Tokenized cash is beginning to reshape how money moves across borders, promising faster, cheaper and more secure global payments through blockchain-based settlement. As stablecoins gain traction, the payments industry is approaching a potential inflection point. Although stablecoin circulation has doubled over the past 18 months, daily transaction volumes remain a fraction of global money flows, highlighting both their rapid momentum and untapped scale.
Proponents argue that stablecoins can operate beyond banking hours and national boundaries, improving speed, transparency, and access, particularly for underserved users. Yet today, their use is largely confined to acting as a bridge between digital assets and traditional fiat systems, relying heavily on liquidity providers and off-ramps. For stablecoins to truly scale, a deeper shift would be required—one in which users increasingly hold and transact directly in tokenized cash rather than constantly converting back to local currency.
Such a transition would have far-reaching implications for banks, payment providers and global liquidity, affecting deposit funding models and reserve demand worldwide. With use cases spanning cross-border payments, remittances, capital markets and corporate treasury management, 2026 could mark a turning point for tokenized cash.
The rise of tokenized cash
In a recent report, McKinsey & Company noted that tokenized money, spanning central bank digital currencies (CBDCs), stablecoins and bank-issued tokenized deposits, is reshaping how value moves by enabling near-instant, always-on payment settlement through blockchain technology. While these instruments differ in issuer and legal status, they share core advantages over traditional payment rails, including faster settlement, fewer intermediaries and automated compliance through smart contracts and on-chain analytics.
Despite these efficiencies, legacy systems still dominate global payments, processing trillions of dollars daily, while stablecoins account for less than 1 percent of total transaction volumes. Yet stablecoin usage has grown by an order of magnitude in just four years, driven by demand for speed, cross-border efficiency and improved risk controls. If this trajectory continues, tokenized cash could materially challenge incumbent payment infrastructure within the next decade—making early engagement increasingly critical for financial institutions.
The appeal of stablecoins
Stablecoins have gained traction as a response to longstanding inefficiencies in traditional payment systems. Cross-border transfers can take days to settle, incur layered fees from multiple intermediaries and offer limited visibility into payment status. Most legacy rails also operate only during banking hours, restricting access on weekends and holidays.
By contrast, stablecoins enable near-instant, 24/7 settlement with greater transparency and fewer intermediaries. They also lower barriers to participation by reducing reliance on traditional banking infrastructure, helping extend payment access to users who are underserved or excluded by conventional systems. Together, these advantages explain why stablecoins have moved from a niche use case to a growing alternative in global payments.
Regulation catches up with stablecoins
In recent years, stablecoin regulation has accelerated as policymakers respond to their growing role in global finance. In 2023, jurisdictions including the EU, the UK, Hong Kong, Japan and Singapore introduced comprehensive frameworks governing issuance and licensing, with the EU’s MiCA regime setting an early benchmark. At the same time, a more supportive stance toward digital assets in the U.S. is opening pathways for Web3 firms to seek banking licenses.
This shift could allow major exchanges and stablecoin issuers to integrate directly with the traditional banking system and offer regulated payment services at scale, marking a significant step toward the institutionalization of stablecoins.
Rapid advances in blockchain networks, wallet technology and on-chain analytics have also strengthened the foundations of tokenized cash, making the ecosystem more secure, scalable and accessible for mainstream adoption.
As the supporting infrastructure has matured, stablecoin circulation has surged. Total issuance has doubled over the past 18 months, rising from $120 billion to $250 billion, and forecasts suggest it could exceed $2 trillion by 2028.
Growing demand from practical applications
Stablecoin demand is fueled by three main factors. First, they serve as base pairs in crypto trading, lending and yield farming, with over 80 percent of volume on major exchanges involving stablecoins.
Second, they provide faster, cheaper alternatives for cross-border payments and remittances, particularly benefiting migrant workers and small businesses.
Third, in emerging markets with volatile currencies, dollar-backed stablecoins act as a secure medium for peer-to-peer payments and a hedge against inflation.
Tokenized cash is also finding traction in institutional settlement and treasury management, enabling faster, more liquid cash operations. Real-time access to deposits allows institutions to optimize intraday cash, potentially earning yield through short-term investments such as US Treasury bills or repurchase agreements, while the underlying reserves remain securely held by the issuer.
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The path forward for financial institutions
If stablecoin adoption continues at its current pace, daily transaction volumes could reach at least $250 billion within the next three years, exceeding the payment volumes currently handled by major card networks.
For specific use cases, particularly those that offer significant improvements over traditional payment technologies, such as business-to-business cross-border transactions, transaction volumes could be even higher.
To fully leverage the opportunities presented by stablecoins, financial institutions should begin by determining which roles they want to play within the emerging digital ecosystem.
The way financial institutions engage with stablecoin infrastructure will likely depend on their size and target market. Leading banks with substantial payment volumes are already exploring stablecoin innovations to protect and enhance their current positions.
Mid-sized banks may participate through consortia, leveraging a shared stablecoin solution while maintaining control over their deposits. Finally, smaller institutions, such as regional banks, credit unions and other financial players, are more likely to rely on large-scale technology providers like Fiserv, FIS, or Velera to access a common stablecoin infrastructure.
From evolving regulatory frameworks to advancements in security technology, rising consumer expectations and the real scaling of solutions, stablecoins are emerging as a serious alternative for global payments, driving a fundamental shift in how financial services are delivered. The strategies incumbent institutions adopt could determine their ongoing relevance in the era of instant value transfer and digital storage of money. Their engagement with this ecosystem may also pave the way for the development of additional digital asset use cases in the near future.
