(As seen on CUInsight) – As digital transformation continues to reshape the financial services landscape, credit unions are paying closer attention to innovations that could redefine how money moves. Among these developments, stablecoins have emerged as a compelling bridge between the reliability of traditional currency and the efficiency of digital assets. With regulatory frameworks like the GENIUS Act paving the way for mainstream adoption, understanding stablecoin technology and its implications has never been more important.
What Is a Stablecoin?
A stablecoin is a type of cryptocurrency designed to maintain a stable value, typically pegged to a government-issued currency such as the U.S. dollar. Fiat currency—money issued by a government that isn’t backed by a commodity like gold or silver—derives its value from public trust and the government’s designation as “legal tender.”
Stablecoins aim to mirror this stability while offering the benefits of cryptocurrency transactions which include speed, lower cost, and transparency. Over the past five years, the stablecoin market has experienced a Compound Annual Growth Rate (CAGR) of 77%, now representing over $250 billion in value. In 2024 alone, stablecoin transfer volume reached $27.6 trillion, surpassing the combined total of Visa and Mastercard transactions, according to a January 2024 report by crypto exchange CEX.io.
How Does It Work?
For many in the credit union industry, the concept of payment tokenization, which protects sensitive data in card-based transactions, is already familiar. Stablecoins take this idea further through asset tokenization, converting fiat currency into digital tokens recorded and verified on a blockchain. This decentralized network confirms ownership, enhances transparency, and eliminates the need for traditional intermediaries in financial transfers.
Why Is Everyone Talking About It?
Although stablecoins have been in existence for several years, the passage of the GENIUS Act in July 2025 has brought them to the forefront of industry discussion. The Act establishes a clear framework for issuing and managing stablecoins, ensuring they are safely integrated into the broader financial system.
Under the legislation, stablecoin issuers must:
- Back tokens with reserves of cash or short-term U.S. Treasuries at a 1:1 ratio, with monthly reporting.
- Refrain from offering interest or yield on stablecoin holdings.
- Comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.
- In the event of bankruptcy, provide priority claims to stablecoin holders over other creditors.
The Act will take effect on January 18, 2027, or 120 days after final regulatory guidance, whichever comes first.
Use Cases for Stablecoin
Stablecoins are not just a concept, they are already being tested and deployed across a wide range of financial and commercial applications:
- Cross-Border Payments: Stablecoins can dramatically reduce settlement times and fees for international transactions. Businesses benefit from faster supplier payments and improved liquidity.
- Enhanced Payment Processing: Mainstream payment processors can integrate stablecoins to provide consumers and merchants with faster, lower-cost digital transactions.
- Access to Emerging Markets: In countries with unstable currencies or limited banking infrastructure, stablecoins offer a pathway to financial inclusion and access to global commerce.
Conclusion
Stablecoins represent a pivotal step in the evolution of digital finance, combining the trust of fiat currency with the innovation of blockchain technology. As regulation solidifies and adoption expands, credit unions will need to evaluate how stablecoins fit into their long-term digital strategy. Whether as a tool for faster payments, international growth, or member service innovation, stablecoins are poised to become a key component of the financial ecosystem of the future.
About the Author
Rebekah Higgins, Chief Growth Officer at Synergent, brings nearly three decades of experience partnering with credit unions of all sizes. A recognized subject matter expert in payments and fraud, she is known for her strategic vision, collaborative leadership, and innovative approach. Rebekah’s deep industry insight and forward-thinking mindset continue to drive Synergent’s growth and empower credit unions to thrive in an evolving financial landscape.
