Onchain finance will lead the next wave of banking innovation, but many are uncertain where to start. Learn how banks can accelerate their digital asset strategy.
Most institutions I speak with understand that onchain finance will define the next wave of banking innovation.
In our recent report, Beyond Stablecoins: The Rise of theInternet Financial System, Bill Winters, Group Chief Executive of Standard Chartered, said it best: “Our job is to provide access to what our customers find important. Increasingly, our customers want to deal in this incredibly efficient, internet-based economy with stablecoins, digital assets, and blockchain. Together with Circle and other partners, we are institutionalizing parts of the new-economy value chain so we can deliver the benefits to our customers and the broader market.”
The banks that we work with making real progress aren’t waiting for perfect clarity or a fully formed end state. They are homing in on the use cases that matter most to their clients and their balance sheets. Across those use cases, stablecoins are emerging as a meaningful optimization to existing fiat rails: an interoperable, 24/7 settlement layer that connects systems and enables continuous value movement.
Rather than debating digital asset strategy in the abstract, these institutions are building now — and from my vantage point, the leading banks have been at this for years. Some of the biggest institutions began investing well before the current wave of regulation, and that early work is exactly why they’re moving faster today.
Digital asset demand is accelerating
Increasingly, the inquiries we receive from banking leaders have shifted from “is it safe?” to “where do I start?”. This is hardly a surprise, given that nearly 1 in 4 CFOs expect their teams to adopt digital assets within the next two years.
GENIUS, MiCA, and other Asia/EMEA policy frameworks have been significant unlocks for banks. While regulatory fragmentation is complex, fewer than 1 in 5 firms now cite regulation as a barrier to digital asset adoption (down from 80% two years ago) and 83% of institutional investors intend to increase their digital asset allocations this year.
This has allowed the operational efficiencies of digital assets to become real opportunities. Onchain transfer fees on major blockchains regularly cost less than $0.01 — a 99% cost improvement over legacy rails in certain cross-corder corridors. Beyond fees, the promise of 24/7, near-instant settlement is improved capital efficiency: less idle liquidity and a lower cost of capital.
Understanding the digital asset landscape for banks
Many of our conversations with banks span the whole digital asset spectrum. For banks getting started, the goal isn’t to understand every digital asset in the market — it’s to understand the asset types that support real banking use cases.
Practical digital asset use cases for banks
In the near term, the clearest value for many banks shows up in familiar areas where friction, cutoffs, and trapped liquidity already exist today:
Cross-border payments
Cross-border is one of the clearest “why stablecoins” use cases. They enable continuous value transfer across borders without local clearing windows or correspondent cutoffs — and unlike most digital assets, regulated stablecoins are built for money movement and interoperability at scale.
Treasury and liquidity movement
Treasury is where always-on settlement becomes immediately practical. For managing liquidity across time zones, stablecoins and tokenized deposits make it possible to reposition funds outside standard operating hours, reduce idle balances and prefunding, and align funding with demand in near real time.
24/7 card network settlement
Card settlement is constrained by batch cycles and cutoffs today. Visa’s recent expansion of USDC settlement for seven-day clearing highlights how interoperable digital assets can move liquidity without batch cycles — better aligning settlement with a global, real-time banking operation.
Emerging use cases
Once the foundational settlement and liquidity flows are in place, digital assets can begin to unlock services that extend beyond simple money movement.
Programmable transactions
Programmability has been more headline than reality so far, but promises conditional payments where funds can be released on verified triggers, automatic reconciliation, and enforceable constraints. Banks exploring this are focusing on high-control workflows like trade finance, escrow-like services, and complex B2B flows where timing and verification drive cost and risk.
Onchain FX
The opportunity in onchain FX is end-to-end conversion and settlement with faster finality. Banks evaluating tokenized money and interoperable networks are aiming to compress settlement cycles, reduce risk between trade and settlement, and integrate FX more cleanly into payment and treasury flows.
Lending and credit
Lending will increasingly benefit from tokenized collateral and programmable controls. Collateral eligibility, margining, and repayment flows can be automated and auditable, with financial institutions maintaining oversight of risk limits and governance..
Agentic payments
Everyone’s talking about AI in payments - including micropayments down to a thousandth of a cent. What matters is whether banks can automate execution inside real controls, from initiation through settlement. That pushes the focus to practical requirements like risk limits, liquidity parameters, auditability, and interoperability on always-on rails.
This is only the starting set of use cases; I’m sure there will be important applications that haven't been imagined yet. But it will be the banks investing today that will capture these opportunities first.
Stablecoins are the foundational digital asset for banks
Which use case and digital assets a bank chooses to incorporate, will come down to each organization’s existing operational realities and strategic priorities. That said, stablecoins’ flexibility and practicality make them integral to most major digital asset deployments.
Stablecoins are increasingly functioning as the settlement layer for continuous value movement across systems. Across each use case, stablecoins play a foundational role via their always-on (24/7) and interoperable settlement capabilities. They move value, provide liquidity, and connect systems. Other digital assets add important capabilities to the financial stack, but stablecoins are the asset type that appears in every practical use case.
For banks, this means stablecoins are not a standalone product decision. They are a cornerstone to a digital asset strategy that is integral to scaling any use case.
Putting your digital asset strategy in motion today
Banks that are making real progress are not trying to solve everything at once. Instead, they are taking a focused, staged approach that balances near-term execution with long-term flexibility:
1. Start with a use case(s)
The goal isn’t to modernize the entire payments or treasury stack at once, but to solve a specific, well-understood problem where friction is already visible. Starting small makes it easier to prove value, align internal stakeholders, and build confidence before expanding.
2. Design for “yes, and” — not either/or
Digital asset adoption isn’t a binary choice between fiat and onchain systems. In practice, banks are increasingly supporting multiple forms of money side by side — traditional accounts, stablecoins, and other tokenized instruments — and choosing the right tool for each flow. Early decisions should prioritize liquidity, interoperability, risk management, and regulatory clarity, while leaving room to support multiple assets as client needs evolve.
3. Partner to accelerate execution
Early progress depends on execution. Banks move faster when they collaborate with experienced third parties that understand the regulatory landscape, digital asset infrastructure, and bank operating requirements. Rather than rebuilding capabilities from scratch (possibly to launch a proprietary stablecoin), banks will unlock new growth with the right partners.
4. Build for optionality
Right now, the ecosystem is widening: more stablecoins, more chains, more standards, and more “programmable” payment models. Over time, regulation and market gravity will likely narrow that set, but the winners will be the banks that planned for both realities by designing for interoperability and keeping the ability to pivot as standards and use cases change.
The reality is there are still a lot of open questions — regulation (especially how stablecoins map to funding, rewards, and deposits), accounting treatment, how to integrate new rails, and how to run KYC/AML, Travel Rule, and counterparty risk at bank standards. Add privacy requirements and a moving target of networks and standards, and it’s easy to see why teams hesitate. But the banks making progress aren’t pretending the uncertainty is gone; they’re moving anyway, partnering early and putting an interoperable foundation in place so they can support 24/7 settlement now and scale into the next set of use cases as they emerge.
For those interested in partnering with Circle, we welcome you to reach out and talk with our team.
