Circle's Kaufman says banks clear pilots but stall at core systems. OCC's stablecoin rule adds pressure. The $350B payment shift demands open architecture, not closed loops.
Digital assets have moved from experimental pilots to production to a core infrastructure question for major banks. JPMorgan, HSBC, and Société Générale already run live programs. The risk event now is not whether banks engage but whether they can scale these programs across treasury, custody, compliance, and client flows without creating operational or regulatory exposure.
Circle’s Alison Kaufman addressed this shift at a recent Current event, noting the conversation has fundamentally changed over the past five years. “Once we arrive at this stage of discussion, we’re moving beyond the conceptual,” she said. That transition is where most programs slow down or stop entirely.
Banks often clear technical feasibility during pilots but struggle when integration reaches core systems. Every architectural choice creates downstream effects across the institution.
Selecting a blockchain affects custody design. Custody design shapes how assets reach clients. Settlement logic then touches liquidity management and funding models throughout the organization. Kaufman noted that fund flow and technical architecture discussions signal when things get serious. The gap between a pilot and a production system is where execution risk concentrates.
Treasury operations face a particularly sharp adjustment. Most US bank treasury floors run on cut-off-driven daily cycles, not 24/7 coverage. Digital assets require continuous operations, and current staffing models were not built for that. Internal audit functions also lack the tools to assess smart-contract, oracle, and bridge risk today. These gaps create operational risk that compounds as transaction volumes grow.
The OCC’s spring 2026 stablecoin NPRM added regulatory weight to the gap. It requires permitted payment stablecoin issuers to demonstrate the capability to access and monetize reserve assets. That is a capability most institutions would have to build from the ground up.
Banks currently experimenting with tokenized deposits inside closed networks face a strategic question: whether those assets can connect to the broader ecosystem. A tokenized deposit that only settles within one bank’s network captures limited value compared to one that interoperates with external rails. The OCC’s rule forces banks to prove they can access reserves in real time, a requirement that demands new infrastructure, not bolt-on solutions.
Public stablecoin rails carried an estimated $350 billion in payment volume in 2025. Visa’s settlement network now spans nine blockchains, including Circle’s Arc. These numbers reflect a market moving toward open architecture, not closed loops.
Banks holding closed-loop positions too long will pay a connectivity cost later. Cross-border exposure through regulated multi-currency stablecoins, 24/7 public corridors, and real-time settlement against tokenized cash equivalents are all client capabilities. Each one requires infrastructure the bank does not own internally. The risk is that banks underestimate the cost of all sizes miss the shift and lose payment volume to non-bank stablecoin issuers and blockchain-based settlement networks.
Visa’s expansion to nine blockchains signals that settlement infrastructure is becoming a public utility. Banks that cannot connect to these rails will face higher costs and slower execution for cross-border payments. The $350 billion volume figure is not static; it is growing as more institutions adopt public stablecoin corridors.
Pulling operating-model design and interoperability into a single workstream is the practical path forward. The institutions that build this architecture properly over the next four to six quarters will set the patterns others follow. Those that bolt onchain capability onto old models will face compounding costs as the market moves on.
Banks that treat digital asset integration as a technology project rather than a business-model redesign will face compounding costs. The regulatory timeline from the OCC, the volume shift toward public rails, and the operational demands of 24/7 settlement all converge in the next 12 to 18 months. The risk event is not a single hack or outage but a slow erosion of competitiveness for banks that fail to adapt.
What would reduce the risk: clear regulatory guidance, investment in real-time treasury operations, and open-architecture custody solutions. What would make it worse: continued reliance on closed-loop tokenized deposits, underinvestment in compliance tools for smart-contract risk, and treating stablecoin pilots that never reach production scale.
For traders and investors tracking the digital asset ecosystem, the banks that demonstrate successful core integration over the next four quarters will likely capture disproportionate market share in payment flows and custody revenue. Those that stall will face margin compression as non-bank competitors absorb the $350 billion and growing payment volume.
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Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.