'Near-Instant Finality': Are Stablecoins Ready To Fix Settlement Inefficiencies?

Stablecoins are emerging as transformative tools in global financial systems, offering faster settlements and reduced costs. However, before widespread adoption, the technology faces regulatory, infrastructure, and institutional challenges. That was the consensus among speakers at the Benzinga Future of Digital Assets conference, where panelists examined the factors shaping stablecoin adoption and tokenized assets.

Efficiency In Payments And Settlements

Colin Butler, global head of institutional capital at Polygon Labs, highlighted how stablecoins could reshape traditional payment systems by reducing settlement delays. "What if you could rewire the global settlement system on yield-bearing institutional stablecoins and use them as settlement tokens?" Butler said. He explained that these tools could generate returns during settlement periods, addressing inefficiencies inherent in traditional systems.

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Butler referenced BlackRock's move to tokenize its money market fund across five blockchains as a sign of growing institutional interest. "These products are being built right now," he added, predicting wider integration of tokenized solutions into existing financial systems.

Andrew Czupek, Northern Trust’s America‘s head of digital assets and financial markets innovation, emphasized that stablecoins could solve major inefficiencies, but only if traditional financial infrastructure aligns with blockchain solutions. "You can't just replace existing systems overnight," he said, calling for careful integration between legacy networks and new technologies.

Bridging Regulatory Uncertainty

The conversation shifted to regulation, a recurring challenge slowing stablecoin adoption. AlphaPoint‘s general counsel, Reba Beeson, emphasized the need for ongoing collaboration with regulators to establish trust. "Collaboration with regulators is very important," Beeson said, adding that the focus must be on security, scalability, and meeting risk management standards for end users.

Andrew Murphy, head of legal at Talos, echoed Beeson's stance, stressing that regulators must understand blockchain's full potential to avoid restrictive measures. "You run the risk, especially if the regulators don't understand what the technology can do, of over-regulating and taking away some of the benefits," Murphy explained. He suggested expanding custody rules to allow more entities, including self-custody, to facilitate stablecoin use at scale.

Murphy also pointed out the inefficiencies of current systems, recalling an experience where delayed bond settlement led to $75 million in misplaced funds. "The lag between trade and settlement creates many problems," he said, noting that blockchain can reduce such risks by enabling near-instant finality.

Institutional Hesitation And Retail Success

While retail adoption of stablecoins has surged, institutions remain cautious. Czupek described stablecoins as "an interesting product" with potential for institutions but acknowledged concerns about volatility during market disruptions. He questioned how tokenized cash will move seamlessly between financial institutions and whether networks can interconnect efficiently.

"There's still going to be a delay when you bridge one network to another," Czupek said, emphasizing the need to address these gaps for stablecoins to achieve institutional trust.

Murphy argued that institutional adoption would require a major participant—a "whale"—to lead the way, forcing counterparties onto tokenized systems. "You need someone to drag everyone else along," he said.

A Path Forward For Stablecoins

Panelists agreed that stablecoins can potentially transform settlement systems and global payments. However, the industry must resolve regulatory gaps and infrastructure inefficiencies to accelerate adoption. Butler described the technology as "a massive disruption" waiting to reshape financial processes, while Beeson underscored the importance of balancing compliance and technological progress.

With regulatory clarity and gradual institutional adoption, panelists concluded that stablecoins could become a driving force in modernizing financial markets worldwide.

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