Stablecoin strategy for banks

Tony McLaughlin, CEO of Ubyx, explains why banks should act now and how they can implement a practical stablecoin strategy that aligns with their existing business models.

While most banks continue to view stablecoins with cautious scepticism, a new financial paradigm is quietly taking shape. The recently released Ubyx whitepaper outlines a transformative infrastructure that positions banks to capture significant new revenue streams, maintain their central role in the payments ecosystem, and prevent disintermediation by crypto-native players.

Source: Ubyx White paper

The choice facing traditional financial institutions is stark: develop a coherent stablecoin strategy or risk being sidelined as customers migrate to more innovative competitors. This article outlines why banks should act now and how they can implement a practical stablecoin strategy that aligns with their existing business models.

Many banks have misunderstood stablecoins as merely specialised crypto assets rather than recognising them as the digital evolution of traditional banking products. In reality, stablecoins represent the next iteration of financial instruments that banks have successfully managed for decades.

Consider this parallel:

• In the paper era, banks provided checkbooks to customers, allowing them to transfer money through paper instruments;

• Today, they need to enable the digital equivalent—stablecoins—to fulfil the same customer needs for value transfer.

Banks that recognise this opportunity stand to gain:

1. New revenue streams through stablecoin redemption fees and foreign exchange spreads;

2. Enhanced client retention by meeting evolving payment preferences;

3. First-mover advantage in the emerging digital asset economy;

4. Protection against disintermediation by crypto-native competitors.

The central innovation described in the Ubyx whitepaper is a clearing system that allows banks to seamlessly participate in the stablecoin ecosystem without fundamental changes to their business model or excessive technological investment.

Much like check clearing systems enable banks to process checks from other institutions, Ubyx creates a mutually beneficial network where banks can:

1. Accept stablecoins from any participating issuer and deposit them at full value;

2. Process these deposits through a standardised clearing mechanism;

3. Issue their own stablecoins with confidence they'll be universally accepted.

The beauty of this approach lies in its familiarity. Banks already understand clearing systems—they've operated them for centuries. Ubyx simply extends this proven model to digital assets.

The first move for any forward-thinking bank is to provide hosted blockchain wallets to customers. This allows clients to receive stablecoins through addresses they can share with counterparties, similar to how they currently share account and routing numbers.

Source: Ubyx White paper

These wallets can be provided in partnership with specialised Ubyx scaling partners, allowing banks to implement them quickly without building deep blockchain expertise internally. Customers benefit from receiving stablecoins through an institution they already trust, while banks create a new touchpoint within their existing digital banking infrastructure.

From day one, banks can offer automatic conversion of stablecoins into traditional account balances. This is conceptually similar to the way banks have processed foreign currency checks for decades—accepting them, converting them to local currency, and crediting customer accounts.

With customer-facing wallet infrastructure in place, banks need a back-end solution to process stablecoin redemptions efficiently. The Ubyx clearing system provides this critical infrastructure, allowing banks to:

• Submit received stablecoins for collection from issuers;

• Receive full value settlement from the issuer's pre-funded accounts;

• Credit customer accounts in their preferred currency;

• Apply appropriate fees and foreign exchange spreads.

This approach mirrors how banks process ‘cash letters’ containing foreign currency checks—submitting them through correspondent banking networks for collection. The key difference is that Ubyx provides near-instantaneous electronic settlement rather than the multi-day process required for paper instruments.

For a bank with just a 5% market share in a country capturing 5% of global stablecoin redemption flow, this represents a potential annual revenue opportunity of approximately USD 91.25 million from fees and FX spreads.

Once connected to the Ubyx clearing network, banks gain the ability to not just accept stablecoins, but to issue them as well. This creates a powerful two-way flow that positions the bank at the centre of the digital asset ecosystem.

From a regulatory perspective, when a stablecoin is redeemed through a clearing system like Ubyx, it functions essentially as a digital cashier's check. There is no fundamental reason banks should be prevented from issuing these digital instruments, as they represent a natural evolution of bank-issued paper instruments.

Banks can issue stablecoins backed by their balance sheets—just as they've issued cashier's checks for generations. The regulatory framework exists; what's needed is implementation that satisfies both innovation and prudential requirements. For more conservative jurisdictions, fully-collateralised models provide an even more straightforward path forward.

Some forward-thinking institutions might even consider stablecoins drawn against established credit lines—similar to how banks have historically allowed certain customers to write checks against credit facilities.

Source: Ubyx White paper

Many banks have adopted a cautious, wait-and-see approach to stablecoins. This strategy carries significant hidden risks:

1. Customer migration risk - clients seeking stablecoin functionality will find providers, with or without their primary bank's participation.

2. Economic opportunity cost - every day without a stablecoin strategy represents lost revenue potential that competitors will capture.

3. Strategic positioning loss- banks that lag in adoption will struggle to catch up as the ecosystem matures.

4. Digital relevance risk- as transactions increasingly move to blockchain rails, institutions without participation become progressively marginalised.

If you're a banking executive considering your institution's stablecoin strategy, consider these practical steps:

1. Experience stablecoins firsthand - have your executive team download popular crypto wallets, acquire stablecoins, and conduct transactions between themselves. Understanding comes through direct experience.

2. Test the current off-ramp process - attempt to convert stablecoins back to traditional currency through existing channels, noting the friction and costs your clients currently experience.

3. Calculate your opportunity - estimate the revenue potential from stablecoin redemption fees and FX spreads based on your client base and market positioning.

4. Evaluate Ubyx scaling partners - identify technology providers who can help implement hosted wallet infrastructure with minimal disruption to existing systems.

5. Join the Ubyx Association - connect with other forward-thinking financial institutions shaping the future of stablecoin infrastructure.

The stablecoin revolution isn't coming—it's already here. The only question is whether traditional banks will participate and thrive or resist and gradually lose relevance.

History offers a clear lesson: in the age of paper payments, banks that couldn't process checks lost customers. In the card era, institutions that couldn't issue debit and credit cards became non-viable. Now, as we enter what the Ubyx whitepaper calls ‘the Stablecoin Epoch’, banks face a similar inflection point.

The Ubyx clearing system offers a practical, regulatory-compliant bridge between traditional banking and the future of digital money. By joining the Ubyx Association today, banks can position themselves at the forefront of this transformation while maintaining their essential role in the financial ecosystem.

Those who hesitate will watch as their competitors capture the value, relationships, and strategic positioning that stablecoins enable. The time for a wait-and-see approach has passed. The stablecoin epoch has begun, and banks must decide: lead, follow, or become increasingly irrelevant as the financial system evolves around them.

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*To learn more about joining the Ubyx Association and implementing your bank's stablecoin strategy, visit https://ubyx.xyz*

About Tony McLaughlin

Tony McLaughlin worked in trad-fi for 30 years in payments, FX, and treasury.  He founded Ubyx in March 2025 with a mission to make stablecoins ubiquitous, cash equivalent, and general-purpose methods of payment.  Tony previously originated the Regulated Liability Network and was the instigator of BIS/IIF Project Agora.