Moody's 2026 Outlook: Stablecoins are Rising as a Core Infrastructure in Global Finance

International top credit rating agency Moody’s released the “Global Outlook 2026” report, explicitly stating that stablecoins have transitioned from being native tools within the cryptocurrency space to becoming an indispensable “core infrastructure” in institutional markets. The report disclosed that in 2025, on-chain settlement volume of stablecoins surged by 87% year-over-year, reaching an astonishing $9 trillion.

This data marks the evolution of stablecoins and tokenized deposits into “digital cash” used by institutions for liquidity management, collateral transfer, and settlement, becoming a key conduit connecting traditional finance with the growing world of tokenized assets. As global regulatory frameworks become clearer and infrastructure investments exceeding $300 billion are anticipated, the role of stablecoins as a “financial pipeline” is now irreversible.

Moody’s Key Insights: The Paradigm Shift Behind $9 Trillion in Transactions

When a traditional rating agency, renowned for assessing sovereign credit and blue-chip corporate debt risks, begins to focus on a niche within the cryptocurrency sector and offers high praise, it sends a strong signal. In its latest “Global Outlook 2026” report, Moody’s uses detailed data and rigorous logic to set the tone for the future development of stablecoins: they are no longer marginal speculative tools or mere deposit channels but have become fundamental “pipelines” in institutional financial markets, akin to water, electricity, and gas. Based on estimated on-chain transaction data, the total settlement processed by stablecoins in 2025 reached approximately $9 trillion, a significant 87% increase from the previous year. The significance of this figure lies not only in its enormous scale but also in the trend it represents—institutional funds are adopting this digital settlement medium on a large and systematic scale.

Moody’s analysts coined a precise term to describe this evolution: “digital cash.” In the report, fiat-backed stablecoins (such as USDT, USDC) and bank-issued tokenized deposits (like JPM Coin) are positioned as digital cash equivalents used for liquidity management, collateral transfer, and final settlement within an increasingly tokenized financial system. This definition is crucial as it separates stablecoins from the often controversial category of “cryptocurrencies,” endowing them with a more neutral and functional financial instrument attribute. This narrative shift is a key to attracting traditional financial institutions that may be wary of “cryptocurrencies” but are interested in “fintech” and “efficiency improvements.”

This transformation is not accidental but the result of multiple driving forces. First, the wave of global financial asset tokenization provides the most fundamental application scenario. Whether it is government bonds, fund shares, or credit products, when issued and traded as digital tokens on blockchain, they require a digital, programmable, and stable-value medium for settlement—stablecoins fit this role perfectly. Second, in 2025, banks, asset managers, and other institutions conducted numerous pilots of blockchain settlement networks and digital custody solutions aimed at simplifying issuance processes, optimizing post-trade processing, and intra-day liquidity management. These practices have created genuine, sustained demand. Finally, regulatory advancements in major jurisdictions—such as the EU’s MiCA, proposed US legislation, and licensing regimes in Singapore—have paved the way for institutions to adopt stablecoins at scale within compliant frameworks.

Moody’s “2026 Outlook” on Stablecoins: Core Data and Judgments

• On-chain annual settlement volume: approximately $9 trillion (estimated) in 2025
• Annual growth rate: 87% increase over 2024
• Core qualitative shift: from native crypto tools to “core infrastructure” in institutional markets
• Core functions: evolving into “digital cash” for liquidity, collateral, and settlement
• Related trends: driving the integration of traditional and digital finance alongside tokenized bonds and funds
• Infrastructure investment: by 2030, investments in digital finance and infrastructure may exceed $300 billion

From “Trading Fuel” to “Financial Pipeline”: Three Major Institutional Use Cases of Stablecoins

The evolution of stablecoins is most directly reflected in the deepening and expansion of their use cases. Early on, stablecoins primarily served as a substitute for fiat currency within crypto exchanges, facilitating quick conversions between different crypto assets—viewed as “trading fuel.” However, according to Moody’s report, the core driver of their explosive growth has shifted to three closely related institutional-level applications, making stablecoins a true “financial pipeline” supporting value flows.

First is the 24/7 global management of liquidity. For multinational corporations, hedge funds, or asset managers, managing cash positions across multiple countries, different time zones, and banking hours is costly and inefficient. Stablecoins offer a near-instant, 24/7 transferable tool. The report specifically mentions that in 2025, regulated institutions such as Citibank and Société Générale began experimenting with cash and US Treasury-backed stablecoins for intra-day fund transfers between funds, credit pools, and trading venues. This indicates that stablecoins are becoming innovative tools for corporate treasury management and internal settlement within financial institutions.

Second is the programmable transfer and use of collateral. In traditional repurchase agreements or derivatives trading, collateral transfer, valuation, and recovery are complex and slow processes. Stablecoins, as digital native assets, can be deeply integrated with smart contracts to enable automatic collateral locking, valuation based on market prices, and instant transfer. This is now standard in DeFi protocols and is being explored for institutional “tokenized repo” scenarios. Collateral in stablecoin form makes the entire collateral process more transparent, efficient, and reduces counterparty risk.

Third is the final settlement layer for tokenized assets. This is the most core manifestation of stablecoins as “pipelines.” When a bond, stock, or fund share is tokenized, its trading settlement requires a stable, on-chain asset of equal value. Stablecoins serve as this settlement asset. Moody’s views stablecoins alongside tokenized bonds, funds, and credit products as key components of the integration of traditional and digital finance. This blockchain-based settlement system can shorten the traditional T+2 or longer settlement cycles to minutes or seconds, minimizing settlement risk.

Global Regulatory Race: Building a Compliant Path for “Digital Cash”

For stablecoins to become a recognized “pipeline” in the global financial system, technical innovation and market demand alone are insufficient; clear and credible regulatory frameworks are essential “tracks.” Moody’s keenly points out that global regulation is striving to keep pace with this financial innovation, with a trend toward convergence. This convergence does not mean rules must be identical but that major financial centers are working to address similar core issues: issuer admission and reserve requirements, custody security, redemption rights, and systemic resilience.

The EU, with its Markets in Crypto-Assets Regulation (MiCA), has taken the lead in establishing comprehensive rules for stablecoins (referred to as “electronic money tokens” and “asset-referenced tokens” under MiCA). The report cites the example of EURCV issued by a subsidiary of Société Générale, illustrating how traditional financial institutions can launch compliant products under the EU stablecoin framework. Across the Atlantic, multiple US legislative proposals concerning stablecoins and market structure are under active discussion, aiming to establish a federal regulatory system to end the patchwork of state-level regulations. Although legislative progress is slow, agencies like the US Office of the Comptroller of the Currency (OCC) have issued interpretive letters providing initial guidance for banks participating in stablecoin activities.

In Asia and the Middle East, regulatory innovation is also active. Singapore’s Monetary Authority (MAS) regulates companies providing digital payment tokens (including stablecoins) through its “Payment Services License” regime. Hong Kong is exploring specific regulations for stablecoins based on its virtual asset service provider licensing framework. The UAE and other Gulf countries are actively promoting payment token projects pegged to their national currencies (e.g., Dirham), exploring forms of sovereign digital currencies. These decentralized yet aligned efforts collectively form a gradually clearer global landscape, giving cross-border financial institutions more confidence in designing and deploying stablecoin-related operations.

However, Moody’s also calmly reminds that regulatory development is an ongoing process, and differences across jurisdictions may introduce new compliance complexities. For example, a euro stablecoin approved under MiCA, if offered to US customers, must also meet US requirements. This “regulatory fragmentation” risk is a challenge in building a truly global “digital cash” system. Nonetheless, the overarching trend from unregulated to regulated, from vague to clear, has been established, paving the most critical institutional path for stablecoins to move from the “gray area” into the “financial core.”

Risks Not to Be Overlooked: New Challenges of Smart Contracts, Oracles, and Interoperability

As trillions of dollars of value flow through these emerging “digital pipelines,” their security, reliability, and robustness become systemic issues concerning global financial stability. Moody’s report does not simply praise but adopts a cautious stance, emphasizing new risks accompanying this transformation. These risks differ sharply from traditional financial risks and are primarily rooted in technology.

First is the risk of smart contracts. Functions such as issuance, transfer, freezing, and redemption of stablecoins are controlled by code deployed on blockchains. Any code vulnerabilities could be exploited maliciously, leading to asset theft or erroneous locking. Multiple major losses caused by smart contract flaws have occurred historically. For stablecoins aiming to serve as institutional infrastructure, their code must undergo rigorous formal verification and third-party audits, with comprehensive bug bounty and emergency response mechanisms.

Second is the risk associated with oracles and external dependencies. Many stablecoins (especially algorithmic or hybrid collateralized stablecoins) and DeFi applications depend on oracles to fetch external price data for collateralization and liquidation triggers. Attacks or errors in oracles could cause systemic liquidations or insolvencies. Additionally, stablecoins backed by fiat or government bonds rely on trust in custodial banks and periodic audits to verify collateral existence and quality, introducing counterparty and audit risks from traditional finance.

Third is blockchain network interoperability and fragmentation. Major stablecoins like USDT and USDC are issued across multiple chains (Ethereum, Solana, TRON, etc.). While multi-chain deployment improves accessibility, it disperses liquidity and increases complexity. Cross-chain transfers depend on bridges, which have become prime attack targets. For institutions needing seamless, secure transfers of large “digital cash” across ecosystems, developing safe and efficient interoperability solutions is urgent.

Moody’s emphasizes that security, interoperability, and sound governance, alongside regulatory transparency, will be key factors determining whether stablecoins can serve as reliable institutional settlement assets rather than becoming new systemic vulnerabilities. This essentially raises the industry’s standards: infrastructure competition has entered the “reliability” and “robustness” phase.

Future Outlook: Trillions in Investment and a New Era of “Programmable Finance”

Moody’s report is not only a description of the current state but also a forecast of future trends. It estimates that as institutions build large-scale tokenization and programmable settlement “tracks,” global investments in digital finance and related infrastructure could exceed $300 billion by 2030. This massive capital will flow into blockchain node networks, digital asset custody solutions, compliance tech, and middleware connecting traditional core banking systems with blockchain. Stablecoins, as the “blood” of this new financial architecture, will undoubtedly be a key investment focus and beneficiary.

Looking ahead, stablecoin development may deepen along two main paths. Path one is “digitization enhancement of traditional finance.” In this route, bank-issued tokenized deposits, exemplified by JPM Coin, will become mainstream. They mainly operate on permissioned blockchains, serving the bank’s client network, improving cross-border payments, securities settlement, and existing services. This conservative but steady approach is a natural extension of traditional financial digital transformation.

Path two is “native settlement layer for open finance.” Here, public, transparent fiat-backed tokens like USDC will continue to develop on public blockchains, becoming universal settlement units connecting DeFi, tokenized RWA, and future decentralized autonomous organizations (DAOs). This ecosystem will be more innovative, spawning financial products and services beyond current imagination. The two paths may coexist and complement each other long-term, even interconnected through compliant bridges.

Ultimately, all this points toward a new era of “programmable finance.” In this era, value (in stablecoin form) and assets (in various token forms) can be precisely defined, automatically transferred, and combined via code. Financial contract execution will shift from reliance on legal texts and manual operations to verified smart contract logic. Moody’s report, as a meticulous observer, confirms that this future is not science fiction—its foundational “pipelines”—stablecoins—are rapidly being laid and solidified before our eyes. For investors and industry participants, understanding and positioning in this fundamental infrastructure shift will be crucial to gaining an edge in the next wave of finance.