Stablecoins are becoming an increasingly established feature of institutional finance.
With the ability to settle transactions in seconds, operate around the clock, and move value across borders without traditional banking delays, they represent a meaningful advance for treasury teams, fund managers, and payment operations.
The institutions making the most of this opportunity are those approaching it with preparation and clarity. Understanding how stablecoins work, what distinguishes one from another, and where the key considerations lie provides a strong foundation for adoption.
Choosing the right instrument matters
Not all stablecoins are built the same – and that is good news for institutions. It means there are options to match different risk appetites and use cases. A fiat-backed stablecoin issued by a regulated trust company offers a very different profile from a token issued by an offshore entity with limited disclosure. Tokenised bank deposits and tokenised money market fund (“MMF”) shares add further choice, each with distinct legal protections, reserve structures, and regulatory standing.
The starting point is knowing what to look for: who issued the token, what backs it, how it is governed and which regulatory framework applies.
Building institutional readiness across five areas
Successful stablecoin adoption comes down to preparation across five areas, most of which will feel familiar to any risk or treasury team.
- Issuer and reserve assessment comes first. Institutions that evaluate stablecoin issuers with the same discipline applied to any financial counterparty are well positioned. This means reviewing reserve composition, redemption processes, and the legal protections available to holders. Issuers backed by cash and short-term government securities with frequent independent attestations offer the strongest foundations.
- Operational discipline is equally important. Blockchain transactions settle quickly and permanently, which means processes such as address verification, dual approvals, and test transactions become standard practice. Firms that embed these controls early create a reliable operating environment from the outset.
- Cybersecurity readiness builds on existing institutional strengths. Secure custody solutions, hardware-based key storage, whitelisted addresses, and multi-signature wallets all reduce exposure. Permissioned environments can offer additional protection, as issuers may be able to freeze and reissue tokens in the event of a breach.
- Blockchain infrastructure awareness helps teams plan for the realities of on-chain settlement. Selecting well-established networks with strong uptime records, setting confirmation thresholds for large transfers, and maintaining backup payment routes contribute to continuity.
- Governance and transparency standards complete the picture. Institutions that favour issuers with published reserve policies, independent audits, and clearly defined administrative controls benefit from greater visibility and fewer surprises. Regulatory frameworks such as Markets in Crypto-Assets Regulation (“MiCA”) in the EU, the Financial Services Regulatory Authority (“FSRA”) in Abu Dhabi, and emerging US proposals are raising standards, creating more structured environments for institutional participation.
"Due diligence and sound risk management remain the best tools for safeguarding institutional integrity."
Jasmine Burgess, CEO/CIO of Isogonal
Regulation is building a stronger foundation
New legislation is giving institutions greater clarity and confidence. MiCA is active in the EU, establishing requirements for reserves, reporting, and redemption rights. Abu Dhabi and Bermuda have introduced supervisory frameworks for digital asset activity, and the US is progressing towards bank-grade issuer standards. These developments provide clearer criteria for selecting stablecoin partners and integrating digital settlement into institutional operations.
"A stablecoin isn't just a means of value within one jurisdiction. It is a potential global payment mechanism and supporting that operation 24/7 is essential."
Angie Walker, Commercial Head of Apex Digital
A practical starting point
For firms seeking to build experience before broader rollout, tokenised MMFs offer a practical entry point. They combine regulated, familiar assets with blockchain-based settlement in a controlled environment, allowing teams to develop operational confidence while maintaining conservative risk exposure. Many institutions are beginning here and expanding their digital asset activity as internal capability grows.
The opportunity is real, and the tools to engage responsibly are already in place. With the right preparation, stablecoins can become a valuable addition to the institutional financial toolkit.
Download the eBook for insights
Our eBook, Understanding and mitigating stablecoin risks for financial institutions, sets out a structured framework and practical due diligence checklist to support confident adoption.
Inside the eBook:
- Key risks: issuer, reserve, cybersecurity, operational, and infrastructure risks explained
- Best practices: mitigation strategies and structured due diligence checklist
- Regulatory clarity: MiCA, FSRA, Bermuda Monetary Authority (“BMA”), and US frameworks
- Practical entry points: how permissioned tokenised MMFs reduce exposure
- New infrastructure: stablecoin clearing houses, custodians, and trusted intermediaries
