Moody's Declares Stablecoins Are Becoming Institutional Digital Cash

Stablecoins on the Rise

According to a new report published by Moody's, stablecoins and tokenized deposits are evolving into "digital cash" for institutions, with blockchain settlement volumes reaching trillions and investments in infrastructure amounting to billions. The report highlighted that by 2025, stablecoins processed 87% more settlement volume than the previous year, with estimated activities reaching $9 trillion.

The Role of Stablecoins in the Financial System

Moody's has positioned stablecoins alongside tokenized bonds, funds, and credit products, illustrating a broader convergence between traditional and digital finance. Financial institutions, including banks and asset management firms, have invested in blockchain settlement networks, tokenization platforms, and digital custody. Estimates suggest that by 2030, over $300 billion could be invested in digital finance and infrastructure.

Challenges and Regulations

Regulations are starting to catch up with these changes, with proposed regulations emerging in both the European Union and the United States. However, Moody's warned that this transformation poses risks, including smart contract errors, cyberattacks, and operational risks.