Banks Investigating Stablecoin Options Due to Concerns Over Market Share Loss, According to BitGo Executive

As the stablecoin competition intensifies with impending regulations in the U.S., traditional financial institutions are becoming increasingly aware—mainly due to concerns over the potential impact of digital currencies, noted Ben Reynolds, BitGo’s managing director of stablecoins, during Consensus 2025 in Toronto.

In a panel discussion, he shared that BitGo’s newly introduced stablecoin-as-a-service has attracted notable interest from both U.S. and international banks aiming to tokenize deposits or launch stablecoins. “Many banks are being defensive—they’re worried about losing their deposits,” Reynolds remarked. “They observe stablecoins and ponder: How do we avoid being left behind?”

Recently, yield-bearing stablecoins and tokenized money market funds have experienced rapid growth, although they still represent only a small portion of the $230 billion stablecoin market. A16z’s Sam Broner noted that while yield-bearing stablecoins present an intriguing market opportunity, their main application lies in payments and transactions where users may not prioritize yields. Nevertheless, a possible short-term highlight could be “collateral mobility”—the capacity to swiftly transfer funds to fulfill obligations across various platforms.

“You can’t do much with a share of a money market fund,” Broner stated. “There are lock-up periods, business-hour settlements, and contracts that require manual reviews. In contrast, crypto offers programmatic, permissionless flexibility.”

Yield-bearing stablecoins could be particularly appealing for institutions, as highlighted by Matt Kunke, crypto product strategist at BlackRock. “For a DAO, protocol, or market maker, the process of transitioning between crypto assets on an exchange and your brokerage account can be slow and cumbersome,” he explained. “Yield-bearing stablecoins reduce that friction.”

However, regulatory distinctions will significantly influence the market. “A tokenized Treasury fund is deemed a security, while a genuine stablecoin is not,” he clarified. “They require fundamentally different markets.”

Joseph Saldana, chief financial officer of the Wyoming Stable Token Commission, emphasized that yield-generating tokens have the potential to expand access for investors when compared to mutual funds, which often impose minimum investment limits that “exclude many people.” “Our goal is to serve the underbanked and broaden access to financial instruments that many already utilize,” Saldana stated.