Over the last few months, the conversation around cryptocurrency, specifically stablecoin, has grown from a whisper to a steady buzz. The U.S. government is actively considering legislation on the technology, and large retailers and financial institutions have already started sharing their plans for stablecoin. Unlike previous forms of cryptocurrency that have stayed on the fringes, stablecoin has the potential to become widely adopted, especially if retailers and financial institutions are able to create a version of stablecoin that feels secure and more familiar.
To understand what is happening with stablecoin and how it might impact credit unions, I talked with our Credit Union of the Future fellow, Dr. Lamont Black, to get his take on recent announcements and what we might expect next.
Note that the interview has been edited for clarity and brevity.
JG: What are stablecoins and how do they differ from other cryptocurrencies?
When most people think about crypto, they think of Bitcoin. Like most cryptocurrency, Bitcoin has a high price volatility, changing every moment, 24/7. A stablecoin is different. The whole idea of a stablecoin is a coin with price stability, hence the name.
LB: When most people think about crypto, they think of Bitcoin. Like most cryptocurrency, Bitcoin has a high price volatility, changing every moment, 24/7. A stablecoin is different. The whole idea of a stablecoin is a coin with price stability, hence the name. Traditionally, stablecoins are a form of cryptocurrency pegged to fiat, sovereign currency like the U.S. dollar. One stablecoin equals one U.S. dollar.
The most common stablecoin here in the U.S. is USDC, launched by Circle. USDC exists on multiple blockchains like Ethereum and Solana, and one USDC equals one U.S. dollar.
Bitcoin and stablecoins have different roles in today’s crypto ecosystem. People buy Bitcoin today as a form of investment, just like they would buy shares of a stock on the stock market. They don't have any intention of spending the Bitcoin. They just want to buy and hold it and then hope to sell it for a gain. Stablecoins are designed to have zero price gains, which makes them more like a form of money for transferring value. You don't buy a stablecoin as an investment because the value is held constant. The legislation is very clear that these will not be yield-bearing accounts and so there's not even interest that you're earning on a stablecoin.
JG: Can you say more about the recent stablecoin-related legislation? What are the highlights that credit unions should know about?
LB: A lot is changing with the STABLE and GENIUS Acts, especially in how stablecoins interact with traditional finance, financial institutions, and retail merchants. Stablecoins are really a bridge to thinking of crypto as a method of payment, and while there has not been widespread adoption of stablecoins in that regard, this new proposed legislation will open up doors further.
One thing that the legislation is doing is broadening the definition of stablecoin. Historically, a stablecoin was a token on a public blockchain like Ethereum or Solana. We’ll call this “narrow” stablecoin. With this legislation, you can have something that is called a stablecoin but does not exist on a public blockchain, or a blockchain at all. It is a token in some sense of the word, but the legislation itself does not require that it be recorded on a blockchain. The legislation is really about how the money is managed and how it is used, focused more on the functionality rather than the platform on which it is built.
The legislation is really about how the money is managed and how it is used, focused more on the functionality rather than the platform on which it is built.
Another element of the legislation is that issuers would be required to hold one-to-one funds in reserve for every dollar deposited that would be converted into one stablecoin. There’s no fractional reserve system here—you can't deposit a dollar and convert that into two stablecoins because that would not be a one-to-one reserve.
The legislation also requires that the issuer allows the purchasers to convert the currency in both directions—from traditional currency to stablecoin and from stablecoin back into traditional currency.
JG: Amazon and Walmart have recently made announcements about issuing their own stablecoin. What does this look like under the new legislation?
LB: Let’s use Walmart as an example. If Walmart were to issue a stablecoin, that would be like a Walmart coin that only functioned as a method of payment in the Walmart ecosystem, in store or online. That is not entirely different from something like a Walmart gift card.
What the legislation opens up is the ability for people to convert U.S. dollars into a Walmart stablecoin using methods that bypass rails, like Visa or Mastercard, to convert currency into stablecoin. For instance, Walmart would likely set it up as an ACH transfer for their customers who have a banking account. In this way, Walmart would be both an on-ramp and an off-ramp. People who had the Walmart stablecoin could redeem that back into cash if they chose to do so. It's really that redeemability, the ability to move money into and out of the Walmart ecosystem, that is very important. That is much harder to do today with a traditional gift card.
Once it's in the Walmart ecosystem, you can spend it any way that you want, which would be the stablecoin element. I don't see anything yet indicating that Walmart would have to record that on a blockchain, so it could be a closed loop solution as long as it has those features of redeemability. In other words, Walmart could use their own internal database to track customers’ Walmart stablecoins. I would call this the “broad” definition of stablecoin, because applying the term to this type of coin would be a more general usage than the narrow, blockchain definition of stablecoins.
That’s just the merchant example. If Walmart issues its own stablecoin, that would be so people spend money at Walmart. It's like gift cards without the interchange fees of buying the gift card—it’s just for Walmart. There’s also the question of who will issue merchant-agnostic stablecoins. A major element here is financial institutions issuing stablecoins.
JG: What are other financial institutions doing?
LB: There are already some financial institutions who have gone down the path of minting stablecoins on a customer's behalf. The financial institution acts as a ramp into and out of the stablecoin ecosystem. JP Morgan is a good example of a global bank that has made announcements about efforts to tokenize deposits. Today, I can go to Coinbase and I can spend U.S. dollars to purchase USDC, and Coinbase functions as an on-ramp to convert fiat currency into cryptocurrency. I think more and more we’ll see banks, and possibly credit unions, functioning as that on-ramp.
Different from the Walmart and Amazon examples, the stablecoin that a financial institution issues is designed to be spent elsewhere. This will likely be the emerging method of payment at smaller retailers who cannot afford to issue their own stablecoins. A method of payment could be receiving stablecoins like a Chase stablecoin, which is tokenized at Chase but then spent at the merchant. Or it could be narrow stablecoins with merchants receiving USDC as payment. The merchant can set up their point-of-sale system to receive those stablecoins, then convert them back into fiat currency through their merchant banking provider.
This is what disrupts the money movement between the sender and recipient. Rather than money running on card rails, we could now have money running on blockchain rails. That is disintermediation.
This is what disrupts the money movement between the sender and recipient. Rather than money running on card rails, we could now have money running on blockchain rails. That is disintermediation.
JG: How are the blockchain rails accessed? For card networks we have cards. What will the stablecoin equivalent be?
LB: If the tokenizer and the merchant are one in the same, like the Walmart case, then I don't think you need a blockchain, or a payment rail, because you can do all of that with a centralized database. If the tokenizer and the merchant are two different entities, then I think you need a blockchain, because you need some sort of payment rail to verify funds and record that transaction to update some type of shared ledger. The reason we have card networks today is to connect the issuing bank and the merchant point of sale to record that transaction. If we are going to use stablecoins, we need some type of network to record that transaction. That's where blockchain comes in as an arguably more efficient network for recording monetary transactions. Rather than paying a private third party, a Visa or MasterCard, to run that network on our behalf, we can have a shared network that is more peer-to-peer. We can transact more directly using that shared ledger, which can reduce transaction fees.
In terms of credentialing, for Walmart and Amazon that could be as simple as a physical card or an account number where the stablecoin is stored. You can use that account and you can spend it either in person or online as needed. That's why I don't think Walmart or Amazon will need to deal with crypto technology, per se, if they are able to internalize this stablecoin functionality.
If we're talking about the narrow version of stablecoins, which are functional outside of a single ecosystem, then the coins have to be fungible outside of a single merchant. You have to be able to move them around and convert them into other forms of value. That is going to require blockchain technology.
To own stablecoins on a blockchain ultimately involves the management of a blockchain address using a crypto wallet. That is a hurdle that has historically held back this ecosystem from wider adoption, because people just aren’t comfortable setting up a crypto wallet like a MetaMask. It's fairly easy to do, but it's so foreign, like the idea of having a “seed phrase” and managing my own money. Most people don’t want that level of responsibility.
I think we are going to see financial institutions helping their customers and members set up and manage stablecoin accounts. This is how a credit union can help their members transfer and receive stablecoins—there will be several options for getting into crypto. One is a “non-custodial” solution, which means the institution does not record any of the access information, like a private key that is solely owned and managed by the member. But I think it’s more likely we see something referred to as “multi-signature” accounts where both the member and the institution jointly help to maintain the security of the stablecoins. Alternatively, we could see “fully custodial” solutions. I, for example, own USDC stablecoins on Coinbase, which isn’t a private crypto wallet. Coinbase basically owns those stablecoins on my behalf and will also send those stablecoins on my behalf.
I can envision a near-term future where credit unions manage the stablecoins on their members’ behalf. That could simply be a number on your mobile banking app showing that I have X dollars in my stablecoin account. These funds could then be spent with merchants who accept stablecoins. Merchants already have providers like Bitpay who can receive payments from a stablecoin account on the blockchain without the merchant or consumer needing to have much technological awareness of what’s actually happening.
Mainstream stablecoin adoption is going to significantly speed up the 'crypto as a method of payment' evolution.
Mainstream stablecoin adoption is going to significantly speed up the “crypto as a method of payment” evolution. Currently it's just not very user-friendly. For instance, if you lose your private key, you lose your money. But that’s going to change. I think we're going to see more and more solutions to make that user experience almost seamless.
JG: What are the major threats to credit unions?
LB: If we talk about a merchant example like Walmart, a lot of people who shop at Walmart use credit and debit cards to make those purchases. Those interchange fees are going back to credit unions as non-interest income. As stablecoins become an alternative method of payment that is more understood and more widely adopted, credit unions could see those interchange fees go down.
Let's say Walmart makes it very clear that if you shop with a credit or debit card that they're going to add 3% to every point-of-sale transaction. That is totally fair game, because many merchants are already doing this. Walmart is all about lowering costs and one of their main goals for entering the stablecoin space is making merchant processing fees go away. Once they have their own coin in place, I think they would likely start a significant marketing campaign encouraging Walmart shoppers to convert their money into Walmart money in a way that does not involve some type of interchange fee.
This is a scenario in which credit unions earn no interchange fees from Walmart transactions. If you add Amazon, or even just Amazon Prime Day, you have large retailers no longer generating interchange fees. I think that's a significant disruptive threat.
Similarly, if that narrow type of stablecoin becomes more widely adopted, and credit unions don’t have a solution to offer their members, members could move business elsewhere, reducing deposits, transactions fees, and access to members’ transaction data.
Similarly, if that narrow type of stablecoin becomes more widely adopted, and credit unions don’t have a solution to offer their members, members could move business elsewhere, reducing deposits, transactions fees, and access to members’ transaction data.
JG: The loss of fee income with stablecoins assumes that blockchain rails won’t be monetized similar to card rails. Anything happening there?
LB: There are already efforts to monetize blockchain rails. MasterCard’s recent announcements, for example, are very much trying to step into the role of a bridge between traditional finance and crypto. They want to be one of those providers that provides an interface to the ecosystem. As I already mentioned, merchants can pay Bitpay to receive crypto on their behalf so the merchant doesn't have to set up a point-of-sale system on their own.
I don’t think that the monetization will be in setting up private blockchains. A lot of companies have tried to get into the blockchain-as-a-service game. IBM is probably one of the best examples, but in many cases those private blockchains have not been able to compete with public blockchains. With money, it's all about the size of the network and who is willing to use it. That is what's often referred to as Metcalf's Law—the bigger the network, the more valuable the network is.
With money, it's all about the size of the network and who is willing to use it. That is what's often referred to as Metcalf's Law—the bigger the network, the more valuable the network is.
I think public blockchains have a competitive advantage. Solana, for example, is probably in the best position as a public blockchain to benefit from this new wave of stablecoin activity. It’s a venture-funded private company that will be rewarded financially for these transactions. New technology will continually improve the payment rails. Solana poses a threat to the card networks, and other, newer blockchains will pose a threat to Solana. It's continual innovation and disruption, and this is just one more step in that direction.
New technology will continually improve the payment rails. Solana poses a threat to the card networks, and other, newer blockchains will pose a threat to Solana. It's continual innovation and disruption, and this is just one more step in that direction.
JG: Another downside for credit unions is the potential loss of visibility into the transaction data. When we think about the different custodial models, do credit unions retain access to the data?
LB: Whenever a solution has any custodial element to it, there is always a role for an intermediary and an element of trust. Some of the purists will still value a fully non-custodial solution because they want a “trustless solution”. That is the original ethos and premise of the Bitcoin revolution. The belief that “I do not need a trusted third party. I'm going to do this myself. Thank you very much.”
What I think we have learned is that, for most people, they would rather give up some of that responsibility and give some trust to a third party in exchange for some of the convenience and some of the assurance that someone else is taking care of this for them.
What I think we have learned is that, for most people, they would rather give up some of that responsibility and give some trust to a third party in exchange for some of the convenience and some of the assurance that someone else is taking care of this for them. This is where the data comes back in for credit unions, through this shared responsibility. If the credit union sets up something like a shared custodial account, they will still be able to gain those transaction insights.
JG: What’s the current consumer sentiment on stablecoins? Are people more open to it than Bitcoin and other cryptocurrencies?
LB: Let’s acknowledge that a lot of people still don't even know that stablecoins exist. However, with everything happening in Washington now, the word is spreading.
Most public perception of crypto is that it's too risky and it's 'not for me.' Once people understand that there's much less price risk with stablecoins, there will be more acceptance and adoption.
Most public perception of crypto is that it's too risky and it's “not for me.” Once people understand that there's much less price risk with stablecoins, there will be more acceptance and adoption. Historically, stablecoins aren’t totally risk free because they do not have one-to-one reserves, which creates liquidity risk. If there is a run on the stablecoin, they will not be able to convert all those stablecoins back into fiat currency. If the new legislation eliminates that risk, then it's really about other, traditional risks, like fraud.
Another part of this legislation is shifting stablecoins into the world of regulatory compliance, with requirements like anti-money laundering, BSA for bank secrecy, and KYC for know-your-customer. This is going to totally change the idea that crypto is anonymous—the other reason people tend to stay away from it. The legislation is bringing stablecoins into the mainstream. In the process of converting fiat currency into stablecoins, all that information about who the person is will be recorded. At least in this model, crypto will no longer be the world of criminals and drug lords. It’ll just be people using stablecoins for everyday purchases.
I think a lot of those negative associations people have with crypto are going to diminish over time. Once they understand how these new forms of stablecoins are very detached from that history, people will form more positive associations with the crypto ecosystem.
JG: What should credit unions be thinking about or planning for?
Credit unions need to figure out their role in the stablecoin ecosystem. There is a potential threat to interchange fees through the card networks, but I think there is also an opportunity for credit unions to find an alternative form of intermediation.
LB: Credit unions need to figure out their role in the stablecoin ecosystem. There is a potential threat to interchange fees through the card networks, but I think there is also an opportunity for credit unions to find an alternative form of intermediation. If they are helping members to convert those credit union shares into stablecoins, credit unions are helping provide that bridge between their members and this new payment ecosystem. I think that will be a valuable service. And similarly, there is value in being able to receive stablecoins. If someone owns stablecoins and wants to convert those to shares, a credit union should be set up to be on the receiving end of that transaction. If a credit union provides a service like tokenizing their shares, I think they can charge a fee for that. This is an opportunity for credit unions to step into some of those roles that have been traditionally played by the crypto exchanges.
JG: What kind of movement are we seeing in the credit union space now on stablecoins?
LB: Fiserv had a recent stablecoin announcement, which I think indicates they’re trying to build a bridge between traditional financial institutions and this new crypto ecosystem. The Fiserv announcement is interesting in that they are using both an internal ledger and trying to partner with Circle on a shared ledger, blending both a centralized database with a decentralized blockchain.
It's important to acknowledge that there are existing vendors in this space for credit unions, but most have historically focused on cryptocurrency as an investment. NYDIG, for example, was an early credit union partner for members buying Bitcoin, but those systems were never designed to transfer money as is the goal with stablecoin. I don't want people to think that this is a return to that movement in 2021 and 2022—this is very different. This is all about the transfer of funds, not crypto as an investment.
There are other vendors trying to figure out the transfer of funds to stablecoins, like Bank Social. Another one that is less on people's radar is St. Cloud Financial Credit Union in Minnesota. They have set up the technology for a “vault” to store their members’ digital assets. I think more and more we will see the emergence of vendors and credit unions trying to provide some of these solutions.
JG: Where do you think all of this is headed? And over what kind of timeline?
The original crypto revolution was money without banks. I think this stablecoin revolution is going to have one foot in each world. It is neither traditional finance nor decentralized finance.
LB: The original crypto revolution was money without banks. I think this stablecoin revolution is going to have one foot in each world. It is neither traditional finance nor decentralized finance. It is going to be a blend of the two, and I think credit unions need to figure out how to position themselves so that they have a seat at the table and can serve their members. If a member starts using stablecoins as a method of payment and their credit union does not provide the conversion service, the member may look for a different financial institution.
As for a timeline, it may be relatively slow in the next six months, but I think it will accelerate dramatically during 2026 and into 2027. Stablecoins are not just “something to keep an eye on”—if credit unions aren't experimenting with it, exploring it, learning about it, they're going to be caught flat-footed when the acceleration picks up next year.
