Financial Institutions Eye Stablecoins Amid Competitive Concerns, Says BitGo Executive
BitGo’s stablecoin-as-a-service has captured substantial interest from banks in the U.S. and internationally, according to Ben Reynolds, the managing director of stablecoins.
Key Insights
- As traditional financial institutions strive to avoid being outpaced by digital dollar offerings, there is a notable uptick in their desire to issue stablecoins.
- Yield-bearing stablecoins and their applicability for seamless collateral movement are gaining traction, especially among DAOs and institutional entities, as mentioned by a BlackRock strategist.
- The trajectory of tokenized assets hinges on regulatory clarity, which will define the future delineations between stablecoins and tokenized securities.
As the competition for stablecoins intensifies alongside increasing regulations in the U.S., institutions are taking significant notice due to fears of losing out to digital currencies. BitGo’s Ben Reynolds highlighted at the Consensus 2025 conference that their newly introduced stablecoin service has garnered substantial interest from both U.S. and international banks eager to utilize stablecoins or tokenized deposits.
Reynolds stated, “A lot of banks are just being defensive—they’re afraid they’re going to lose their deposits. They look at stablecoins and say: How do we not get left behind?”
Yield-bearing stablecoins and tokenized funds are witnessing fast growth yet represent a mere fraction of the total $230 billion stablecoin market.
A16z’s Sam Broner posited that while yield-bearing stablecoins have potential, their main functions revolve around payments, often where users do not focus on yields. The next significant use case could likely be described as “collateral mobility,” which simplifies fund transfers across various platforms.
Yield-bearing options also appeal to institutions by lessening trading friction. Matt Kunke of BlackRock added, “If you’re a DAO, moving funds between an exchange and your brokerage can be cumbersome; stablecoins with yields help streamline that process.”
Despite the opportunities, regulation will frame this market segment. “A tokenized Treasury fund is classified as a security, while a stablecoin is not. They cater to fundamentally different markets,” clarified Kunke.
Furthermore, Joseph Saldana from the Wyoming Stable Token Commission emphasized the inclusive potential of yield-generating tokens, stating, “We aim to provide access to financial resources for the underbanked, allowing them to engage with investment opportunities typically inaccessible to them.”
