How banks are capturing stablecoin payment volumes: notes from our Merge Madrid fireside

Not long ago, the question was whether banks would enter stablecoin payments at all. Today it is about how they enter, how fast they can move, and what it takes to build an offering that competes.

On October 28 at Merge Madrid, Catarina Veloso, our Director of Regulatory and Compliance, sat down with Deborah zu Hohenlohe, our EMEA Sales Director, to talk through what that looks like from the inside. Deborah spends most of her time with financial institutions that are making these decisions right now. Here are the themes from their conversation.

From exploration to implementation

Two years ago, banks were asking whether they needed a digital asset strategy at all. Now Deborah hears from banks that were openly cautious telling her they are accelerating: joining consortia, running pilots with stablecoin issuers, and choosing custody platforms against a deadline.

Regulatory clarity is part of the reason. Europe has MiCA and the US has the GENIUS Act. But clarity is not the same as readiness, and the questions have become practical ones. Which platform? Which counterparties? Which compliance workflow? How fast can the regulator sign off?

In some markets, the regulator is on the critical path. Deborah described a bank that is the first in its country to offer digital asset custody, whose supervisor's message was simple: go step by step, and we'll figure it out together.

Ownership has moved too. "The whole blockchain innovation lab era is pretty much over," Deborah said. These initiatives now sit with strategy teams and the business units that will own the product and its revenue. In her view, the next phase will reward the quality of execution far more than the ambition of the announcement.

Moving a token isn't completing a payment

For years, banks' interest in digital assets was mostly about giving customers access to crypto: buying, selling, custody and investment products. Stablecoins change the conversation from digital assets as investments to digital assets as payment infrastructure.

The requests are getting specific. The RFPs Deborah sees don't ask whether a vendor supports stablecoins. They name corridors, like South Africa to the Philippines or the Gulf to Pakistan. They ask for local-currency stablecoins, not only dollar ones, and they ask about stablecoins and tokenized deposits in the same breath.

But a token arriving at an address is not a completed payment. You still need to know who is on each side, carry the right information with the transfer, reach a counterparty that is ready to receive, and often convert back into local currency at the other end.

Banks are also bringing the protections their customers already expect. One European group is building a stablecoin scheme with several banks that works like a card scheme, disputes and chargebacks included. The opportunity is not only offering stablecoin transfers. It is combining new rails with what banks already have: trust, distribution, compliance and customer protection.

Compliance wasn't the problem. Connectivity was.

A payment doesn't happen in isolation, and Deborah called counterparty connectivity the most underestimated challenge in stablecoin payments.

This summer, our team sat on a call with two fully licensed institutions. Both were doing the Travel Rule properly, and they still couldn't exchange compliance data automatically because their providers spoke different protocols.

Connectivity is also more than a protocol. An address tells you where money goes. It doesn't tell you who is on the other side, or which legal entity, in which jurisdiction, is accountable. A global exchange might run ten licensed entities, and you need to know which one you are dealing with.

One bank put it in a way Deborah keeps coming back to: by solving the Travel Rule, the industry quietly built a strategic asset, a directory of who controls which addresses. In payments, connectivity isn't measured by how many institutions you know. It is measured by how many you can actually transact with, and how fast they answer.

You can outsource the technology, not the responsibility

The most common misconception Deborah sees is that outsourcing the technology also outsources the responsibility. Good infrastructure providers make the market much easier to enter, but tools aggregate signals. The risk appetite belongs to the bank: which jurisdictions it will transact with, which counterparties, and what happens when a name matches a sanctions list.

The most sophisticated banks understand this. They aren't buying one stack. They are assembling one and acting as the orchestrator, with custody from one provider, analytics from another and compliance messaging from a third, and they test whether each vendor works well with the others.

The due diligence shows how seriously they take it. One RFP our team answered ran to more than five hundred questions, covering where data lives, what happens when it crosses borders, and how an outcome would be reproduced for an auditor a year later. Compliance isn't something to bolt on before launch. It shapes the architecture from day one.

Three decisions to get right on day one

Catarina closed by asking what Deborah would tell a bank about to start its first stablecoin payment project. She named three decisions.

Define the use case and counterparties before choosing technology. Know which corridors you are serving and who you need to reach on the other end. Then pick the stack.

Put authorization into the payment flow from the start. Decide what information has to travel, which checks run and who makes the call, and make sure all of it happens before funds move.

Launch pragmatically, but design for change. The best teams start with the integration path that gets their first launch out fastest, but position themselves to adapt and scale as their program grows.

Her last point tied the three together. Your first corridor might have a handful of counterparties. Don't optimize for the first successful transaction. Design for the thousandth, and for the next hundred counterparties.

If your team is working through any of these decisions, get in touch. We're happy to compare notes.