The $133 Billion Question: Can Stablecoins Streamline Trade Settlements?

According to some of the industry’s top names, stablecoins could soon transform how institutions settle transactions, addressing inefficiencies in traditional financial systems and opening the door for broader adoption.

This was the central focus of a panel discussion at the Benzinga Future of Digital Assets conference, where leaders from finance and digital assets shared their perspectives on regulation, liquidity, and the growing role of tokenized cash instruments.

Institutional Efficiency Through Stablecoins

Colin Butler, global head of institutional capital at Polygon Labs, highlighted how stablecoins can improve institutional finance by replacing outdated processes. “What if you could rewire the global settlement system on yield-bearing institutional stablecoins and use them as settlement tokens?” Butler said. He argued that the ability to earn yield during settlement delays could upend longstanding inefficiencies in traditional finance.

The existing settlement framework, often plagued by lags, carries hefty costs. Andrew Murphy, head of legal at Talos, referenced industry estimates that “the securities industry spends $133 billion a year just on post-trade clearing and settlement.” By shortening the time between trade and settlement, stablecoins could reduce risks and streamline institutional operations.

Regulatory Hurdles Remain a Barrier

Despite their potential, stablecoins face hurdles tied to regulatory uncertainty. Panelists stressed that establishing clear rules for stablecoin issuance, reserves, and audits is vital for institutional adoption. Murphy emphasized that regulatory frameworks must address market structure without stifling the technology. “You run the risk of overregulating and taking away some of the benefits, especially if the regulators don’t understand what the technology can do.”

Reba Beeson, general counsel at AlphaPoint, echoed the need for collaboration with regulators, pointing to her firm’s work with clients navigating compliance challenges. “It’s important to develop guardrails that regulators understand while ensuring technology operates as intended,” Beeson said.

Retail Success and Institutional Opportunity

While institutions remain cautious, stablecoins have already gained traction among retail users and merchants, driven by their ability to settle payments quickly. Butler referenced recent activity from BlackRock, which tokenized its money market fund across multiple blockchains, including Polygon, as a sign of growing institutional interest.

Andrew Czupek, head of digital assets innovation for the Americas at Northern Trust, highlighted the implication of building infrastructure that connects traditional and tokenized systems. “You can work one, and you can work another, but if you’re not supporting both and integrating them, traditional clients can’t access these benefits,” Czupek said.

A Turning Point for Adoption

The panel concluded with optimism about stablecoins’ role in reshaping financial markets. While regulation remains a sticking point, participants agreed that stablecoins could bridge gaps between traditional finance and blockchain technology.

Beeson explained that stablecoins succeed when they address clear use cases, such as cross-border transactions or liquidity needs.

Stablecoins are no longer an experimental concept but a practical solution with the potential to modernize global settlement systems. For institutions, the challenge lies in balancing regulatory requirements with the benefits of faster, more efficient processes.

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Photo by Corynn Egreczky.