposits and he expects more banks to follow.
According to Lau, tokenized deposits and stablecoins are currently competitive but complementary, as they tend to serve different users. Stablecoins are more open, he said, because they can be settled between two parties. Tokenized deposits are more closed-loop, he explained, because they are typically designed for a bank’s own customers. He noted that JPM Coin is limited to JPMorgan clients and will likely be used first by institutional and corporate clients.
However, over time, Lau expects the boundary to blur.
He said banks are starting with token deposits, but are already considering building rails for other token assets. At the same time, he said, stablecoin issuers are seeking to become more like banks, driven in part by capital efficiency. Lau argued that banks’ fractional banking model may be more capital efficient than stablecoin structures that require 1:1 backing, and that this gap is one reason why stablecoin issuers might want closer alignment with the banking model.
For now, Lau said, the two instruments remain complementary. However, he also touted tokenized deposits as an early development: Only a handful of banks have seriously invested in this area so far, he said, and as more do, adoption will grow, and stablecoins and deposit tokens will begin to compete more directly.
“Tokenized deposits transform the banking system into programmable infrastructure. Stablecoins modernize the dollar for consumers and global markets. As the two converge, money becomes both fully compliant and instantly accessible,” he added.
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