Banks and payment companies are testing stablecoins, a type of cryptocurrency designed to maintain a consistent value, as a faster alternative to traditional money transfer systems. Financial institutions are exploring how these digital tokens could speed up global payments and help businesses and consumers process transactions more efficiently. According to Bloomberg, stablecoin transaction volumes reached approximately $33 trillion in 2025, up from $19.7 trillion the previous year, signaling growing adoption of this technology.
Major financial services including Visa, Stripe, and Revolut have begun integrating stablecoins into their platforms. Meanwhile, traditional banks such as Bank of America, Citigroup, and Goldman Sachs have announced they are jointly exploring stablecoins tied to major national currencies. In January 2025, Wyoming became the first U.S. state to launch a state-backed stablecoin called the Frontier Stable Token.
Understanding Stablecoins and How They Work
A stablecoin is a digital crypto token that represents a fixed amount of currency, most often one U.S. dollar. Each token is designed to track that value consistently because it is backed by an equal amount of reserves held by the issuer. Unlike volatile cryptocurrencies such as Bitcoin, stablecoins are intended for everyday transactions rather than trading and investing.
Stablecoins can be issued by banks, government-related entities, or private companies. The issuer decides how many tokens will exist and holds the money or assets that back each token. However, different issuers operate under different levels of oversight, and regulatory rules for each are still being defined by lawmakers.
Regulatory Framework Driving Adoption
Interest in digital token technology has grown steadily over the past seven months alongside clearer regulation. In July 2025, President Donald Trump signed the GENIUS Act into law, which created a federal framework for certain dollar-backed digital crypto tokens. Regulators then opened 2026 by advancing proposals on crypto market regulation, according to Reuters.
That regulatory momentum has made banks more willing to test the technology at scale, increasing the likelihood consumers will soon see stablecoins as an option at some checkouts. The World Economic Forum predicts that 2026 will be a “defining moment” for crypto technologies as financial institutions gain confidence in the regulatory environment.
Three Main Types of Stablecoins
Not all stablecoins are created equal, according to Corey Ballou, head of trust and safety engineering at OpenSea. The main difference between stablecoin types is the method used to maintain their value. Some are issued by regulated entities and backed by reserves such as cash or short-term government securities, while others rely on algorithms or market incentives.
Dollar-backed stablecoins are the most common type. Each digital dollar is backed by real money or government assets held by the company or bank that issued it. One example is USD Coin, known as USDC, which is issued by Circle, a U.S.-based financial technology company. Circle says USDC is 100% backed by cash and cash-equivalent assets like short-term U.S. Treasuries.
Crypto-backed stablecoins are backed by other cryptocurrencies instead of cash. Computer programs help manage this process, and these tokens are more commonly used by traders familiar with crypto platforms. One example is SkyDollar, issued by Sky, formerly known as MakerDAO.
Algorithm-based stablecoins rely on software that automatically increases or decreases the number of tokens in circulation to maintain stable pricing. However, some of these systems have failed in the past, most notably the collapse of TerraUSD in 2022, which de-pegged from its $1 valuation and lost value, according to Reuters.
Where Consumers May Encounter Stablecoins
For most consumers, stablecoins are not expected to replace cash, credit cards, or bank accounts outright. Instead, banks and payment companies are beginning to offer dollar-linked digital tokens as an additional way to pay for more flexibility. Stablecoins are already used in some online shopping checkouts, money transfer apps, and cryptocurrency platforms.
In financial apps such as Revolut, which an estimated 65 million individuals use to send money internationally, stablecoins are now a currency option alongside traditional fiat currencies. Revolut announced in October 2025 that it would eliminate transaction fees for certain types of stablecoins, potentially making peer-to-peer payments cheaper.
Additionally, Visa is testing stablecoins to help businesses pay overseas suppliers, contractors, or partners more quickly at convenient hours when banks in different time zones are closed. Payments company Stripe plans to let businesses accept stablecoins from customers who want to pay invoices and subscriptions in crypto, with transactions settling in the business’s Stripe balance as USD.
Furthermore, money-transfer apps like Zelle announced in October 2025 that it will begin testing the use of stablecoins to allow users to send money internationally. Western Union announced a pilot for its own digital dollar token called USDPT, which will be issued by Anchorage Digital Bank in the first half of 2026.
Safety Considerations for Consumers
Stablecoins are designed to be less volatile than other cryptocurrencies, but their safety for consumers depends on how they are issued, stored, and used. Ballou said the way people use digital wallets can play a major role in safety, sometimes posing new opportunities for risk. He recommends only storing in crypto wallets what users would be comfortable spending or potentially losing if hacked.
Crypto wallets function more like payment apps than traditional bank accounts. Starting with small amounts, keeping wallet software up to date, and using device-level protections such as passcodes or biometric locks can significantly reduce risk, according to Ballou. He also emphasized protecting recovery information that allows users to regain access to a wallet if they lose a phone or device.
Ballou urged users to slow down before sending funds and verify transaction details before clicking send. Users should double-check the destination address, the amount, the fees, and the asset before confirming a transaction, the report indicates. Recovery phrases should be written down and stored offline in a secure location and never saved digitally or shared with anyone.
The regulatory landscape for stablecoins continues to evolve as lawmakers work to define oversight responsibilities and establish clear rules for issuers. While major financial institutions move forward with testing and implementation, authorities have not confirmed specific timelines for comprehensive federal regulations beyond the GENIUS Act framework.