If 2020–2022 was a period of “trial phase” and 2023–2024 one of “exploration,” then 2025 has marked the era of full-speed adoption for stablecoins. Their growth has far outpaced expectations: annual stablecoin transaction volumes surged from a negligible $3.3 billion in 2018 to $18.4 trillion in 2024. This milestone not only signifies stablecoins’ evolution from niche experiments to core global payment rails but also surpasses the annual transaction throughput of legacy payment giants Visa ($15.7 trillion) and Mastercard ($9.8 trillion).

Several high-profile developments in the past month have put this narrative in the spotlight:

1️⃣ Citi formally partnered with Coinbase to expand digital asset payment capabilities for institutional clients.
2️⃣ Nine major European banks formed a Euro stablecoin consortium, targeting issuance by 2026.
3️⃣ Western Union announced plans to launch the USD-pegged stablecoin USDPT on Solana in 2026, with Anchorage Digital Bank handling issuance and custody.
4️⃣ Visa disclosed settlement support for four stablecoins across four new blockchains.
5️⃣ Mastercard aims to acquire stablecoin/crypto infrastructure firm Zero Hash for $1.5–2 billion and had previously competed with Coinbase over BVNK.

Together, these developments reveal a clear trend: in the race to dominate the future of finance, traditional incumbents are unwilling to lag behind, actively transitioning their core businesses — from payment networks to cross-border settlement — onto programmable blockchain infrastructure.

Banks: Stablecoins vs Tokenized Deposits

As traditional banks embrace digital assets, they face two distinct paths: stablecoins or tokenized deposits.

Initially, Citi CEO Jane Fraser emphasized tokenized deposits over popular market stablecoins — not because stablecoins are inferior, but because tokenized deposits are “comfortable” for banks:

🔷 Tokenized Deposits (Banks’ “Internal Rail”): These are essentially digital representations of customers’ fiat deposits. Think of it as issuing a digital pass for existing bank accounts. Fully regulated under central bank oversight, they are safe, compliant, and seamlessly integrate with legacy clearing systems, enabling 24/7 settlement between banks. For banks, this is the lowest-friction, most regulation-friendly approach.
Yet having only an “internal rail” is insufficient.

🔷 Stablecoins (Banks’ “External Rail”): To interact with the broader crypto ecosystem and public blockchains like Ethereum, banks must use stablecoins — universal tokens in the decentralized financial world.

Citi’s strategy is therefore smart: while favoring tokenized deposits, it swiftly announced the Coinbase partnership.

The dual-track approach serves one ultimate goal: whether the future money network runs on public chains or bank rails, traditional banks must control both forms of “digital money” to remain central as trusted clearing hubs in the emerging financial system.

In Europe, nine banks (UniCredit, ING, Banca Sella, KBC, Danske, DekaBank, SEB, CaixaBank, Raiffeisen) are jointly advancing a Euro stablecoin, establishing a company in the Netherlands and seeking an e-money license under MiCA. The target: launch in H2 2026, emphasizing compliance, 1:1 reserves, and public-chain usability. The objective is clear: create a local digital payment rail to counterbalance the influence of US dollar stablecoins in Europe. This is a bank-led infrastructure play designed to mirror public-chain ecosystems.

Western Union: Using Stablecoins to Upgrade the “Cash Endpoint”

Unlike banks, which focus on improving internal clearing and settlement efficiency, Western Union sees stablecoins as a core component of its cross-border retail remittance infrastructure.

As one of the world’s largest remittance providers, Western Union’s strength lies not in advanced fintech, but in its global network of physical cash points. Particularly in emerging markets, it controls the “last mile” where digital funds convert to cash, serving as a lifeline for unbanked users.

Western Union’s strategy is straightforward: make stablecoins the “highway” of its remittance rails, integrating them with its cash network to create a smooth closed loop.

1️⃣ Channel Selection: Partner with Anchorage to issue USDPT, running on Solana for high throughput and low fees — critical for high-frequency, low-value retail remittances.
2️⃣ Network Construction: Launch a Digital Asset Network to ensure seamless flow: external wallet → stablecoin remittance → local cash pickup or deposit.
3️⃣ User-Centric Execution: For cash-reliant users in emerging markets, priority is not blockchain per se, but immediate settlement, nearby cash access, and low fees. By hiding the complexity of blockchain infrastructure, Western Union leverages stablecoins to reinforce its dominance in global retail remittances.

Card Giants: Connectors vs Acquirers

Visa and Mastercard accelerate stablecoin integration from the perspective of global card networks, but with different strategies:

1️⃣ Visa — Evolving into a “Multi-Chain Settlement Router”

Visa increasingly positions itself as a multi-chain settlement network operator. This fiscal year, it added settlement support for four blockchains and four stablecoins, redeemable in 25+ fiat currencies. Transaction volumes linked to stablecoins have surged YoY, highlighting Visa’s core competence: bridging traditional bank accounts with on-chain digital funds, enabling seamless cross-chain settlement for banks, merchants, and wallet users.

2️⃣ Mastercard — Fast-Track Acquisition

Mastercard takes a more aggressive approach, acquiring infrastructure to rapidly secure time in the “on-chain payment race.” Its $1.5–2 billion bid for Zero Hash, coupled with deep discussions to acquire BVNK, shows a strategy focused on internalizing compliance custody, wallet routing, fund anchoring/redemption, and on-chain risk controls quickly, then scaling these capabilities across its global issuer, acquirer, and merchant network.

In short: Visa excels at connecting, Mastercard at rapidly controlling infrastructure. Both recognise stablecoins as central to future payments.

Risks Remain

Even as giants race down the stablecoin track, formidable challenges persist. For banks and card networks, the main hurdles are not technical, but non-technical regulatory and operational barriers:

1️⃣ Dollar Stablecoin “Intrusion”: Global stablecoin expansion touches a sensitive nerve: monetary sovereignty. A USD-pegged stablecoin dominating a small economy could erode central bank control, prompting regulatory pushback. This explains Europe’s cautious, bank-led Euro stablecoin path.

2️⃣ Trust Stress Test — On-Chain Resilience: Translating “bank-grade robustness” onto blockchain demands readiness for trust crises and technical shocks:

• Run & Reserve Risk: Can stablecoins withstand mass redemptions?
• On-Chain Crises: Platforms must handle liquidity shortages, reserve volatility, network congestion, and cyberattacks.

3️⃣ Compliance “Last Mile”: For models like Western Union’s, integrating blockchain efficiency into cash-centric flows requires navigating AML, forex controls, and multi-jurisdiction licenses.

The operational and regulatory complexity far exceeds mere blockchain integration — explaining why Visa, Mastercard, and Citi opt for collaboration or strategic acquisitions rather than going it alone.

Conclusion

Looking at recent industry developments, the stablecoin wave is less about crypto “victory” and more a silent revolution in financial infrastructure. As “accounts + stablecoins” operate in parallel, users no longer perceive on-chain vs off-chain distinctions — only faster settlements, lower costs, and smoother experiences.

Ultimately, the game comes down to familiar variables: network scale, fee curves, merchant acquisition, and risk & compliance execution. By Q4 2025, traditional finance is no longer standing on the sidelines.