For all the momentum behind digital assets, the biggest hurdle facing the banking industry is not conceptual. It’s a process.
The tools to support cryptocurrencies, stablecoins and token deposits already exist, but what is missing is the connected infrastructure that allows traditional financial institutions to use them seamlessly.
“For everyone outside of those 10 or 15 big banks, it’s a really big task to do.” Alex Traceco-founder and CEO of Stablecorehe said in a conversation with the CEO of PYMNTS Karen Websternoting that even something as basic as connecting to a digital asset custodian can expand internal capabilities.
Or as Webster put it: “Plug and play is actually not that easy.”
One of the most persistent misconceptions of traditional institutions looking to integrate cryptocurrencies is that adoption of digital assets can be achieved through simple integration with vendors. Choosing a custodian or wallet provider is only a small part of the puzzle.
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“It’s a great hosting company, probably 10 to 15 percent of the business,” Trice said. “But you have another 80 or 85% to integrate that with your internal systems…and in terms of regulated financial institutions, there are a lot of other pieces that have to come together.”
Giving regional and community banks a bridge to cryptocurrencies
For regional and community institutions, the burden of cryptocurrency integration is often prohibitive given that these smaller lenders often lack the large engineering and compliance teams that their larger peers boast. But this integration gap, or the “last mile” of cryptocurrency adoption, is where Stablecore has staked its own claim in the market.
“We focus on connecting the pieces together because we’ve found that’s where 80% of the work is,” Trice said.
Rather than building core custody or banking systems, the company focuses on connecting the disparate components banks need to deliver digital asset services, from wallets and custodians to compliance tools and customer interfaces. The company’s investor base of nearly 300 banks and credit unions is itself an indication of the demand for this capacity.
For banks, the implications are both defensive and strategic. Webster put it succinctly: “It’s because they want to retain deposits, and attract and retain a younger customer base.”
In Trace’s view, the competitive landscape is moving towards one goal: “Everyone wants to be the primary financial accountant.”
“This market is driven by non-bank participants,” he added, noting that over the past decade, fintech and cryptocurrency companies have expanded independently, building products and attracting users while banks have remained on the sidelines of digital assets due to regulatory uncertainty.
Stablecoins, token deposits and infrastructure staking
Unlike real-time payments infrastructure, which was limited by private bank approval cycles, digital assets have grown rapidly outside the traditional system.
For many years, regulatory uncertainty has been the main barrier to banks’ participation in digital assets. This restriction has been significantly relaxed and has made it permissible for banks to participate directly in the field of blockchain finance.
“The real hurdle was the technology aspect,” Trice said.
Integrating digital asset infrastructure into existing banking groups – while maintaining compliance and passing regulatory tests – remains a complex task, and must be executed with surgical precision.
As a result, the conversation within banks often starts with use cases – whether to prioritize stablecoins, token deposits or broader digital asset offerings. Stablecoins alone have grown from nearly $10 billion in supply five years ago to about $300 billion today, with projections to reach trillions by 2030. Meanwhile, token deposits have gained traction in industry discourse, fueled by consortium efforts and experimentation.
But the most important consideration for banks is architectural, Trice said.
“Whether you start with stablecoins, cryptocurrencies or token deposits, all of these things use the same infrastructure,” he said, underscoring how this common foundation allows banks to enter the market with a single use case while maintaining the flexibility to scale over time.
Even after technical hurdles are removed, operational challenges remain. Banks must design products, train employees, and align internal processes with new capabilities, all while maintaining the reliability expected of regulated institutions. Fortunately, early adopters, typically the most innovative organizations at each level, set precedents that others can more confidently follow.
“This year is about getting the first 5 to 20% to market,” Trice said. “I think you’ll see rapid adoption next year.”
CEO of PYMNTS Karen Webster He is one of the world’s leading experts in payments innovation and the digital economy, advises multinational companies and sits on the boards of AI startups, health technology and real-time payments companies, including a non-executive director on the board of Sezzle, a publicly traded BNPL provider. She founded PYMNTS.com in 2009, a leading media platform covering innovation in payments, commerce and the digital economy. Webster is also the author of the NEXT Newsletter and co-founder of Market Platform Dynamics, which specializes in driving and monetizing innovation across industries.
