PayPal says stablecoins need banks and regulation to scale

PayPal's senior vice president of digital currencies, Jose Fernandez da Ponte, stated at Consensus 2025 that banks and clear regulation are essential for stablecoins to scale successfully beyond the crypto-native community.

He emphasized that banks provide critical infrastructure such as custody services and fiat transaction rails, which are necessary for stablecoins to function effectively and gain broader adoption.

Fernandez da Ponte acknowledged that this might seem counterintuitive, but having banks involved is crucial to unlocking the full potential of stablecoins. The involvement of banks ensures the connectivity and framework needed for stablecoins to expand into real-world use cases like cross-border payments and corporate treasury activities.

The importance of regulatory clarity was also highlighted, as U.S. lawmakers are close to passing stablecoin legislation, such as the GENIUS Act, which could reshape the market by enabling banks to participate more fully.

Both Fernandez da Ponte and MoneyGram CEO Anthony Soohoo expect that once regulations are in place, there will be a surge of new stablecoin issuers followed by market consolidation.

Currently, the stablecoin market is dominated by Tether's USDT and Circle's USDC, which make up about 90% of the $230 billion market. PayPal’s own stablecoin, PYUSD, launched in 2023, has a much smaller supply but aims to grow by focusing on transaction velocity, active wallets, and transaction volume rather than just market capitalization.

PayPal views the integration of banks and clear regulatory frameworks as foundational to stablecoin growth and mainstream adoption, enabling stablecoins into trusted, regulated financial instruments with real-world utility.

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