Over the past few years, stablecoins have been defined by a narrow reality: essentially a two-horse race between Tether’s USDT and Circle’s USDC, with most activity concentrated on cryptocurrency-native exchanges.
Alchemy co-founder and president Joe Lau said in an interview with CoinDesk that the next situation will look very different.
Lau said the recent trajectory of stablecoins has taken many directions, but one theme dominates: Stablecoin adoption is “exploding.” The reason, he believes, is that stablecoins offer distinct advantages that traditional payments and banking systems cannot match, most notably 24/7 settlement and digitally native currency movements.
“Stablecoins and deposit tokens are quickly becoming the consumer and enterprise layer of the modern Internet-native financial system. With this foundation, funds can flow with the security of the banking system and the speed of the Internet,” Liu said.
Banks are increasingly evaluating stablecoins, and fintech companies are developing fund movement and payment products, he said.
Lau mentioned payment platforms and processors, highlighting Stripe’s activity in this space, as well as payroll providers and enterprise finance solutions that are now considering stablecoins as part of their operational stacks.
Stablecoins are cryptocurrencies that are pegged to fiat currencies or assets such as gold. They underpin much of the crypto economy, serving as payment rails and vehicles for moving funds across borders. USDT is the largest stablecoin, followed by USDC.
A report from Morgan Stanley Investment Management showed that the total market value of stablecoins reached US$300 billion in September, a year-on-year increase of 75%.
Wall Street giant Citi said the stablecoin market is growing faster than expected. That prompted the bank to recently raise its 2030 issuance forecast from $1.6 trillion to $1.9 trillion in the base case and from $3.7 trillion to $4 trillion in the bull case.
Liu also said regulatory clarity is attracting more traditional players into the industry.
As the rules become clearer, he expects wider adoption of stablecoins by traditional finance (banks, neobanks, fintech companies focused on money transfer, and large payments companies) because stablecoins can plug directly into the types of use cases these companies already serve.
a major force
However, Liu sees another major force shaping the future: banks are launching tokenized deposits, He described it as an “alternative” that complements stablecoins.
Liu said that in this model, banks can offer customers many of the same benefits associated with stablecoins, lower transfer fees and faster settlements, but within the existing regulatory framework and with funds remaining in the bank.
Today, moving money from a standard bank account still means wire transfers, fees and friction, he said. With tokenized deposits like JPM Coin, customers can gain more stablecoin-like functionality without leaving the banking environment. Liu added that HSBC has also expressed interest in tokenized deposits, and he expects more banks to follow suit.
In Liu’s view, tokenized deposits and stablecoins are currently both competitive and complementary because they tend to serve different users. Stablecoins are more open, he said, because they can be settled between any two parties. Tokenized deposits are more closed-loop, he said, because they are typically designed for a bank’s own customers. He noted that JPM Coin is limited to JPMorgan Chase clients and will likely be used by institutional and corporate clients first.
Over time, however, Liu expects the lines to blur.
He said the bank is starting with tokenized deposits but is already looking at building tracks for other tokenized assets. At the same time, he said stablecoin issuers are looking to become more like banks, in part due to capital efficiency. Lau believes that a bank’s partial banking model is more capital efficient than a stablecoin structure that requires 1:1 backing, and this gap is one of the reasons stablecoin issuers may want to align more closely with the banking model.
For now, Liu said, the two tools are still complementary. However, he also sees tokenized deposits as an early development: so far, only a few banks have seriously invested in this space, he said, and as more banks do so, adoption will grow and stablecoins and deposit tokens will start to compete more directly.
“Tokenized deposits transform banking systems into programmable infrastructure. Stablecoins provide consumers and global markets with a modern dollar. As the two converge, funds become fully compliant and instantly accessible,” he added.
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