Stablecoins Are Raising Strategic Questions Banks Can No Longer Ignore

Stablecoins may still be a limited part of banking today, but they are starting to force bigger strategic decisions. Joseph Cox, a partner at Oliver Wyman and former Federal Reserve supervisor, recently told ProSight that the real question for banks is no longer whether stablecoins matter. It is how quickly the market may develop, what the rules will look like, and where traditional institutions want to fit. 

That makes this less a digital-assets side story than a broader question about payments, deposits, competition, and customer relationships. 

A few practical points: 

The framework is clearer, but it is still incomplete. Cox says the GENIUS Act and the OCC’s proposed implementation rule are important because they bring familiar banking concepts into the stablecoin space, including governance, liquidity, capital, and risk management. “In many ways, it was a conservative proposal,” he said. “It’s clear the OCC is thinking about supervising stablecoin issuers using frameworks banks already recognize.” But he also notes that other issues, including anti-money laundering, sanctions compliance, and tokenized securities, still need more clarity. 

Demand is emerging where traditional rails fall short. Cox says stablecoins are gaining traction in use cases where existing payment systems are slow, expensive, or hard to access. “Stablecoins are global by default, they’re 24/7, and they’re natively programmable,” he said. “They provide a shared ledger that’s auditable and easy to reconcile.” Most activity today remains concentrated in crypto trading, but he expects cross-border payments, tokenized securities settlement, and AI-driven micropayments to help push adoption further. 

Tokenized deposits solve a different problem. Cox says banks have gravitated toward tokenized deposits because they remain general liabilities of the bank, letting institutions use blockchain without fundamentally changing the funding model. “At a fundamental level, the difference is who can issue them,” he said. “Only banks can issue tokenized deposits, whereas stablecoins can be issued by a broader range of firms.” The challenge is that tokenized deposits remain less useful when they stay inside closed or permissioned systems. 

The bigger issue may be control of the transaction relationship. Cox says banks should think beyond the debate over indirect yield arrangements—which the OCC currently views as potential evasion of the law. “The most valuable thing in banking is owning the transaction relationship with the customer,” he said. “If you lose that, even if you still have the funding, you’re in a vulnerable position.” 

The takeaway: Stablecoins do not introduce entirely new risks so much as new versions of familiar ones—specifically by accelerating the speed of deposit flows. As Cox put it, “These are new expressions of risks banks already manage.” The strategic question for banks is how ready they want to be if adoption picks up.