Stablecoins Become Institutional Digital Cash, Says Moody’s

Stablecoins are shifting from a crypto native tool to a core piece of institutional market plumbing, according to a new cross-sector outlook report from Moody’s.

In the report, published Monday, the ratings agency says stablecoins processed an estimated 87% more settlement volume in 2025 than the year before, reaching roughly $9 trillion in activity based on industry estimates of on-chain transactions, rather than purely bank‑to‑bank flows.

Moody’s argues that fiat‑backed stablecoins and tokenized deposits are now evolving into “digital cash” for liquidity management, collateral movements, and settlements across an increasingly tokenized financial system.

Stablecoins plug into institutional rails

Moody’s places stablecoins alongside tokenized bonds, funds, and credit products as part of a broader convergence between traditional and digital finance.

Banks, asset managers, and market infrastructure providers spent 2025 running pilots on blockchain settlement networks, tokenization platforms, and digital custody, seeking to streamline issuance, post‑trade processes, and intraday liquidity management.

The report estimates that, across these initiatives, more than $300 billion could be invested in digital finance and infrastructure by 2030 as firms build out the rails for large‑scale tokenization and programmable settlement.

​Within that picture, stablecoins and tokenized deposits increasingly act as the settlement asset for cross‑border payments, repo (short-term secured loans where one party sells securities and agrees to buy them back later at a higher price), and collateral transfers.

Moody’s notes that regulated institutions used cash and US Treasury‑backed stablecoins in 2025 to facilitate intraday movements between funds, credit pools, and trading venues, with trials in banks such as Citigroup and Société Générale, among others.

JPM Coin is cited as an example of a deposit token model that integrates programmable payments and liquidity management into existing banking infrastructure, illustrating how “digital cash” layers can sit on top of traditional core systems.

Related: How US banks are quietly preparing for an onchain future

​Regulation and risks for “digital cash”

Regulation is starting to catch up with this shift. The report highlights the European Union’s Markets in Crypto‑Assets Regulation (MiCA) framework, US stablecoin and market structure proposals, and licensing frameworks in Singapore, Hong Kong, and the United Arab Emirates as evidence of a converging global approach to tokenization, custody, and redemption rules.

In Europe, Société Générale‑Forge’s EURCV and related initiatives are cited as examples of bank-issued products developed under the EU’s emerging stablecoin framework, while in the Gulf, banks and regulators are exploring UAE dirham‑referenced payment tokens and broader digital money architectures.

​However, Moody’s stresses that the transformation is far from risk‑free. As more value moves onto “digital rails,” the report warns that smart contract bugs, oracle failures, cyberattacks on custody systems, and fragmentation across multiple blockchains could create new forms of operational and counterparty risk.

The agency argues that security, interoperability, and governance will be just as important as regulatory clarity if stablecoins are to function as reliable institutional settlement assets rather than new sources of systemic vulnerability.