Accepting Stablecoin Deposits: How Banks Can Participate in the Stablecoin Boom

Key Takeaways

• Accepting stablecoin deposits can be a significant revenue opportunity, allowing banks to attract new customers and balances.

• Beyond attracting deposits and earning fees, accepting stablecoins provides banks with capital and operational efficiencies (like faster transfers/settlement) and serves as a low-risk entry point to build a deeper digital asset offering for clients.

• Instead of building their own blockchain infrastructure, banks can leverage established, regulated infrastructure providers like BitGo, thereby minimizing operational risk and development time.

The Stablecoin Boom Could Be Good News for Banks 

Despite many banks looking at yield bearing stablecoins as a threat to deposits, building in functionality to accept stablecoins as deposits could actually spell added revenues.

By partnering with providers like BitGo, banks can begin to grow deposits, earn additional fee revenue, and offer modern crypto-to-fiat rails with full regulatory and operational confidence.

Accepting Stablecoin Deposits

With volumes crossing $1T per month, stablecoins have solidified themselves as a modern pillar of payments. As that number continues to swell, banks can capitalize on the growing popularity by accepting stablecoin deposits, without needing to build their own blockchain infrastructure or issue their own stablecoin. 

Here is a practical example of how that could work:

A regional bank wants to support accepting deposits for crypto-native clients. These could be a variety of different clients such as supply chain businesses, gaming platforms, fintechs, investment platforms, or crypto-friendly consumers - any of which transact with or receive stablecoin payments. The bank would need to complete a few simple steps:

1. The bank creates dedicated wallet addresses for clients.

2. Clients deposit USD1 or other stablecoins.

3. BitGo programmatically converts the stablecoin to USD.

4. Funds are swept to the bank’s on-ledger account.

5. The bank earns a fee on each conversion.

With a straightforward setup, a bank begins to not only make fees by offering stablecoin services, but is potentially attracting additional deposits from companies and individuals that want to bank with digital assets.

Why Accept Stablecoin Deposits

Unlock New Deposits, With Minimal Risk

Banks can tap into the rising flow of stablecoin-denominated funds without fear of losing core deposits. With clients which have already gone through the KYC process, banks can leverage stablecoins as a way to win additional customer balances. For example, customers that transact with digital assets regularly may want to keep stablecoins at their bank rather than a self-custody wallet or other fintech platform.

Banks can also market stablecoin acceptance as a competitive advantage to attract new customers.

Earn Revenue from Stablecoin Transactions

When accepting stablecoins, banks can set up a variety of commercial models:

• Introducing fees for stablecoins to USD swaps, and vice versa. 

• Flat subscription fee for access to stablecoin products.

Both models are a win-win. Banks keep customers on their platform while monetizing a flow that was previously leaking to crypto exchanges, and customers utilize a more centralized system instead of having to transfer funds and switch between apps.

Capital and Operational Efficiencies

Banks can utilize stablecoins for a multitude of their operational activities including intrabank or international transfers and settlement, speeding up settlement times to days instead of quarters.

Build it with BitGo

Building something like this into your bank stack does not require a completely new build, especially when utilizing providers like BitGo.

Get Started Without Blockchain Development

Banks can start accepting stablecoins without complex blockchain build out or added operational risk, by leveraging proven technology from partners like BitGo. There is no need to build a completely new tech stack when you can lean on a technology innovator that has been providing trusted digital asset infrastructure for over a decade.

Trusted Infrastructure for Regulated Institutions

BitGo is a regulated infrastructure provider already trusted by thousands of institutional clients. Leverage qualified custody with an integrated prime brokerage, which lets you convert and settle stablecoin transactions seamlessly, all within your BitGo account.

Built to Scale with You

BitGo offers APIs and infrastructure to support users and to build a deeper, more robust digital asset offering over time. Starting with a straightforward integration of wallets and trading to accept stablecoin deposits, banks can expand to offer products like purchasing and holding bitcoin, Ether, Solana, or XRP, as they see more demand from their client base. 

Wondering if you should launch your own stablecoin?

Leveraging existing stablecoins is the simplest starting point for banks new to the digital asset space. However, the advantage of launching your own stablecoin can bring your bank added control and customization, and could bring strategic advantages.

A native stablecoin could be used for real-time intrabank settlements, client transfers, or tokenized deposits. And partnering with BitGo gives you a direct line to a trusted, regulated, and proven stablecoin issuance platform that is GENIUS-ready.

Banks can gain initial hands-on experience by starting to accept stablecoin deposits today, positioning themselves to launch their own stablecoin so they can optimize real customer data and usage patterns.

With BitGo’s help, stablecoins do not pose a threat to bank deposits, but represent an opportunity to optimize and expand deposits, product offerings, and potentially revenue.

Get in touch to learn more.