By Carlos Netto, CEO/Co-Founder, Matera
Stablecoins Are Coming—Here’s How Banks Can Get Ahead
Stablecoins are entering the financial mainstream. Their adoption is accelerating across markets, signaling a pivotal moment for banks to evaluate their role in the evolving landscape. With legislation like the GENIUS Act gaining bipartisan momentum, stablecoin adoption is expected to accelerate. The implications for banks are significant: if deposits flow into stablecoins outside the traditional banking system, institutions risk losing not just balances but long-term customer relationships.
This paper outlines four pathways banks can take to engage with stablecoins, and makes the case for a new model that combines Circle’s USDC and Matera's Digital Twin to help banks preserve their role in the financial value chain. With Digital Twin, banks can participate in stablecoin ecosystems without overhauling their Core Banking Systems, and without exposing themselves or their customers to unnecessary risk.
Four Strategic Models for Banks in the Stablecoin Era
Option 1: Light Integration with External Platforms
Banks can play an introductory role by linking to platforms that enable crypto tracking (e.g. PayPal, Coinbase) inside their mobile app. This provides a unified customer experience, allowing users to view crypto balances alongside traditional accounts. However, the bank doesn’t manage the stablecoin or its wallet and customer balances reside outside the institution’s control.
Option 2: Custody-Only Solution
Banks can offer a custody service, allowing businesses or retail customers to hold USDC balances under the bank’s umbrella. This is attractive for corporate clients that want regulated storage of digital assets, and safe-keeping for wallet holdings, but the bank is not participating in payments or transfers. It protects customer relationships, but doesn’t help the bank remain relevant in the broader stablecoin economy.
Option 3: Stablecoin Embedded in Mobile App (Recommended)
Banks can offer USDC embedded directly within their mobile banking apps. Using Digital Twin, they can support crypto balances with more than two decimal points, and display real-time, accurate balances to users without modifying their legacy core. The crypto balances are authorized and tracked by Digital Twin, which updates balances immediately after transactions. Customers see it all in one place, and banks retain full KYC/AML oversight. Banks can provide simple funds movement instantly within their app and they remain at the center of value movement for their customers.
Option 4: Bank-Issued Stablecoin
Financial institutions will have the opportunity to issue their own stablecoin. A handful of large institutions may explore this option, but the regulatory complexity and technical burden make this impractical for most. Banks must manage minting, burning, compliance, and interoperability—while still risking customer confusion and fragmented adoption.
The Role of Digital Twin in Unlocking Stablecoin Participation
Why Cores and Digital Twin Work Better Together
Core Banking Systems are foundational to bank operations. They manage customer accounts, regulatory reporting, lending, and complex financial workflows. But when it comes to real-time, 24x7 transaction authorization—especially for digital currencies—they face limitations. Most cores process in batches and go offline nightly, making it difficult to support continuous stablecoin activity. Further, bank core platforms are engineered to operate on the concept of accounts and transactions within accounts, while stablecoin ecosystems will operate on the concept of a “wallet” with no account aggregation.
Digital Twin complements the core. It acts as a real-time transaction ledger in the cloud, tracking crypto and fiat-adjacent balances with sub-second accuracy. With support for high-precision assets (e.g. 6+ decimal places), it can hold balances in USDC or other tokens natively. It also handles real-time authorization, ensuring that transactions are approved and balances updated immediately—every day of the year.
Running in Parallel with the Core
Banks using Digital Twin can operate a dedicated layer alongside the core for stablecoin and digital asset processing. In this model:
- Digital Twin provides balance visibility across deposits and stablecoin holdings, authorizes transactions and updates balances for stablecoin wallets
- The Core continues to manage fiat account balances and traditional banking operations
It’s a modular modernization strategy: one that protects the integrity of the core while delivering the agility of a cloud-native system.
Benefits for Financial Institutions
- Banks gain a path to stablecoin engagement that’s compliant, fast, and secure
- Customers never leave the bank’s ecosystem
- Provide confidence to the bank that deposits that leave to go to stablecoin are likely to return to the bank when cashed out
- KYC/AML is controlled by the bank and leverages existing processes
- Banks can keep visibility to asset holdings and maintain relationships that might otherwise migrate to external wallets
The Strategic Imperative and Real-World Use Cases
Why This Matters Now
Every day that goes by, money is moving out of bank accounts and into digital wallets. Whether for international payments, DeFi, or crypto investing, customers are exploring alternatives, or they risk losing customers along with their balances. Banks need a way to meet those needs while keeping the customer relationship and balance sheet intact.
Real-World Example
A customer at a U.S. bank wants to send money to a friend in Argentina. In a typical scenario, they might go through SWIFT, pay a $45 fee, and wait 2-3 business days. With USDC + Digital Twin:
- The customer logs into their mobile banking app
- Converts $1,000 USD to USDC instantly
- Sends it to the friend’s bank-integrated wallet in Argentina
- The recipient sees USDC in their banking app and converts to local currency or keeps in USDC
- The whole process completes in seconds
Strategic Outcomes
- The bank retains the customer and holds the original deposit as long as possible
- The customer gets the benefit of speed and efficiency
- Compliance is maintained
Closing Thoughts
Stablecoins are coming fast. The opportunity is not just to coexist with them, but to use them to cement customer relationships. By combining the real-time infrastructure of Digital Twin with the regulated liquidity of Circle, banks of all sizes can stay relevant, protect deposits, and offer next-generation financial services without rewriting their core.
This is not a threat to the industry. It’s an invitation to reimagine it.