While the digital asset space continues to gain momentum, the primary obstacle for many community banks looking to embrace cryptocurrencies, stablecoins, and tokenized deposits is not a lack of understanding, but rather an operational deficit. The necessary tools exist, but the crucial missing piece is the connective infrastructure that would allow traditional financial institutions to integrate these digital assets seamlessly into their existing systems.
The “Last Mile” of Crypto Integration
Alex Treece, co-founder and CEO at Stablecore, highlighted in a conversation with PYMNTS CEO Karen Webster that for banks outside the top tier, the task of integrating digital assets is substantial. Even a seemingly foundational step like connecting to a digital asset custodian can strain internal capabilities. Webster characterized this as a common misconception: “Plug and play is never actually that easy.” Many institutions believe that selecting a vendor, such as a custodian or wallet provider, is the bulk of the work. However, Treece explained that this represents only a fraction of the effort.
“A great custodian provider, that’s maybe 10 to 15% of the work,” Treece stated. “But you’ve got another 80, 85% to get that integrated with your internal systems … as it relates to regulated financial institutions, there’s a lot of other pieces that have to come together.” This integration gap, often referred to as the “last mile” of crypto adoption, is particularly challenging for regional and community banks that typically lack the extensive engineering and compliance teams found at larger financial institutions.
Stablecore’s Focus on Connective Infrastructure
Stablecore has positioned itself to address this specific challenge, focusing on connecting the disparate components that banks require to offer digital asset services. Instead of developing core banking systems or custody solutions, the company concentrates on bridging the gap between existing bank infrastructure and the new digital asset ecosystem. This includes integrating wallets, custodians, compliance tools, and customer-facing interfaces. The company’s significant investor base, comprising nearly 300 banks and credit unions, signals a strong demand for such capabilities.
Strategic Imperatives for Banks
The push for digital asset integration is driven by both defensive and strategic considerations for banks. Webster noted that a key motivation is the desire “to retain the deposits, and attract and retain a younger client base.” Treece echoed this sentiment, observing that the competitive objective for many is to “be the primary financial account.” He pointed out that the market has largely been shaped by non-bank participants, including FinTechs and crypto-native firms, which have scaled independently over the past decade, building products and acquiring users while traditional banks hesitated due to regulatory uncertainty.
Shifting from Regulatory to Technological Blockers
Historically, regulatory uncertainty was the primary barrier to bank participation in digital assets. However, this constraint has significantly eased, making it more permissible for banks to engage directly in blockchain finance. “The real blocker has been on the technology side,” Treece asserted. The complexity of integrating digital asset infrastructure into existing banking stacks, while simultaneously maintaining regulatory compliance and passing audits, requires meticulous execution.
Discussions within banks often begin with specific use cases, such as prioritizing stablecoins, tokenized deposits, or broader digital asset offerings. The market for stablecoins alone has seen substantial growth, expanding from approximately $10 billion in supply five years ago to around $300 billion today, with projections indicating trillions by 2030. Tokenized deposits are also gaining traction, spurred by industry consortiums and ongoing experimentation.
Treece emphasized that the underlying architectural considerations are paramount. “Whether you start with stablecoins, ditcoin, or tokenized deposits, these all use the same infrastructure,” he explained. This shared foundation allows banks to enter the market with a single use case and retain the flexibility to expand their offerings over time.
Operational Challenges Persist Beyond Technical Integration
Even after technical hurdles are overcome, operational challenges remain. Banks must develop new products, train their staff, and realign internal processes to accommodate these new capabilities, all while upholding the reliability expected of regulated institutions. Nevertheless, early adopters, typically the most innovative institutions within their respective tiers, are establishing precedents that can guide others. Treece anticipates that “this year is really about that first five-to-20% coming in the market. Next year I think you’re going to see accelerated adoption.”
