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Moody’s said stablecoins and tokenized deposits are evolving into institutional “digital cash,” with trillions in onchain settlement volume and billions flowing into financial infrastructure investment.
Stablecoins are no longer just a crypto-native payment tool. According to a new cross-sector outlook from Moody’s, they are rapidly becoming a core component of institutional financial market plumbing, underpinning settlements, liquidity management and collateral movements across a tokenized global system.
In its report published Monday, the ratings agency outlined how stablecoins processed significantly higher settlement volumes in 2025, marking a decisive shift in how traditional finance engages with blockchain-based money.
Stablecoins Enter Institutional Finance
Moody’s noted that stablecoins processed roughly 87% more settlement volume in 2025 compared with the previous year, reaching an estimated $9 trillion in onchain activity. These figures are based on blockchain transaction data rather than traditional bank-to-bank payment flows, highlighting the scale of adoption on digital rails.
The agency emphasized that fiat-backed stablecoins and tokenized bank deposits are increasingly functioning as “digital cash.” Institutions are using them for real-time liquidity management, intraday settlements, and collateral transfers in markets that are becoming progressively tokenized.
This evolution signals a broader convergence between traditional financial systems and blockchain infrastructure, with stablecoins acting as the connective tissue between the two.
Digital Cash Market Plumbing
Moody’s placed stablecoins alongside tokenized bonds, funds and credit products as part of a wider transformation in capital markets. Rather than existing at the edges of finance, stablecoins are now being integrated into core workflows.
Throughout 2025, banks, asset managers and market infrastructure providers ran extensive pilot programs focused on blockchain settlement networks, tokenization platforms and digital custody solutions. These initiatives aim to streamline issuance processes, reduce post-trade friction and improve intraday liquidity efficiency.
The report estimated that more than $300 billion could be invested in digital finance infrastructure by 2030, as firms build the foundational rails needed for large-scale tokenization and programmable settlement.
Stablecoins Power Settlement Rails
Within this ecosystem, stablecoins and tokenized deposits increasingly serve as the settlement asset of choice for cross-border payments, repo markets and collateral mobility.
Moody’s observed that regulated institutions relied on cash- and U.S. Treasury-backed stablecoins in 2025 to move funds efficiently between trading venues, investment funds and credit pools. These intraday movements reduce settlement risk while improving capital efficiency.
Banks such as Citigroup and Société Générale were cited as participants in trials exploring blockchain-based settlement and liquidity flows. These experiments demonstrate how digital cash instruments can coexist with existing financial infrastructure while enhancing speed and transparency.
Tokenized Deposits Gain Traction
The report also highlighted JPM Coin as a prominent example of the deposit token model. Unlike public stablecoins, deposit tokens are issued by banks and integrated directly into core banking systems.
JPM Coin enables programmable payments, automated liquidity management and real-time settlement while maintaining compliance with traditional banking regulations. Moody’s described this approach as evidence that “digital cash” layers can be built on top of legacy systems rather than replacing them entirely.
This hybrid model may appeal to institutions seeking the efficiency benefits of blockchain technology without sacrificing regulatory certainty or operational control.
Regulation Begins Catching Up
Regulatory frameworks are gradually adapting to this shift toward digital money. Moody’s pointed to the European Union’s Markets in Crypto-Assets Regulation (MiCA) as a major milestone, alongside stablecoin and market structure proposals in the United States.
In Asia and the Middle East, jurisdictions such as Singapore, Hong Kong and the United Arab Emirates are developing licensing regimes and redemption rules for stablecoins, custody providers and tokenized assets. Together, these initiatives suggest a converging global approach to regulating digital finance.
In Europe, Société Générale-Forge’s EURCV stablecoin was cited as an example of a bank-issued product designed within the EU’s emerging regulatory framework. Meanwhile, Gulf regulators are exploring UAE dirham-backed payment tokens as part of broader digital money strategies.
Risks On Digital Rails
Despite the momentum, Moody’s cautioned that the transition to digital settlement infrastructure is not without risks. As more value moves onto blockchain-based rails, new vulnerabilities emerge.
The report highlighted concerns around smart contract bugs, oracle failures, cyberattacks on custody systems, and fragmentation across multiple blockchains. These risks could introduce operational disruptions or counterparty exposure if not properly managed.
Moody’s stressed that security, interoperability and governance will be just as critical as regulatory clarity. Without robust standards and controls, stablecoins could become sources of systemic risk rather than stabilizing settlement assets.
Stablecoins Shape Financial Future
Moody’s 2026 outlook makes clear that stablecoins are no longer peripheral to global finance. They are becoming foundational infrastructure for a tokenized financial system, supporting real-time settlement, cross-border payments and programmable liquidity.
As regulation matures and institutional adoption deepens, stablecoins and tokenized deposits are poised to function as the digital equivalent of cash—provided risks are managed effectively. The next phase will determine whether these instruments fulfill their promise as reliable market plumbing or introduce new challenges to financial stability.