For the past few years, stablecoins have been defined by a narrow reality: essentially a two-horse race between Tether’s USDT and Circle’s (CRCL) USDC, with most activity concentrated on crypto-native exchanges.
What comes next looks materially different, Alchemy co-founder and President Joe Lau told CoinDesk in an interview.
The near-term trajectory for stablecoins has lots of directions, Lau said, but one theme dominates: stablecoin adoption is “exploding.” The reason, he argued, is that stablecoins deliver tangible advantages that traditional payments and banking systems struggle to match, most notably 24/7 settlement and digital-native money movement.
“Stablecoins and deposit tokens are rapidly becoming the consumer and enterprise layers of the modern internet-native financial system. With this foundation, money can move with the safety of the banking system and the speed of the internet,” Lau said.
Banks are increasingly evaluating stablecoins, he said, alongside fintechs building money-movement and payments products.
Lau pointed to payment platforms and processors, highlighting Stripe’s activity in the space, as well as payroll providers and corporate treasury solutions that are now considering stablecoins as part of their operational stack.
Stablecoins are cryptocurrencies pegged to assets like fiat currencies or gold. They underpin much of the crypto economy, serving as payment rails and a tool for moving money across borders. USDT is the largest stablecoin, followed by USDC.
Total stablecoin market capitalization reached $300 billion in September, a 75% increase from a year earlier, 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 lift its 2030 forecast for issuance to $1.9 trillion in its base case and $4 trillion in a bull case, up from $1.6 trillion and $3.7 trillion, respectively.
Lau also said that regulatory clarity is drawing more traditional players into the sector.
As the rules become clearer, he expects broader adoption from traditional finance — banks, neobanks, fintechs focused on moving money, and large payments companies — because stablecoins plug directly into the kinds of use cases those firms already serve.
A major force
However, Lau sees another major force shaping the future: banks are launching tokenized deposits, which he describes as an “alternative” that complements stablecoins.
In this model, Lau said, banks can offer customers many of the same benefits associated with stablecoins, low transfer fees and faster settlement, but do so under existing regulatory frameworks, with the funds remaining at the bank.
Today, he said, moving money from a standard bank account can still mean wires, fees and friction. With tokenized deposits, such as JPM Coin, customers can get more stablecoin-like functionality without leaving the bank environment. Lau added that HSBC has also signaled interest in tokenized deposits, and he expects more banks to follow.
In Lau’s view, tokenized deposits and stablecoins are currently in competition but complementary, as they tend to serve different users. Stablecoins are more open-ended, he said, because they can settle between any two parties. Tokenized deposits are more closed-loop, he said, because they’re typically designed for a bank’s own customers. He noted that JPM Coin is limited to JPMorgan clients and is likely to be used first by institutions and corporate clients.
Over time, however, Lau expects the boundary to blur.
He said banks are starting with tokenized deposits but are already thinking about building rails for other tokenized assets. Meanwhile, he said, stablecoin issuers are looking toward becoming more bank-like, driven in part by capital efficiency. Lau argued that banks’ fractional banking model can be more capital efficient than stablecoin structures that require 1:1 backing, and that this gap is one reason stablecoin issuers may want closer alignment with the banking model.
For now, Lau said, the two instruments remain complementary. However, he also framed tokenized deposits as an early-stage development: only a handful of banks have seriously invested in this 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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