ChainTech Africa

By Precious A
May 16, 2025

In a striking shift from past hostility, traditional banks are now racing to embrace stablecoins—a technology they once viewed with skepticism. This dramatic pivot, from debanking crypto firms to integrating blockchain-based assets into core operations, marks one of the most significant reversals in modern financial history.

From Hostility to Adoption

For years, crypto entrepreneurs and firms struggled to access basic banking services. Tales of frozen accounts, rejected applications, and abrupt closures were commonplace, especially during the height of regulatory crackdowns such as “Operation Chokepoint 2.0.”

Between 2021 and 2024, more than half of all crypto-related debanking complaints in the U.S. were linked to four major institutions: Bank of America, JPMorgan Chase, Wells Fargo, and Citibank. Now, the tide is turning. The rollback of restrictive policies, including the controversial SEC Staff Accounting Bulletin (SAB) 121, has opened the door for banks to reevaluate their approach to digital assets.

Stablecoins as a Strategic Imperative

Stablecoins—blockchain-based tokens pegged to fiat currencies—are no longer seen merely as tools for crypto-native firms. Instead, they are emerging as strategic assets for banks aiming to modernize payment infrastructure and stay competitive in a fast-evolving landscape.

While early experiments by institutions like JPMorgan and Santander focused on private blockchain applications for treasury functions and interbank settlements, these efforts often fell short of leveraging the full potential of stablecoins—particularly those operating on public, permissionless networks.

Stablecoins on public chains such as Ethereum offer faster, cheaper, and more programmable payment options. They eliminate chargebacks, reduce reconciliation errors, and dramatically improve payroll efficiency—replacing a patchwork of ACH transfers, wire instructions, and manual spreadsheets with automated, real-time payments.

Smaller Banks Step Up

Smaller, more agile banks are beginning to seize the opportunity. Custodia Bank, for example, recently launched its own stablecoin, Avit, on Ethereum. The coin enables users to access faster and more cost-effective financial services, setting a precedent for how traditional banks can deploy blockchain tools without compromising regulatory compliance or customer trust.

Much like the wave of businesses that restructured their models following the launch of ChatGPT in 2022, financial institutions are now recognizing the disruptive potential of stablecoins and blockchain technology more broadly.

Stablecoin Ecosystem Gains Momentum

According to data from Artemis and Dune Analytics, the number of active stablecoin wallets surged from 19.6 million in February 2024 to over 30 million in February 2025. Legislative support is also building. President Donald Trump has stated his intent to sign stablecoin regulation into law by August 2025, with Wyoming having already enacted its own framework in March.

The infrastructure supporting stablecoins has matured rapidly. Today, 91% of stablecoins are backed by fiat currencies, with only 8.5% tied to crypto-collateralized assets. Algorithmic stablecoins—once a risky and volatile segment—have largely fallen out of favor following multiple high-profile failures.

Mastercard’s recent partnerships with Circle and Paxos to enable merchant stablecoin payments further highlight growing institutional confidence in the space.

Toward a Tokenized Financial System

The stablecoin movement is part of a broader shift toward the tokenization of financial assets. Earlier this year, BlackRock CEO Larry Fink called on the SEC to fast-track the approval of tokenized bonds and stocks, signaling a future where more assets move seamlessly onchain.

As financial institutions grapple with shifting interest rates, growing fintech competition, and declining consumer savings, stablecoins may represent one of the most transformative tools at their disposal. Those that adapt now may find themselves leading the next era of financial innovation—while those that hesitate risk being left behind.