Banks and Credit Unions Fuel Stablecoin Surge to $4 Trillion by 2030: Citibank

Polygon Exec Predicts 'Super Cycle' of 100,000 Stablecoins as Banks and Sovereigns Compete

A major shift is emerging in the global financial system as stablecoins gain traction among banks, credit unions, and sovereigns. Executives from Polygon and other industry leaders are forecasting a "super cycle" in the next few years, with stablecoins potentially reaching a scale of 100,000 tokens in circulation. This follows a wave of regulatory clarity and institutional adoption, with credit unions like Minnesota's St. Cloud Financial Credit Union preparing to issue their first stablecoin, Cloud Dollar (CLDUSD) according to reports.

Meanwhile, Citibank recently revised its stablecoin market forecast, raising its 2030 issuance target to $1.9 trillion in a base case and $4 trillion in a bullish scenario. The report noted that stablecoins could support up to $100 trillion in annual transactions, positioning them as a major force in digital commerce. However, the firm also highlighted a growing role for bank tokens-such as tokenized deposits-as companies seek compliance and real-time settlement advantages.

As stablecoins expand beyond crypto-native platforms, traditional financial institutions are stepping in. German state lender NRW.BANK recently issued a €100 million blockchain bond on Polygon, signaling broader institutional adoption of digital assets. Banks like Bank of America are also moving quickly, with CEO Brian Moynihan indicating the bank will likely launch its own stablecoin to stay competitive in a fast-evolving landscape.

Why the Standoff Happened

The rapid rise of stablecoins reflects broader shifts in the financial infrastructure landscape. Unlike traditional cryptocurrencies, stablecoins are typically backed by fiat reserves and offer the speed and transparency of blockchain without price volatility. This makes them ideal for cross-border payments, retail transactions, and institutional settlements. Citibank's report described the moment as a "ChatGPT moment" for blockchain, with digitally native firms driving adoption in real-world commerce.

Regulatory clarity has played a key role in accelerating adoption. The Trump administration's support for crypto innovation, including the passage of the GENIUS Act, has provided a legal framework for stablecoin development in the U.S. As a result, institutions are now more willing to issue and use stablecoins. St. Cloud Financial Credit Union's Cloud Dollar is a prime example of how smaller institutions are leveraging blockchain to compete with fintechs and traditional banks according to reports.

Risks to the Outlook

Despite the optimism, stablecoins face regulatory and systemic risks. The IMF has highlighted concerns about currency substitution, where users might abandon local currencies in favor of dollar-backed stablecoins, reducing the effectiveness of central bank policies. There are also worries about money laundering and illicit financial flows, given stablecoins' pseudonymity and cross-border usability.

Moreover, the market is not without competition. Citibank warned that bank tokens-backed by traditional financial systems-could eventually outperform stablecoins, particularly for corporate clients seeking compliance and real-time settlement. This trend is already visible in Europe, where banks like BPCE are introducing crypto trading services to 2 million retail customers. The rise of bank tokens could lead to a two-track financial system: stablecoins for open, peer-to-peer transactions and tokenized deposits for institutional and regulated environments.

What This Means for Investors

For investors, the stablecoin boom presents both opportunities and uncertainties. The market has already surpassed $270 billion in issuance, with Citi forecasting exponential growth over the next five years. However, the competition between stablecoins and bank tokens could fragment the market, making it harder for investors to gauge long-term winners.

Regulatory developments will be key. As major economies like the U.S. and Germany push forward with stablecoin laws, firms that align with global standards may see faster adoption. Companies like BitGo, with $4.2 billion in H1 2025 revenue and $90 billion in crypto assets on its platform, are already positioning themselves as infrastructure leaders in the space. Similarly, Oracle, recently upgraded to Overweight by Wells Fargo, is expected to benefit from its AI infrastructure partnerships and growing cloud compute contracts.

Conclusion

Stablecoins are no longer just a crypto phenomenon-they are reshaping the global financial infrastructure. With banks, credit unions, and sovereigns all entering the fray, the next decade could see a dramatic shift in how money moves. The challenge for regulators and market participants is to balance innovation with stability, ensuring that the benefits of digital finance are realized without compromising financial integrity or monetary policy.