Stablecoins are no longer peripheral to the asset management industry and have become a fundamental link between traditional and decentralized finance, with the potential to transform the private markets, according to a new report.
A recent joint publication between IFI Global and Jersey Finance explores the rise of stablecoins over the past decade, their critical role in the digitalization of the asset management infrastructure and the significant opportunity they present in providing liquidity, inclusivity and operational benefits to fund managers and institutions.
While noting the exceptional development of the stablecoin market over the past year, the report also analyzes the structural, operational and regulatory challenges that come with their utilization, as well as how quality international finance centers can help drive the evolution of stablecoins and the digitalization of the financial ecosystem.
Institutional investors drive stablecoin growth
The report reveals that stablecoin growth has accelerated over the past year, outpacing that of traditional asset classes and reaching a total market capitalization of more than $300 billion in October 2025.
Within the investment universe, the growth in stablecoins is largely driven by greater adoption by institutional investors, with stablecoins becoming an established part of the investment industry, particularly on the private markets side.
The report also notes that 70 percent of U.K. and U.S. private fund managers surveyed for the report were considering incorporating stablecoins into their operational development, though none were at the implementation stage yet.
“The past 12 months have been pivotal in the journey of stablecoins, as they have seen a rapid acceleration in issuance and volume. Now occupying a critical position within a new financial architecture, stablecoins are likely to transform how asset managers operate in the year ahead – in fact, with stablecoins on course to become a universal medium of value in the digital economy, asset managers will not be able to ignore them,” said Elliot Refson, Head of Funds at Jersey Finance.
Refson adds that despite major legislative initiatives in key markets, not least the GENIUS Act in the U.S., challenges at both a regulatory and an operational level remain.
Read| Tokenization: A $500 billion opportunity for the GCC by 2030
Key challenges remain in shift to stablecoins
The report also notes that the key benefits of stablecoins for private funds include enhanced liquidity, fractional ownership and tokenization, improved investor accessibility, cross-border interoperability and speed.
Emerging regulatory frameworks around the world are signalling a shift towards recognizing stablecoins as an integral part of the future financial system, but regulatory treatment remains varied across jurisdictions.
Integrating stablecoins into managers’ operating systems is another challenge, with operational shifts in areas such as cash and treasury management being potentially time-consuming and expensive.
“Institutional investors are the key force behind stablecoin growth, with their positive impact on private market liquidity widely recognized among managers. Yet, while the potential of stablecoins is clear, so too are the challenges – from upgrading technical infrastructure, to choosing forward-looking jurisdictions with robust and transparent regulatory frameworks. Stablecoins are set, however, to reshape how private fund managers organize their operational activities and, in doing so, may unlock opportunities that today are difficult to imagine,” said Simon Osborn, Editor of IFI Global and author of the report.
