Inspired by the Bank Policy Institute’s November 2025 analysis
Stablecoins were meant to make payments faster, cheaper, and smoother. A digital token pegged to the U.S. dollar—how complicated could that be? But if you look at what the Bank Policy Institute (BPI) and U.S. regulators are saying lately, the so-called “safe” coins might be anything but.
For treasurers, that matters. Because stablecoins aren’t just a crypto curiosity anymore—they’re creeping into settlement infrastructure, fintech rails, and bank-tech partnerships. The question isn’t if they touch your world, but how much risk they drag along when they do.
The Stable Promise, the Fragile Reality
The U.S. “GENIUS Act” (yes, someone actually called it that) is supposed to give stablecoins a legal and supervisory framework. It requires issuers to fully back tokens with high-quality liquid assets and redeem them on demand. On paper, that looks like the kind of regulation treasurers could live with.
But paper isn’t balance-sheet reality. Even fully backed stablecoins can stumble if their reserves lose value or redemptions get messy. In other words, they can “break the buck” just like a money-market fund. The BPI highlights that risk clearly: the peg is a promise, not a guarantee.
DeFi: The Wild West of Liquidity
Here’s where it gets more interesting. Many stablecoins end up circulating on decentralised finance (DeFi) platforms—an unregulated playground that looks like a banking system with none of the adult supervision.
Stablecoins are borrowed, leveraged, re-lent, and rehypothecated across multiple chains. When that loop breaks, liquidity disappears overnight. The risk doesn’t stay in DeFi—it seeps into payment networks, custodians, and even fintechs connecting to corporate treasuries.
It’s a classic contagion problem in a new wrapper.
Why Treasurers Should Care
Most treasurers won’t touch stablecoins directly. But here’s the catch: your payment provider, your ERP, or your fintech partner might. And that means you’re exposed whether you like it or not.
Think about it this way:
- Integration risk. If your treasury stack connects to a wallet or API that uses stablecoins for settlement, you’re indirectly carrying redemption risk.
- Counterparty risk. Some issuers claim “bank-like” safety while operating under far looser rules. That’s not counterparty diversification—it’s counterparty roulette.
- Systemic spillover. A major stablecoin failure could disrupt payment flows, create intraday liquidity shocks, or trigger volatility in short-term funding markets.
You don’t need to be holding stablecoins to get splashed by their problems.
What Regulators Are Worried About
The BPI’s latest note reads like a polite but firm warning to lawmakers: the GENIUS Act could backfire if implemented too loosely. Their key points:
- No yield loopholes. Issuers shouldn’t promise or route interest on stablecoins—it blurs the line with deposit-taking.
- Tight supervision. Non-banks getting “limited charters” must face the same prudential scrutiny as real banks.
- Transparency and consumer protection. Redeemability, disclosure of reserves, and anti-fraud measures should match the standards of insured deposits.
- Bank vs. commerce separation. Letting tech firms issue stablecoins without bank oversight is a recipe for shadow banking.
Translation: regulators see what’s coming, and it looks suspiciously like a parallel financial system.
What This Means for Corporate Treasury
For treasurers, this is not about betting on blockchain. It’s about protecting liquidity and ensuring continuity in a financial system that’s quietly changing shape.
- Map your indirect exposures. Identify vendors, platforms, and banks that use or hold stablecoins in their infrastructure.
- Evaluate redemption reliability. Ask tough questions about reserve assets, liquidity lines, and supervisory oversight.
- Scenario plan for disruption. What if a major stablecoin collapses over a weekend? Do you have fallback channels for settlements or cash positioning?
- Stay connected with regulation. The rules will evolve faster than most treasury policies. Watch U.S. developments—they often set the tone for Europe and beyond.
- Use this to raise treasury’s profile. This is a cross-functional risk conversation—finance, legal, tech. Treasury should lead it.
Final Thought
Stablecoins could still change how money moves—24/7, borderless, programmable. The opportunity is real, but so is the need for discipline.
For treasurers, the advantage goes to those who prepare before the market standard shifts. The future of payments might not belong to whoever adopts stablecoins first, but to whoever understands their risks best.
Also Read
- In-House Banks and Cash Pooling: Why They’re the Hot Treasury Topic of 2025
- Building an Actionable Roadmap for Implementing AI in Treasury
- Citi & Coinbase: A Turning Point for Digital Payments in Treasury
- Ripple Acquires GTreasury: What It Means for Corporate Treasury
- EuroFinance 2025: AI Takes the Stage, but Core Treasury Still Reigns
- Why Treasury Tech Projects Fail – and How to Turn Them Around
- Bank Capital Rules: Why Treasurers Should Care
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