Stablecoins are becoming a crucial part of the institutional financial system, with Moody’s reporting a 87% increase in settlement volume in 2025, reaching $9 trillion. They are evolving into “digital cash” for liquidity management and settlements in the financial system.

Moody’s sees stablecoins as part of the convergence between traditional and digital finance, alongside tokenized bonds and credit products. Banks, asset managers, and market infrastructure providers are investing in blockchain settlement networks and digital custody to streamline processes and enhance liquidity management.

Regulation is catching up with the rise of stablecoins, with the EU’s MiCA framework, US stablecoin proposals, and licensing frameworks in Singapore, Hong Kong, and the UAE. Société Générale and other banks are developing stablecoin products under emerging regulations, but risks like smart contract bugs and cyberattacks remain a concern.

In order for stablecoins to be reliable institutional settlement assets, security, interoperability, and governance are crucial, according to Moody’s. They stress the importance of these factors along with regulatory clarity to prevent new forms of operational and counterparty risks in the financial system.

Read more at Cointelegraph: Stablecoins Become Institutional Digital Cash, Says Moody’s