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The GENIUS Act will accelerate the US stablecoin market, with major US banks already raising capital. To bridge the digital gap, provide customers with market access, and contribute to burgeoning stablecoin revenues, local banks need to partner with crypto startups now. Otherwise, you risk being completely squeezed out of the market by larger competitors.
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Stablecoins are now a source of income rather than a side hustle. Annual transaction volumes of $33 trillion and billions of dollars in bank revenues indicate that the opportunity is already being seized. Local banks can’t outspend, but they can outspend their partners. By working with regulated crypto startups, we can bypass costly R&D and compete with Big Four infrastructure. The real risk is hesitation. As regulations mature and large players capture initial market share, inaction could result in local banks being permanently locked out of stablecoin payment flows.
In such a dark and bearish market environment, stablecoins have emerged as unexpected winners. Thanks to the GENIUS Act that moved the dial, the market received long-awaited regulatory approval, resulting in a significant boost in consumer confidence and institutional support. Demand is high, the mood is high, and the market is at its peak. And with big profits poised to be made, local banks can’t afford to miss out on their time in the spotlight.
Stablecoin trading volume is set to rise to a record $33 trillion in 2025, and JPMorgan’s payments division generated more than $4 billion in revenue in the second quarter of last year alone when it launched its own token. Amid the current reports of soaring earnings across Wall Street, one thing is clear to me. That means companies that take the risk and invest in the ability to facilitate stablecoin transactions will win customers and revenue.
Of course, there is a clear difference in size between the Big Four and regional banks. But local banks don’t need to monopolize the market to benefit. Consumer demand is also booming in states that are likely home to brick-and-mortar stores, such as Wyoming.
Importantly, local banks also have a strong presence in these communities. By leveraging stablecoins, you can attract new customers, including high-income earners who are more likely to adopt crypto-based payment methods. Executives at these banks told me that customer attraction and retention are two of their biggest issues, which is why stablecoins must become a strategic priority if they are to grow their customer base.
The problem is that many local banks are already lagging behind in the digitalization of the industry. It’s no secret that these capital-strapped financial institutions don’t have the multibillion-dollar budgets of Bank of America or JPMorgan to invest in new technology, specialized stablecoin-friendly infrastructure, and internal experimentation. If so, questions remain. How can these banks quickly and cost-effectively provide their customers with access to the stablecoin market before the big four capture most of the consumer demand?
My answer is to partner with agile, cutting-edge crypto startups. Hundreds of crypto payment startups are operating across the United States and can help local banks bridge the digital gap. Similarly, by leveraging the technology-advanced infrastructure of startups, local banks can eliminate costly in-house experimentation and meet consumer demand more efficiently.
On a larger scale, this idea has already proven successful. JP Morgan, Standard Chartered, and others have partnered with a variety of small and large crypto businesses, including Coinbase, Circle, and startup Digital Asset. Nontraditional institutions like Stripe also went this route last year, acquiring stablecoin orchestration platform Bridge to expand its services. This has already been proven, which is why local banks must follow suit if they want a share of the spoils.
Of course, I’m not ignoring the risks. The stablecoin market has a checkered past with major reputational issues, and local banks are understandably cautious. When TerraUSD crashed in 2022, investors lost $40 billion, and there’s no doubt that’s weighing on management.
But that was four years ago. Cryptocurrencies, and indeed stablecoins, are no longer the western part of financial services. Indeed, with the GENIUS Act clarifying the regulatory framework and strengthening anti-money laundering protections, stablecoins have quickly become mainstream in the global payments landscape for both institutions and consumers.
Rather, concerns about the risks posed by stablecoins are why these partnerships are so important. By working with regulated startups that already have the technical framework in place, local banks can reduce risk and avoid costly mistakes that can come with building untested systems in-house.
The bigger danger facing local banks is doing nothing. The four largest U.S. banks currently account for more than half of the industry’s total profits, and their dominance will increase as they expand payments revenue. As regulations mature and large banks capture early market share, local banks face narrowing opportunities to capitalize on consumer demand.
The race to meet consumer demand is steadily underway, given that these larger institutions likely do not want to dilute their potential share of stablecoin revenue among thousands of competitors. If local banks wait, they will give industry giants yet another competitive edge that they cannot afford to lose.
