Recent regulatory developments have brought new urgency to conversations around stablecoins. With the passage of the GENIUS Act, banks now have greater clarity around how they can participate in digital money. But as many financial institutions begin evaluating stablecoin strategies, they’re discovering that regulation is only part of the equation. The bigger question is whether their payments infrastructure is prepared to support what’s next.
During the American Banker Leaders episode, Preparing for Stablecoins: A CEO Perspective, Janet King, SVP of Content Strategy at American Banker, spoke with Manish Gurukula, CEO of Alacriti, about how financial institutions should approach payments modernization in the era of digital money. Rather than focusing solely on stablecoins themselves, the conversation explored the infrastructure, operational changes, and strategic decisions banks should be making today to prepare for tomorrow.
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The GENIUS Act Has Changed the Conversation
For years, uncertainty surrounding regulation kept many financial institutions on the sidelines when it came to stablecoins. Even banks interested in exploring digital asset strategies often lacked clear guidance around permissible products, compliance expectations, and examiner oversight.
According to Gurukula, that uncertainty has changed significantly. “About 18 months ago, if a bank wanted to participate in the stablecoin ecosystem, they had a lot of ambiguity around the regulatory framework,” Gurukula said. “What kind of products could I offer to my customers? How is the examiner going to look at it? What kind of reporting requirements does my institution have to support?”
The GENIUS Act:
- Creates the first-ever Federal regulatory system for stablecoins, ensuring their stability and trust through strong reserve requirements.
- The GENIUS Act requires 100% reserve backing with liquid assets like U.S. dollars or short-term Treasuries and requires issuers to make monthly, public disclosures of the composition of reserves.
- Stablecoin issuers must comply with strict marketing rules to protect consumers from deceptive practices. Crucially, they are forbidden from making misleading claims that their stablecoins are backed by the U.S. government, federally insured, or legal tender.
- The GENIUS Act aligns State and Federal stablecoin frameworks, ensuring fair and consistent regulation throughout the country.
- In the event of insolvency of a stablecoin issuer, the GENIUS Act prioritizes stablecoin holders’ claims over all other creditors, ensuring a final backstop of consumer protection.
Source: Whitehouse.gov
The GENIUS Act established a clearer framework by defining payment stablecoins, outlining supervisory expectations, and specifying which organizations are permitted to issue them. It also provides banks with the confidence to begin strategic planning.
“The GENIUS Act defined what a payment stablecoin is. It established a supervisory framework for how stablecoin products and transactions need to be screened and monitored, and only regulated financial institutions, such as federally chartered banks, credit unions, and approved non-bank issuers, can actually issue payment stablecoins, ” Gurukula shared.
That distinction creates an important competitive opportunity for banks. “That’s a legal or competitive moat that regulated financial institutions have that they will be able to effectively compete with others in the market right now,” Gurukula said.
Bank leadership teams can now have meaningful strategic conversations that weren’t possible just a year or two ago. Rather than debating regulatory uncertainty, executives can begin evaluating which digital money products align with their customer base, what compliance capabilities they’ll need, and how stablecoins fit into their long-term payments strategy.
Gurukula also pointed to another factor driving urgency: institutions that begin preparing now have an opportunity to gain operational experience before stablecoin adoption becomes more widespread. “Those forward-thinking institutions have a first-mover advantage,” Gurukula said. “They’ll also have the operational know-how around what the regulators look for and all the aspects they need to take care of to roll out stablecoin products effectively for their customers.”
Are Stablecoins Just Another Payment Rail?
Although stablecoins are frequently discussed alongside payment networks like the RTP® network or the FedNow® Service, Gurukula cautioned against thinking of them as simply another payment rail. “I think that entirely framing stablecoin as a rail understates the importance of the infrastructure change that is needed,” Gurukula said.
Traditional payment modernization projects typically extend existing infrastructure. Whether adding the RTP network or the FedNow Service capabilities, banks continue moving U.S. dollars through payment networks that operate within familiar compliance and settlement frameworks.
Stablecoins introduce an entirely different operating model. “If you switch the context and you talk about stablecoins, the underlying asset is really not sitting in your core banking infrastructure,” Gurukula said. “That actually lives in a public blockchain.”
Rather than validating traditional account numbers, financial institutions must evaluate wallet addresses in real time. They must support reserve attestation requirements, integrate with institutional custodians, reconcile blockchain-based transactions, and produce examiner-ready reporting designed specifically for digital assets.
“You’ve got to deal with a USDC transfer that has wallet addresses on both sides of the transaction. How do you screen these wallet addresses in real time? What kind of compliance framework governs these kinds of transactions?” Gurukula asked.
Supporting stablecoins also raises questions about how banks manage customer accounts. If institutions decide to offer digital dollar accounts alongside traditional checking and savings accounts, they must determine whether existing core systems can support those products or whether new technologies—such as shadow ledgers—are required.
“If a financial institution wants to offer a digital dollar account alongside a checking and savings account, then you get into the complexities of, can your existing core banking infrastructure actually support that, or do you actually need a shadow ledger technology?” Gurukula said. Stablecoins require financial institutions to rethink how money is represented, processed, reconciled, and governed across the enterprise
Legacy Infrastructure Wasn't Built for Digital Money
While stablecoins introduce new technical requirements, many of the challenges banks face today are rooted in infrastructure decisions made decades ago. Most core banking platforms were designed around batch processing rather than real-time transaction processing. As a result, they often struggle to meet the always-on availability requirements expected by today’s faster payment networks.
That limitation becomes particularly evident as financial institutions adopt capabilities such as the RTP network and the FedNow Service—both of which require continuous availability.
The challenges extend beyond the core. Many banks continue relying on legacy anti-money laundering (AML), Bank Secrecy Act (BSA), sanctions screening, and fraud platforms that were never designed to make risk decisions in milliseconds. Although many institutions have added temporary solutions to bridge those gaps, those workarounds are becoming increasingly difficult to sustain. “When you have instant payments systems, you want to be able to screen transactions in real time,” Gurukula said.
Fraud prevention presents another challenge. “A real-time transaction requires you to score potential fraud on a real-time basis,” Gurukula said. “None of these platforms are able to support that today.” Supporting digital money requires technology capable of operating continuously, processing transactions instantly, and supporting new forms of money alongside traditional deposits.
Modernize by Extending—Not Replacing—Existing Systems
Although the infrastructure challenges facing banks can appear daunting, Gurukula cautioned against viewing modernization as a complete technology overhaul. Instead, he encouraged financial institutions to build on the investments they’ve already made. “The operating principle here is not to rip and replace, but to extend,” Gurukula said. Payments infrastructure can be extended by adding a programmable money layer on top of existing payments infrastructure.
That architecture begins with a programmable money bridge capable of connecting traditional fiat-based payment systems with blockchain-based assets while remaining flexible enough to support future standards as they emerge. “Something that can support USDC today, tokenized deposits, as well as something that is easily extended to whatever standards emerge tomorrow,” Gurukula recommended.
For many institutions, that work is already underway. Investments made to support ISO 20022, the RTP network, the FedNow Service, and wire modernization have established a foundation that can be leveraged for future digital money initiatives. “If a bank already has a payments infrastructure that’s based on ISO 20022 data models, that’s a huge plus from a stablecoin or digital money capability perspective,” Gurukula said. Banks also need infrastructure capable of supporting digital dollar accounts alongside traditional deposit accounts, as well as compliance capabilities purpose-built for stablecoin transactions.
Finally, Gurukula emphasized the value of centralized payment orchestration. Rather than managing each payment rail independently, institutions can simplify operations by processing all payment types through a unified platform.
Competition Is About More Than Speed
When asked where competitive pressure is emerging first, Gurukula’s answer wasn’t limited to transaction speed. “I think it’s in all three dimensions—customer experience, economics, and speed,” he said.
Of those, customer experience stands out as the most immediate differentiator. Fintech companies have spent years refining intuitive digital experiences that allow customers to move money quickly, manage digital assets seamlessly, and access innovative financial products through simple mobile interfaces. Traditional financial institutions are increasingly competing against those experiences—not just against other banks.
“Robinhood, Coinbase—they do a pretty good job in terms of delivering outstanding customer experience,” Gurukula said. For banks, matching that experience is becoming increasingly important.
Economic pressures are also beginning to reshape competitive dynamics. As digital asset platforms offer significantly higher yields than many traditional deposit products, consumers have stronger incentives to move idle balances away from their primary financial institution. “If I as a consumer have $10,000 sitting at my bank, and I’m only earning 0.15% interest, whereas Robinhood or Coinbase is offering 4 or 4.5%, I would naturally want to move money there,” Gurukula explained.
That has implications beyond customer acquisition and causes deposit displacement. Gurukula provided a hypothetical example. “If a financial institution is losing $50 million in deposits to fintech wallets, and has to replace that with wholesale funding at something like 4.5%, you’re talking about an annual cost of $2.25 million that the financial institution didn’t have a couple of years ago.”
But there is one significant advantage banks still possess: trust. Consumers remain far more willing to adopt digital money products when they’re offered by their primary financial institution. 75% of surveyed consumers would try stablecoins if offered by their bank, while only 3.6% feel comfortable with unregulated providers.
Building the Business Case for Digital Money
Many financial institutions wonder: Where does the return on investment come from? According to Gurukula, a few monetization opportunities are already emerging.
Banks can generate revenue through conversion spreads when customers convert traditional U.S. dollars to USDC and vice versa.
Gig and creator platforms use instant payouts to reinforce engagement among workers who rely on daily income.
With approximately $107.1 billion in personal remittances originating from the United States in 2025 and the average cost of sending a $200 remittance remaining at 6.49% in Q1 2025, digital money has the potential to streamline international payments while creating new revenue through foreign exchange spreads.
Three Decisions Banks Shouldn't Delay
Even for financial institutions that aren’t ready to launch stablecoin products immediately, Gurukula believes there are some strategic decisions that shouldn’t wait.
Seek regulatory guidance.
Engage experienced regulatory counsel to understand the requirements of the GENIUS Act, including permissible products, partnership models, compliance obligations, and reserve requirements.
Assess existing payments infrastructure.
Evaluate whether current systems can support digital money use cases, identify infrastructure gaps, and determine whether additional capabilities—such as a shadow ledger or enhancements to AML, BSA, sanctions screening, and fraud platforms—will be needed.
Make digital money a strategic priority.
Align leadership around a long-term strategy by establishing digital money as a board and executive-level initiative backed by the investment needed to support future growth.
The Banks That Will Lead the Next Wave
Not every financial institution is starting from the same place. Some have spent the past several years modernizing payments infrastructure, adopting ISO 20022, implementing instant payments, and investing in cloud-native technologies. Others remain heavily dependent on legacy systems that make introducing new payment capabilities more challenging. Those differences are likely to become more pronounced as digital money adoption accelerates.
These institutions also tend to recognize the competitive pressures emerging from outside the traditional banking industry. “They see the fintech disruption threat and the deposit displacement problem,” Gurukula said. “They also have a good idea of their stablecoin strategy, and they’ve already started working on those initiatives.”
Banks that are less prepared generally share two characteristics:
1
They’re waiting for more regulatory certainty.
Rather than taking advantage of the clearer framework established by the GENIUS Act, some institutions continue delaying strategic decisions while waiting for additional regulatory guidance.
2
They’re constrained by legacy infrastructure.
Aging payments platforms make it more difficult to extend existing capabilities and introduce new products, including stablecoin and other digital money use cases.
While every institution’s modernization journey will differ, banks that delay modernization may find themselves responding to change rather than helping shape it.
To learn more about how regulatory changes are reshaping stablecoin adoption and what financial institutions should consider when preparing their payments infrastructure for digital money, watch the full webinar, Preparing for Stablecoins: A CEO Perspective.
Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with the RTP® network, the FedNow® Service, Zelle®, Fedwire, ACH, Visa Direct, and Stablecoins, all on one cloud-based platform. To reach an Alacriti payments expert, please contact us at info@alacriti.com.
