Banks reassess infrastructure for stablecoins and CBDCs

Banks are reassessing how to build infrastructure and processes for stablecoins, central bank digital currencies (CBDCs) and tokenised deposits after the US GENIUS Act renewed policy momentum around stablecoins. Financial institutions are mapping technical and operational gaps as the market shifts from use-case discussion to implementation.

Banks distinguish three types of digital money: retail CBDCs issued by central banks, privately issued stablecoins and tokenised bank deposits. Each requires different custody, identity verification, settlement and reconciliation systems and raises distinct implications for liquidity and balance-sheet treatment.

Operational decisions include how customers are onboarded and offboarded, who performs know-your-customer and compliance checks, and how tokens are created and destroyed. Banks can issue tokens directly, act as intermediaries for third-party issuers, or outsource parts of the flow. Those choices affect visibility over customer flows and the timing and cost of holding reserves or collateral that back tokenised liabilities.

Settlement and liquidity management present immediate challenges. Real-time payment systems have already shortened intraday liquidity cycles; adding tokenised instruments increases the frequency and granularity of liquidity movements. Banks may need larger intraday buffers, revised funding lines and new links to clearing and settlement networks. When transfers settle on alternative rails, differing finality rules and timelines create counterparty and operational risks.

Control over transaction processing, reconciliation and final settlement is reduced when tokenisation platforms and alternative rails operate outside traditional banking systems. Using distributed ledgers and third-party token providers can complicate regulatory oversight, auditability and incident response. Banks are identifying which functions to keep-customer onboarding, compliance, custody and liquidity provisioning-and which to delegate to partners.

Hidden costs include systems integration between legacy core banking platforms and distributed ledger technology, ongoing validation and reconciliation work, higher compliance monitoring for token flows, and the operational expense of running reserve and collateral arrangements. Additional fees stem from network charges, smart-contract audits and governance participation in cross-border token networks.

Cross-jurisdiction governance adds complexity. Regulatory frameworks for digital currencies are still evolving, and firms operating across borders must reconcile differing rules on custody, capital treatment, anti-money laundering controls and consumer protections. Internal governance and risk controls are being updated to account for new operational failure modes and legal uncertainty.

Industry debate has moved from hypothetical use cases to practical questions of who performs key functions and how systems connect. The discussion covers whether banks will act as issuers, custodians, on- and off-ramps or service providers, and how they will link to central bank and private settlement systems. A recent webinar moderated by payments expert Scott Hamilton examined these infrastructure, settlement and control questions.