How banks are using stablecoins

Banks are using stablecoins in three ways: routing third-party coins on behalf of clients, issuing tokens of their own, and running stablecoin settlement through partners under the bank’s brand. What changed is not the technology, which has been available for years, but the demand and the rulebook. Corporate clients now ask their banks for stablecoin payments directly, and the GENIUS Act, signed in July 2025, gave US banks a federal framework for the product, with the OCC’s implementing proposals published in February 2026.

Why banks are moving now

The pressure is commercial before it is technological. When a corporate treasurer needs to pay a supplier over a stablecoin rail and the bank cannot help, the flow does not wait; it routes through a fintech or a payment provider that can. The payment leaves, the balances funding it follow, and the bank’s role in the relationship narrows. Multiply that across a client base and the arithmetic is stark: every dollar of stablecoin under someone else’s infrastructure is a dollar that used to sit on deposit.

Banks are not the laggards in this story. They operate inside the system they inherited, where a cross-border payment still crosses a chain of correspondent accounts with the delays and fees that structure produces. Stablecoins gave their clients a way around the chain; the question facing banks is whether the way around also goes around them. Regulation has now made it possible to answer without leaving the perimeter: the GENIUS Act defines who may issue payment stablecoins and how they must be backed, and bank regulators are writing the prudential detail.

Model one: accept and route third-party coins

The lightest-touch model is to handle existing regulated stablecoins, USDC and its peers, on clients’ behalf: accepting them as incoming settlement, sending them as outgoing payment, and converting between coin and account money at the edges. Issuance stays off the bank’s balance sheet, and the bank’s job is routing, custody, and compliance rather than reserve management.

This is also the model with the most infrastructure already in place around it. Card networks have normalized the pattern; Visa’s settlement pilot, at a $7 billion annualized run rate as of April 2026, settles obligations with partners in stablecoins across nine chains. For a bank, the equivalent move is treating the stablecoin as one more settlement asset its payment operations can hold, screen, and deliver.

Model two: issue a token

The heavier commitment is issuance, and it forks into two products that are often confused. A payment stablecoin under the GENIUS Act is a new liability backed one-for-one by segregated high-quality liquid assets, supervised accordingly, and barred from paying interest. A tokenized deposit is the deposit the bank already holds, represented on a shared ledger: it stays on the balance sheet, sits inside existing capital and insurance frameworks, and can pay interest like any deposit.

The largest banks have chosen their opening moves. JPMorgan launched JPMD, a deposit token for institutional clients, extending the Kinexys platform it has run for wholesale payments since 2019. A group of US banks is working with The Clearing House on clearing and settlement of tokenized commercial bank money at scale, announced in June 2026. And several large banks were reported as early as 2025 to be exploring a jointly issued stablecoin. The pattern across all three: banks defending the deposit by upgrading its form, not conceding the rail.

Model three: partner

Between routing and issuing sits the model most banks will actually start with: running stablecoin settlement through specialist infrastructure while keeping the client interface, the brand, and the relationship. The client sees their bank offering faster cross-border settlement; the token mechanics, chain selection, and conversion run underneath. The strategic point of this model is that the bank remains the point of record for the client, which is precisely what the do-nothing path erodes.

What it takes operationally

Whichever model a bank picks, the operational floor is the same. Custody of tokens, whether direct or through qualified custodians. Screening that works on ledger addresses as well as names, because sanctions and AML obligations attach to the payment regardless of rail. Travel Rule compliance on cross-border transfers. Reconciliation between the ledger and the core, so the settlement finality the chain provides is reflected in the books the bank actually runs on. And above all of it, policy: which coins, which chains, which counterparties, which corridors, under which limits, decided in advance and enforced on every transaction rather than reviewed after the fact.

That last requirement is where most stablecoin operations strain. The rails are new, but the checking still happens in systems bolted on before and after settlement, which is how exceptions, manual reviews, and after-the-fact investigations reappear on a rail that was meant to remove them.

Where Frame fits

Frame is the settlement layer for global finance: one integration to orchestrate payments at scale across fiat rails, stablecoins, and tokenized deposits, with compliance enforced on every transaction and settlement in seconds instead of days.

For a bank, Frame is the third model with the policy problem solved structurally. The bank keeps its brand, its client relationships, and its point of record; Frame routes each payment across fiat rails, stablecoins, or tokenized deposits according to the policies the bank sets, and its Rules Engine evaluates every transaction against those policies inside settlement, so a transfer that cannot satisfy them does not settle. Every settled transaction produces verifiable evidence that its conditions were met, without exposing the underlying business data. Frame serves banks alongside payment providers, exchanges, SaaS and ERP platforms, and enterprises, which matters here for a simple reason: the corporates asking banks for stablecoin payments are on the same layer.