Most U.S. banks are taking a wait-and-see approach to stablecoins despite rapid market growth, according to a new report from S&P Global.
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The credit rating agency found that deposit risks, shifting regulatory frameworks, and an influx of new competitors are complicating strategic decisions for traditional lenders considering entry into the stablecoin space.
The report, first covered by CoinDesk, paints a picture of an industry caught between opportunity and uncertainty. While the stablecoin market has expanded significantly — now representing hundreds of billions in total market capitalization — the banking sector's participation remains limited and largely exploratory.
Deposit Flight Is the Core Concern
At the heart of banks' hesitation is a straightforward fear: deposit cannibalization. If banks issue or facilitate stablecoins, they risk pulling funds out of traditional deposit accounts — the lifeblood of their lending operations.
Stablecoins, by design, offer a digital dollar alternative that can move freely across blockchain networks, and that portability could make it easier for customers to shift funds away from bank balance sheets.
For smaller and mid-sized banks in particular, even modest deposit outflows could tighten liquidity and compress margins. S&P Global's analysis suggests this risk calculus is keeping many institutions on the sidelines, even as they acknowledge the long-term potential of tokenized money.
Regulatory Ambiguity Compounds the Problem
The regulatory environment for stablecoins in the United States remains in flux. While Congress has advanced several stablecoin-related bills in recent sessions, no comprehensive federal framework has been signed into law as of early 2026. This leaves banks navigating a patchwork of state regulations, federal guidance, and informal supervisory expectations.
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S&P Global noted that this uncertainty makes it difficult for banks to commit capital and resources to stablecoin initiatives. Compliance teams need clear rules before they can design products, and risk committees need regulatory certainty before they can approve new business lines. Without that clarity, the default position for most regulated institutions is to wait.
Most U.S. lenders remain in a wait-and-see mode as deposit risks, regulatory shifts, and new competition complicate strategy. — S&P Global
The situation is further complicated by the fact that regulatory signals have been mixed. While some federal agencies have signaled openness to bank involvement in digital assets, others have maintained a more cautious posture. Banks that move too aggressively risk drawing supervisory scrutiny; those that move too slowly risk being outpaced by non-bank competitors.
Non-Bank Competitors Are Moving Faster
While traditional banks deliberate, the stablecoin market continues to be dominated by crypto-native issuers. Tether (USDT) and Circle (USDC) remain the two largest stablecoins by market capitalization, and neither is a bank.
Their first-mover advantage, combined with deep integration across decentralized finance (DeFi) protocols and centralized exchanges, gives them a significant lead that would be difficult for any bank entrant to close quickly.
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Beyond established players, a wave of new entrants — including fintech companies, payment processors, and even technology firms — are exploring or launching their own stablecoin products. This growing competitive field means that even if banks do enter the market, they may find themselves fighting for share in an already crowded space.
S&P Global's report suggests that the competitive dynamics are creating a paradox for banks: the longer they wait, the harder it becomes to compete, but moving without regulatory clarity carries its own set of risks.
Some Banks Are Testing the Waters
Not all banks are sitting idle. A handful of larger institutions have begun pilot programs, partnerships, or internal research efforts related to stablecoins and tokenized deposits. JPMorgan's JPM Coin (now rebranded as Kinexys Digital Payments) has been operational for institutional transfers for several years. Other major banks have explored blockchain-based settlement systems that share some characteristics with stablecoins.
However, these efforts tend to be institutional in nature — focused on interbank settlement, treasury management, or wholesale payments — rather than consumer-facing stablecoin products. The gap between institutional experimentation and retail stablecoin issuance remains wide.
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What Comes Next
The trajectory of bank involvement in stablecoins will likely depend on two key variables: federal legislation and market demand. If Congress passes a comprehensive stablecoin framework that provides clear rules for bank issuers — including reserve requirements, audit standards, and consumer protections — the calculus could shift quickly.
Several bills currently under consideration would explicitly allow nationally chartered banks to issue stablecoins under federal oversight.
Market demand is the other wildcard. As stablecoins become more embedded in cross-border payments, remittances, and onchain commerce, banks may find that their corporate and retail clients increasingly expect stablecoin-related services. At that point, the competitive pressure to act could outweigh the regulatory caution that currently prevails.
For now, S&P Global's assessment is clear: the banking industry sees the stablecoin opportunity but is not yet ready to commit. Whether that changes in 2026 will depend on how quickly the regulatory and competitive landscape evolves.
