#13: Stablecoins as the New Backend for Banking

When people hear “stablecoins + banking,” they often imagine a crypto bank.

That’s not what this is about.

The more interesting shift is quieter: banks that still look and feel like normal banks on the front end, but use stablecoins in the backend for settlement, treasury, and internal money movement.

Customers keep using euros, dollars, cards, apps, and IBANs as they always have.

But behind the scenes, the bank runs on stablecoin rails instead of legacy infrastructure like SWIFT.

What Does That Actually Mean?

Think of it like this:

• Front end:

  Customers deposit fiat, get paid salaries, swipe cards, make transfers. Nothing changes.

• Backend:

  The bank uses stablecoins to:

  • move money internally

  • settle payments instantly

  • manage treasury liquidity

  • earn yield on idle balances

  • bridge fiat ↔ crypto seamlessly

This is not about replacing fiat.

It’s about replacing the plumbing.

Users never need to touch crypto (unless they want to). But the bank heavily benefits from crypto-native rails.

Why This Is Powerful (and New)

Using stablecoins in the backend enables things that traditional banking infrastructure simply can’t:

• Instant settlement (no T+1, T+2, weekends, or cut-off times)

• Lower costs (no SWIFT fees, correspondent banks, or complex reconciliation)

• Global liquidity without fragmented nostro/vostro accounts

• Better yields on idle treasury balances

• Programmable money flows (automation, conditional payments)

• Seamless fiat ↔ crypto access if a user ever wants it

None of this works well on legacy rails.

Different Models Emerging

1. Traditional Banks (Partial Adoption)

Banks experiment with stablecoins only where risk is isolated:

• Cross-border settlement

• Treasury optimization

• Internal liquidity movement

They don’t touch the customer-facing product.

Examples:

• JPM Coin (JPMorgan): Internal settlement token

• Société Générale (EURCV): Tokenized euro for institutional use

• BNY Mellon / Citi pilots: Tokenized deposits & on-chain settlement

2. Neobanks (Hybrid Models)

Digital-first banks that can adopt stablecoins selectively, without rebuilding everything.

Examples:

• Revolut: Stablecoin rails for transfers and crypto access

• Nubank: Testing stablecoins for backend payments and treasury

• Wise (exploratory): Blockchain settlement experiments

These banks still look like fintech apps — but increasingly run on new rails.

3. Native Players (Built from Scratch)

These build entirely on stablecoin infrastructure and add banking features on top.

Examples:

• Circle: Issuer + infrastructure + on-chain settlement

• Bridge (Stripe): Stablecoins as payments backend

• New “crypto-native banks”: Stablecoins-first treasury and settlement like Plasma One, Kontigo or Moneda

They don’t migrate legacy systems — they avoid them entirely.

Why Traditional Banks Can’t Fully Embrace This

Legacy banks face structural blockers:

• Tech debt: Core banking systems not built for real-time, programmable money

• Regulation: Capital, reporting, and custody rules designed for fiat rails

• Risk models: On-chain liquidity behaves differently than bank balances

• Organizational inertia: Too many stakeholders, too slow to change

As a result, most incumbents can only adopt stablecoins at the edges.

Why New Infrastructure Players Will Win

The advantages of stablecoin-native infrastructure are too large to ignore:

• Faster

• Cheaper

• Globally interoperable

• Yield-generating

• Automation-ready

Banks that can’t adopt this model will increasingly look like:

• slower

• more expensive

• offering worse yields

• with less flexible products

At that point, the question becomes uncomfortable:

Looking Ahead

Now add what’s coming next:

• AI agents managing money

• Autonomous treasury optimization

• Machine-to-machine payments

• Programmable compliance

Stablecoins are uniquely suited for this future.

They aren’t just a crypto product.

They are becoming the backend of modern finance.

And once banking becomes software-driven infrastructure,

the real competition won’t be about branding or branch networks —

but about who runs the best money rails.

Food for thought:

If robots and AI start moving money for us, would they ever choose a bank running on 1970s infrastructure?

It might not be the financial revolution the initiators had in mind when crypto, DeFi and web3 first became a thing, but if you ask me, we are well on the way to some major shifts here.

Thanks for reading in 🤍

// Kai