Stablecoins are rapidly becoming the future of payments

Introduction

Digital assets are at the core of the future of finance. One digital asset class that sets itself apart as an island of stability in a sea of volatility is stablecoins. Stablecoins are now increasingly linked to cross-border remittance traffic, to management of corporate treasury operations, and to payments of all types. This article will attempt to explain a number of these developments and highlight the ways that Grant Thornton can help you plan for the future and implement your design.   

A brief overview of stablecoins

Stablecoins are digital assets that are pegged to a fiat currency, most often the U.S. Dollar. While there are many definitions of stablecoins, we will use the following: “Stablecoins are digital currencies that are less volatile than typical digital currencies because they are backed with high quality, reserve assets. Stablecoins carry the advantage of digital coins, such as real-time processing, security, and privacy of transactions, but come without the severe volatility that comes with most digital assets.”

Stablecoins began simply as a safe digital asset where crypto traders could step away from the volatility of many cryptocurrencies without moving back to a fiat currency and enduring many rounds of questions and challenges in the traditional fiat world. Stablecoins have now evolved into an effective payment mechanism, particularly with cross-border payments, with lower fees, faster execution and 24/7 settlement, and increased safety. Stablecoins are projected to be the backbone of the fast-advancing area of tokenisation of real-world assets.

“We’re seeing the larger banks adopt blockchain for cross-border settlement,” said Grant Thornton Principal & Forensic Technology National Practice Leader Johnny Lee. “Tokenisation of real-world assets and back-office settlement functionality likewise represent extremely promising use cases for blockchain over time.” As infrastructure supporting stablecoins improves and regulation becomes more harmonised, use cases for stablecoins, particularly in ecommerce, are rapidly evolving. 

Stablecoins can be classified into a few main categories:

• Fiat-collateralised stablecoins: These are backed by reserves in fiat currency, most commonly the US Dollar. For example, Tether (USDT) and USD Coin (USDC) are the two most popular fiat-collateralised stablecoins, both backed by US Dollar denominated assets. USDT and USDC make up nearly 90% of the market value stablecoins, globally.
• Crypto-collateralised stablecoins: These are backed by other cryptocurrencies, often requiring over-collateralisation due to the volatility of the underlying reserve assets. DAI is a well-known example, where users lock up Ether to mint DAI.
• Commodity-backed: Tied to physical assets such as gold, providing exposure to commodities without holding them directly. Examples include PAX Gold (PAXG) and Tether Gold (XAUT).
• Algorithmic stablecoins: These use algorithms to control supply and demand, adjusting supply of stablecoins based on market conditions. Due to the earlier crash of Terra, these stablecoins are now prohibited or limited by many jurisdictions.

The total market capitalisation of stablecoins is now over $320 billion versus a market capitalisation of less than $5 billion only five years ago. In November, US Treasury Secretary Scott Bessent said the stablecoin supply could reach $3 trillion by 2030. As the demand and use cases for stablecoins continues to grow, understanding the trends and challenges of their issuance and usage is becoming more essential. As one of the world's largest professional services network of independent accounting and consulting member firms, Grant Thornton has been an early entrant understanding digital assets, how they are used, how risks are managed, and what the future holds. This overview explores the various dimensions of stablecoin issuance, including types, market dynamics, regulatory challenges, and future outlook.

In its Stablecoin Utility Report 2026, BVNK surveyed over 4,600 retail stablecoin holders and near-term prospective holders asking questions about usage patterns and preferences. Granted, the population is skewed to crypto-believers,* but the findings are astounding. More than half of all owners of stablecoins are 18-34 years old. Most people acquire stablecoin through a centralised exchange, but 77% of those surveyed said they would open a stablecoin wallet with their local bank or fintech application if offered. Stablecoins seem most attractive to people living in lower-income countries or countries with volatile fiat exchange rates. Over 90% of respondents from Africa own stablecoins. Over 70% of respondents would use a linked debt card to spend stablecoins, and this rises to nearly 80% in lower-income countries. The demand for merchant acceptance far exceeds supply. All this points to a finding that use cases will multiply as infrastructure improves and regulatory expectations harmonise. In addition to these findings, corporations around the world are now more likely to consider using stablecoins in their treasury operations.

_{*All respondents either currently hold/held cryptocurrency including stablecoins in the last 12 months or intend to acquire cryptocurrency including stablecoins in the next 12 months.}

Chapter one

Stablecoins regulation is harmonising in the right direction

Bryan Stirewalt, an Executive Advisor at Grant Thornton UAE, and the former Chief Executive of the Dubai Financial Services Authority, notes the UAE’s focus on innovation, particularly with digital assets. “The entrepreneurial spirit that you see everyday in the UAE is what drives the country to excel. Regulators in the UAE have been at the forefront of innovation as a basis for the future of finance.”

The Abu Dhabi Global Market (ADGM) pioneered comprehensive digital asset regulation in 2018, becoming the first jurisdiction globally to introduce a bespoke framework for virtual asset activities. In 2022, Dubai established the Virtual Assets Regulatory Authority (VARA), making Dubai the first jurisdiction globally to have a standalone, dedicated regulator for virtual assets. The Dubai International Financial Center (DIFC) is now broadly in line with the ADGM. In 2024, the regulatory foundation for stablecoins moved to a new level when the Central Bank of the UAE issued their “Payment Token Services Regulation”, leading to several banks issuing stablecoins in the UAE market. 

On a global level, also in 2024, the European Union’s Markets in Crypto-Assets Regulation (MiCA) became fully effective, providing the legal framework for regulating crypto-assets, issuers, and service providers (CASPs) to enhance market integrity, consumer protection, and financial stability. The USA issued a federal law in 2025, called the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act to regulate dollar-denominated payment stablecoins establishing a legal framework for banks and non-banks issue stablecoins.

Financial institutions need to monitor regulatory risk as they contemplate stablecoin or any web3 projects. Regulatory clarity makes many digital assets platforms attractive to some investors. The US GENIUS Act is a perfect example of this needed regulatory clarity. Markus Veith, National Leader for blockchain, digital assets and web3 Industry for Grant Thornton said the lost trust in cryptocurrency after the FTX collapse made it clear that a strong, sensible regulatory system is necessary for this budding industry. “Cryptocurrency exchanges handling billions of dollars of customer assets,” Veith said. “Initially, everybody wants independence from the legacy financial system and its limitations for peer-to-peer transactions. Then, when something fails and users lose money, they ask why the government isn’t protecting their assets.”

One of the most critical areas of regulation is in fighting illicit finance. In its 2026 Crypto Crime Report, the blockchain analytics firm TRM Labs reports an uptick in illicit crypto volumes while also noting a decline in illicit volume as a percentage of total crypto transactions. The report notes that the percentage of illicit activity represents only a fraction of overall crypto activity, but also believes the amount of illicit activity might have been undercounted in the past. TRM Labs says the current state of cryptocurrency environment means that it is “no longer novel or peripheral, but broadly integrated and, in some cases, deeply embedded in traditional economic activity.”

The Financial Action Task Force (FATF) – the global standard setter for fighting financial crime – has recently released reports on peer-to-peer transactions with unhosted wallets and on cyber-enabled fraud. Unhosted wallets are a blind spot for regulators around the globe, while cyber-enabled fraud is garnering increasing attention. In all aspects, fighting financial crime and terrorist finance is an area where regulators and financial institutions are fighting hard.

Alexandra Will, Partner for Regulatory and Financial Crime Compliance in the UAE, stated: “For stablecoins to deliver on their promise as a trusted payment mechanism, financial crime risk must be addressed with the same discipline and maturity applied across the traditional financial system. Long‑term confidence in stablecoins will depend on firms demonstrating that efficiency gains are matched by robust governance, transparency and financial crime controls.”

Chapter two

Looking to the future of stablecoin risk management

With the ecosystem growing, infrastructure improving, and regulatory expectations harmonising, we must turn to risk management tools to ensure that the stablecoin ecosystem is trusted. In a recent report by the MIT Digital Currency Initiative, authors point to a critical trust factor for stablecoin issuers.

Stablecoins are widely trusted because they have reserve assets backing their par value. Regulators around the globe are strictly defining what constitutes a reserve asset in order to ensure that the reserve assets are short-term, liquid assets. In other words, the public and regulators are often looking at the balance sheet risks as primary. The public and regulators might be underestimating the market liquidity risks, technological risks, and operational infrastructure risks that are integral to stablecoin issuance. 

“Even if financial institutions are not jumping in right away, they should prepare for adoption,” said Markus Veith. “They should have their people ready to handle it from a variety of aspects.”

Embracing the possibilities starts with getting a financial institution’s house in order, so to speak. Many traditional banks have siloed processes that have created such complexity that their data is not coming together in a meaningful way. This is a systemic problem that needs to be corrected to make the most of these opportunities.

To be better positioned to take advantage of these opportunities, banks may need to reform their strategy, operations and risk management to enable identification of opportunities and threats on a proactive basis and replace unsustainable, reactive processes.

Grant Thornton has a strong reputation for auditing and has moved quickly to adapt to auditing in the digital age. A quick glance at stablecoin regulation around the world finds reserve validation as a common factor. 

Get it right on the front end

Proper planning for digital assets projects can significantly increase your success. The creation of a digital assets product can be compared to the construction of a building. The process starts with determining the use cases, considering all the important functionality and the appropriate dependencies as well as the regulatory aspects and implications.

A financial institution can prepare by building a 360-degree model that includes all the opportunities, threats and risks. Risks also can be reduced by anticipating what regulators may or may not take an interest in and the likelihood of success can increase by bringing an engineering mindset to the process to map out the road ahead. If you build a journey map and see that you may run into traffic through certain areas, you have a choice: Do you continue with the original route, or do you take an alternate route around the traffic? If you haven’t thought about that ahead of time, that traffic is going to surprise you and slow you down.

Questions to ask may include:

• Where do you want to be in three to five years with this strategy and product?
• What is your growth trajectory?
• What obstacles could stand in the way of that growth trajectory?
• What about this product might customers not like?
• What elements of this product might raise regulatory objections now or later in the life cycle?
• What specific aspects of data will you need to manage?
• How are you going to embed know-your-customer risk management into the process?

Chapter three

Manage the risk

Many cryptocurrency failures have resulted from failure to manage risk effectively.

The Mt. Gox cryptocurrency exchange was brought down by a cybersecurity breach in 2011, according to charges recently unsealed by the U.S. Department of Justice. The FTX crypto asset trading platform allegedly collapsed when customer funds were diverted inappropriately to another privately held crypto hedge fund, according to charges filed last year by the SEC.

“If you’re not contemplating risk when you’re adopting, developing or integrating new technology, you’re inheriting risk,” Lee said. “The Mt. Gox hack — and virtually every other crypto-security issue that followed it — represent somewhat elementary departures from security principles and risk management considerations.”

Lee sees a parallel between the web3 and generative artificial intelligence industries as they develop customer-facing products and services. He said long-lived efforts to make AI development transparent and accountable have been undermined by companies that are placing speed to market and profit motives ahead of risk management considerations.

“Generally speaking, the same philosophy animates digital assets,” he said. “I don’t think it always will, but it certainly does today. Perhaps the key takeaway here is that ‘move fast and break things’ is a terrible risk management strategy.”

Grant Thornton has teams to help with risk elements: overall risks management, technology, reserve validation, reserve audits, regulatory risk assessments, and governance.  This all starts with risk management. Whether or not financial institutions are ready to plunge into these opportunities, they need to understand them. Training their people on the basics of blockchain and cryptocurrency and the potential future use cases can be a useful first step.

Conclusion

Stablecoins issuance represents a rapidly evolving landscape within the cryptocurrency ecosystem. As market demand grows and regulatory frameworks develop, understanding the trends and challenges in stablecoins issuance is essential for stakeholders. The interplay between technological advancements, regulatory developments, and market dynamics will shape the future of stablecoins, influencing their role in finance and beyond. 

As we look to the future growth of stablecoins, we must acknowledge that the interconnectedness of stablecoins with traditional financial systems poses potential systemic risks. A sudden and unexpected collapse of a major stablecoin could have ripple effects throughout the financial ecosystem as we saw surrounding the collapse of Terra's algorithmic stablecoin in 2022. Regular audits and real-time disclosures are necessary to address these concerns and build user confidence. The potential for sudden regulatory changes poses a significant risk to stablecoin issuers. Compliance costs and operational challenges may arise as regulations evolve. Issuers must remain agile and adapt to changing regulatory landscapes to ensure continued viability.

Leaders of financial institutions of all sizes are working to determine the role that these technologies will play for them now and in the future. Grant Thornton professionals say financial institutions, including corporate treasuries, that follow the right steps have an opportunity to make the most out of blockchain, digital assets and web3 opportunities in banking, capitalising on the opportunities while managing the risks. Continuous innovation and adaptation will be crucial for stablecoin issuers as they navigate this dynamic environment. Grant Thornton UAE is with you on this journey.