Stablecoins Still Depend on Banks and Off-Chain Reserves
DeFi projects are struggling to realize the original promise of stablecoins – a decentralized alternative to traditional banking. Instead, they're facing increasing regulation, replicating centralized practices (off-chain reserves, wallet control), and finding limited utility beyond basic financial functions. The sector is grappling with how to evolve and remain truly decentralized.
SOURCES (60)
“All of that was already clear in 2021. But some chains have users, and money in their DeFi ecosystem, some are even real businesses, stablecoins and tokenized stocks exist and adoption will probably keep increasing. Most of DeFi always was vaporware but Blockchain hasn't failed,…”
“How can you say that when the DTCC and swift are launching blockchains this year ? Tokenization is actually happening worldwide. Per swift. Today: "This time last year, I stood on the Sibos stage in Frankfurt and said we would deliver a blockchain-based ledger. And I know I caught some people by surprise. Swift and blockchain? TradFi and DeFi? Could they really go together? Can Swift really pull it off? Twelve months later, the Swift ledger is live and in use by some of the world's larg”
“Blockchain is being ushered into Tradfi by the largest financial institutions in the world, and legislation is already being passed globally that is centered around blockchain tech. Nothing you said here means anything when we're facing an economic catastrophy that is clearly looming... governments & financial institutions, people who've dedicated their lives to public service, and the billions of dollars spent globally to implement this tech into the plumbing of the global financial”
“Both Visa and Mastercard are using Solana to settle stablecoins transactions. That's huge. It has to start sonewhere”
“Wei Zhou, CEO of regulated crypto exchange Coins.ph, states banks rely on them for stablecoin liquidity, with their $100M daily USDT/USDC to peso trading largely bypassing traditional banking. He identifies capital access and cost as key emerging market hurdles. submitted by /u/JakRenden2 [link] [comments]”
“Absolutely, infact i already do in a way since Inxy supports b2b transactions , saves me from having to withdraw to my bank account.”
“lol they're printed out of thin air and have been used for wash trading since their inception. That's like saying the US Dollar has a ton of value because so much of it has been printed and circulated.”
“Except the "bad" chains all came after UTXO chains were already established... the opposite is far more true, UTXO chains should have had first mover advantage. They have the first mover advantage for DeFi . EVM chains had full programability at launch, while UTXO chains didn't get comparable programability until many years later. Why do you think we don't see any new blockchains using UTXO if it's supposedly so superior? Or not even just "new" chains, we haven”
“There has only been 3 neobank failures in history - all related to the same Synapse middleware technology failure. There has been 30,000 total charter/traditional brick and mortar bank failures in US history. I personally think that some neobanks that don’t lend, don’t offer credit cards, and don’t offer crypto products are safer than traditional banks. There cannot be a run on these non lending neobanks because the money was never loaned out by them. Your money is always “just sitting there” (t”
“Something I find genuinely interesting in defi right now is seeing actual regulated investment strategies being brought onchain, with independent fund administrators and NAV verification behind them. That feels like a much more meaningful step for rwas than simply putting a token onchain and calling it a fund. Curious where people think this goes from here. Would you use something like that? submitted by /u/terminallyonchain [link] [comments]”
“https://preview.redd.it/pesoutmwz9rh1.png?width=4096&format=png&auto=webp&s=bf80c8ecf280d94baf7989da890f5d71a553d248 APAC’s stablecoin market is best understood as a multi-layer infrastructure stack rather than a single-token market. Issuers create and manage stablecoins, but exchanges, custodians, payment firms, treasury platforms, and capital-market infrastructure determine how they are accessed, distributed, and used in real-world workflows. This distinction matters because curren”
“It looks like every echange will have their own stablecoin soon. Not sure if this is good or bad tbh”
“Building permissioned assets on chain might drive up demand in the short term. Do you see a long term future for such systems? If your goal is the ride the hype train and make money on a fad, I think your point stands.”
“Yea but stablecoins are not exactly permissionless… Permissionless means whoever wants to, can build whatever they want, even if the thing they are building has its own permissions. Since you understand crypto can you help me understand how this permissioned ecosystem is bullish? Because it drives demand for block space and for the token needed to pay for the block space. Any more stupid questions?”
“Yea but stablecoins are not exactly permissionless… Since you understand crypto can you help me understand how this permissioned ecosystem is bullish?”
“Seeing stablecoins move from being mostly a crypto-native thing to actually handling settlement on a major payment network feels like a pretty big step for real-world adoption.”
“The freeze point is fair for this one. If Circle can freeze cirBTC the way it can freeze USDC, that's a bigger risk than the wrapper itself. Haven't seen them say either way yet.”
“Wait, you are actually arguing that because some fintechs have banking licenses in some countries, that all fintechs should be called banks everywhere?”
“Two things this thread keeps skipping. First, price. Even if enforcement were solved tomorrow, someone with a salary or a small business borrows at bank rates. Stablecoin borrow rates plus liquidation risk rarely beat that, so the demand that actually shows up on chain is leverage demand, which is the crypto holder cohort by definition. Part of what feels backwards is just that the product is expensive for the borrower you are describing. Second, the undercollateralised attempts are informative”
“More ways to use stablecoins (instead of transfer and cash out) means they are more useful I guess”
“Someone still prices the currency leg, and the Visa rulebook says who. Under the Visa Core Rules, where a currency conversion occurs the issuer has to disclose in writing both any fees it may charge and the rate it applies. That rate is either one Visa picks from rates available in wholesale markets, which the rules say is not necessarily executed and may differ from the rate Visa itself receives, or one set by a government or governing body. The Visa rate can then be adjusted by an optional iss”
“Both, in that order. The swipe checks and debits the on-chain balance at authorisation, usually under a second. The merchant gets paid later, in fiat, out of an account the issuer keeps funded, on the card network's normal settlement cycle. The prefunding never disappears, it just moves off the user. Someone still holds fiat, sized to a few days of volume.”
“That’s what makes it practical at scale imo. No new merchant setup or checkout flow, the stablecoin part stays on the background”
“Is each swipe settled against the stablecoin balance in real time or is there some fiat prefunding layer sitting in between?”
“Spending stablecoins directly makes way more sense in countries where converting back to local currency is expensive or annoying”
“Either way there's exchanging of local currency. It's just that you don't have to hassle all around.”
“MoneyGram has launched a stablecoin backed Visa card in Colombia with the balance running on stablecoin rails and Rain handling the card infrastructure I gotta be honest, the relevant part for DeFi is what happens after someone receives stablecoins. If they can spend that balance directly then the whole send stablecoins to cash out to convert to local currency loop starts looking unrelevant Source: https://genfinity.io/2026/09/10/moneygram-card-stablecoin-visa-colombia-remittances/ submitt”
“The interesting part to me isn't the speed; it's the settlement choice. Using the digital rupee instead of a stablecoin is a totally different bet than most Western tokenisation projects make. Same problem, faster settlement, but opposite answer on who gets access. Stablecoins keep it open. A CBDC keeps it closed to institutions by design. Both get called "tokenisation", but they're really different philosophies. Regulatory coordination helps too. RBI, MAS, and HKMA can jus”
“What happens when the bank itself issues a tokenized deposit? We’re not just limited to stablecoins. You still have a claim on a regulated bank, but now the money can move on blockchain infrastructure with 24/7 settlement, programmability, interoperability and potentially much faster/cheaper transfers. https://stories.td.com/us/en/article/td-successfully-completes-testing-of-tokenized-payments-through-project-agor%C3%A1 Cope harder.”
“Why give private companies essentially an interest free loan, they use to earn interest, In exchange for a token that loses value daily if you don’t use it immediately. With a bank account your money is protected from theft and if the bank falls the government insures the money is replaced. By law transaction records made with your bank card or credit card must remain private. Every transaction you make with stablecoin is made public and hundreds of data models tie you transactions to you real n”
“I think the one thing that most people have missed in the crypto cycle is the stablecoin season. I know we have never had one before, and most of us don't really care about stablecoins as an investment because they are just a utility or convenience with some gains attached, but they have had their first season which put the 4 year cycle into a 5 year cycle. RWA being put on a blockchain is a whole new season that will only intensify in 5 years' time when the cycle repeats submitted”
“Money is a big word that has two big meaning. Reserve of value and a mean of exchange. I would suggest treating stablecoins as a way exchange. Stablecoins are becoming the new infrastructure of payments. Fiat in -> stablecoin s -> fiat out. Personal opinion: Usdc is really safe”
“Your concern is reasonable, but I would separate three risks, the stablecoin itself can lose its peg, the yield venue can fail, and the tokenized commodity can leave you with custody, legal, and redemption risk, a one to one reserve does not guarantee instant redemption if reserves are gated, encumbered, or held in a jurisdiction you cannot access, for tokenized gold I would check whether each token maps to allocated bars, who the custodian is, how audits are performed, redemption minimums and f”
“All the backed stablecoins are fine, just understand that it can be seized or frozen. If you want something physical get gold coins or silver. Either way diversify.”
USDC seems like the safer pick if stability is your priority.
“That third party dependency is the part that makes me nervous too. Even if the collateral is solid, you're still trusting someone to actually hold it and honor the redemption. With a dollar backed stablecoin at least that relationship is more straightforward, even if it comes with its own auditing and transparency issues.”
“The backing thing makes sense but I'd still rather have the actual cash in hand than just a promise on a screen.”
“something i will be very careful about, lease yield isn't free, someone's borrowed the metal and has to return it. that's counterparty risk, same shape of promise you're trying to get away from with stables. plain tokenised gold is the cleaner version. PAXG or XAUT, sitting in a vault, no yield but nobody's borrowed it. downside is it just sits there idle. if you want it earning, selling covered calls on it pays you without anyone holding your metal. different risk than leasi”
“the redeemable part matters way more than the apy tbh. if you can't actually redeem 1:1 for the real thing whenever you want, you're not holding gold, you're holding someone's promise about gold. PAXG and XAUT you can redeem (with kyc), a lot of the newer tokenized-yield-gold stuff can't say that.”
“If it is backed one to one, it's fine. Same like the numbers you got in your bankaccount (although they aren't backed 1-to-1 ironically)”
Because stable coin is for transaction not for saving or investment
“Depends on the stablecoin. The safest ones let you redeem 1 token for $1 of the underlying collateral at any time. For me, a stablecoin tied to a real-world asset like a commodity would be less safe because of the inability to redeem for the underlying asset without a trusted 3rd party.”
50 currencies from one stablecoin pool is no small rollout for sure
“A company holds digital dollars and sends them through their infrastructure. The person getting paid receives normal money in their bank account even if they know nothing about crypto”
Stablecoins slowly but surely are finding their real use case
“Spending's actually been solved for a while, just not the way people picture it. Crypto debit cards already convert stablecoins to fiat at the point of sale instantly, that's a real, working product today. What hasn't been solved is a merchant natively accepting USDT on-chain at checkout, and that's not really a DeFi problem, it's an adoption problem. Card networks are cheap enough and invisible enough that merchants have zero incentive to rip out a system that already works.”