Bank Stablecoins Stuck in Sandboxes
- WatersTechnology reported Friday that most bank stablecoin projects are still in pilots or sandboxes, with banks struggling to move tokenized cash from demos into production payment and treasury systems. - The article, based on interviews with more than 25 industry experts, said the bottleneck is integration, controls, and operating-model design, not minting a token or proving blockchain settlement works. - The backdrop is rising stablecoin use and regulatory pressure to choose between stablecoins and tokenized deposits as banks modernize payments rails. (federalreserve.gov)
Stablecoins are digital tokens meant to hold a fixed value, usually one U.S. dollar, and banks have spent years testing whether they can move money faster than legacy payment rails. WatersTechnology reported Friday that most bank projects are still stuck in pilots. (waterstechnology.com) The report said the problem is no longer whether a bank can issue a token in a lab. It said interviews with more than 25 experts pointed instead to integration with core banking systems, governance, compliance, and operational controls as the main blockers. (waterstechnology.com) In plain terms, a pilot can show that a token moves from wallet to wallet. A production system has to reconcile balances, screen transactions, manage redemptions, survive outages, and satisfy internal audit and regulators every day. (waterstechnology.com) (mckinsey.com) That distinction matters as stablecoins grow outside bank walls. Federal Reserve staff wrote on April 8 that stablecoin market capitalization grew about 50% during 2025, with transaction volume and decentralized-finance use also rising. (federalreserve.gov) McKinsey wrote in July 2025 that stablecoin circulation had doubled over the prior 18 months but was still handling about $30 billion in daily transactions, less than 1% of global money flows. That leaves banks chasing a market that is growing quickly but is still early enough for infrastructure choices to matter. (mckinsey.com) Some banks and bank affiliates have moved beyond theory. Société Générale-FORGE said on June 10, 2025 that it would launch its U.S. dollar stablecoin USDCV on Ethereum and Solana, with BNY serving as reserve custodian. (sgforge.com) J.P. Morgan said in 2025 that Kinexys was piloting JPMD, a U.S. dollar deposit token on Coinbase’s Base network for institutional clients. The bank framed JPMD as an alternative to stablecoins for near-instant, 24/7 settlement and near real-time liquidity. (jpmorgan.com) Custodia Bank and Vantage Bank said on March 25, 2025 that they completed what they called America’s first tokenization of a bank’s U.S. dollar demand deposits on a permissionless blockchain, issuing, transferring, and redeeming Avit stablecoins for a bank customer. (custodiabank.com) Even with those launches, the policy debate is moving toward whether banks should issue stablecoins at all or focus on tokenized deposits tied more directly to the banking system. The Bank for International Settlements said in June 2025 that stablecoins fall short of the tests of singleness, elasticity, and integrity that it applies to sound money. (bis.org 1) (bis.org 2) That leaves the engineering work in the middle of the story. Banks do not appear short of token demos; they appear short of systems that can connect blockchains to ledgers, controls, treasury operations, and regulated payments workflows without breaking the bank’s existing machinery. (waterstechnology.com)
