Stablecoins are evolving into foundational infrastructure for global financial products, driving a new phase of banking-as-a-service built on-chain. Unlike prior BaaS waves, which focused on fintechs renting bank licenses and integrating legacy core systems, the current shift leverages on-chain infrastructure and self-custodial wallets to reduce intermediaries.
Companies are combining account, payment, foreign exchange, and credit primitives into end-to-end financial products accessible to teams with the right technology stack—capabilities that previously required multiple regional licenses and local bank partnerships.
Major incumbents are consolidating key infrastructure pieces. Stripe acquired Bridge and Privy, while Mastercard purchased BVNK, signaling strategic positions in the on-chain landscape.
Blockchains are now categorizing into distinct types. General-purpose chains like Solana, Ethereum, and major Layer 2 networks remain the primary venue for crypto capital markets, including trading, lending, and decentralized finance.
Payments-specific blockchains are emerging as a second category. Networks such as Stripe's Tempo and Circle's Arc compete on stablecoin-native gas fees, privacy guarantees, and predictable transaction costs—essential for fintechs processing millions of payments.
Market data underscores stablecoins' growth as foundational infrastructure. Currently, 1.6 percent of the U.S. dollar M1 supply is on-chain. Stablecoin payments are growing at an annual rate of 350 percent, demonstrating accelerating adoption for settlement.
Tokenized assets are expanding rapidly. Tokenized money market funds show compound annual growth exceeding 200 percent in recent years, reflecting traditional assets migrating onto digital rails.
Regulatory bodies are establishing frameworks. The Office of the Comptroller of the Currency provided a template for nonbank stablecoin issuers, which the Federal Deposit Insurance Corporation and Treasury Department followed with proposed rules under the GENIUS Act.
The Depository Trust & Clearing Corporation is advancing tokenization efforts. In December 2025, its subsidiary DTC received a three-year Securities and Exchange Commission no-action letter to conduct a tokenization pilot for DTC-custodied assets, including Russell 1000 names, equity exchange-traded funds, and U.S. Treasuries.
Banks face a strategic decision as tokenized equities, bonds, money market funds, and structured products migrate on-chain. They must choose to extend trading and custody infrastructure onto digital rails or risk losing execution and intermediation revenue to crypto-native platforms. Coinbase generated $4 billion in transaction revenue in 2024, performing an intermediation function similar to traditional banks.
The new stack enables global financial product delivery. Companies like Revolut and Wise previously built country-by-country relationships for issuing, payments, and banking. Applications such as ARQ can now achieve this globally through stablecoin infrastructure, offering faster money movement, cheaper rates, and globally-native services.
Conventional financial institutions are adopting stablecoin rails. Western Union partnered with Rain to offer stablecoin-linked cards, illustrating how incumbents are integrating digital assets into existing services. The emerging end-state is a hybrid stack, with interoperability layers gradually stitching together across venues, chains, and legacy infrastructure.
