Despite the market’s rapid growth, banks are approaching stablecoins cautiously, reflecting early-stage strategies and growing 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 survive, but how they will reshape business models, infrastructure, and revenue. For banks, the trade-offs are significant, spanning deposit risk, modernization costs, and new competition.
A wait-and-see attitude still prevails. S&P Global’s Q1 2026 U.S. Bank Outlook Survey found that only 7% of 100 primarily small financial institutions have developed a framework, and none are actively piloting them, highlighting that exploratory strategies remain.
“Most financial institutions remain cautious in their early stages,” Jordan McKee, director of fintech research at S&P Global Market Intelligence, said in emailed comments. “Our survey of U.S. banks shows that stablecoin strategies are still largely exploratory, with limited internal development and no active piloting among smaller banks.”
Stablecoins are digital tokens pegged to assets such as fiat currencies or goods, and are the core layer for payments and settlements in cryptocurrencies, and are widely used in transactions and cross-border flows. The market is dominated by Tether’s USDT, followed by Circle Internet (CRCL). $USDC.
According to multiple data sources, the stablecoin market has grown rapidly to become a nearly $300 billion sector, with market capitalization exceeding $316 billion in early 2026 after nearly doubling since 2023.
Transaction volumes have also soared to tens of trillions of dollars a year, underscoring their growing use for trading, payments and cross-border remittances, while forecasts suggest continued growth and could reach more than $500 billion in the near term as adoption by institutional investors accelerates.
Pressure is mounting. The report noted a sharp increase in references to stablecoins in earnings conferences following the passage of the GENIUS Act in July 2025, as well as growing concerns about deposit cannibalization and customer migration.
Competition is also fierce. S&P Global highlighted that non-banks are pursuing charters to issue, store and settle stablecoins within regulated institutions, positioning themselves as trusted alternatives.
Banks are also wary of incentives like yield in the stablecoin ecosystem that could compete with deposits, even though direct interest payments remain limited.
Responses will be divided. S&P Global analysts expect large global banks to consider issuing tokenized deposits and bank-backed digital assets, while regional and mid-sized lenders will focus on facilitating access through fiat on- and off-ramps. Whatever their strategy, banks will continue to be important gateways between fiat and stablecoin networks, but this will require significant upgrades to legacy systems unsuited to real-time digital asset activity.
Cross-border banks are facing intense pressure to modernize as payments move to multi-rail systems that combine traditional real-time and tokenized networks. Interoperability and wallet infrastructure will be important as large banks build multi-network connections and small businesses rely on fintech partners. Safe storage and built-in compliance are expected to become the norm, the report added.
read more: Stablecoin reward limits can slow Circle’s growth, but they can’t stop it $USDCsays Citigroup.
