3 Things Goldman Sachs Thinks About Stablecoins

One of summer’s themes has been the rise of the stablecoins.

Circle, issuer of USD Coin (USDC), went public in June, for example. Meanwhile, retail giants like Walmart and Amazon announced they were exploring their own digital dollars. And most significantly, the GENIUS Act, the first-ever federal regulatory framework for stablecoins, was signed into law in July.

The confluence of these events has turned the season into the “stablecoin summer,” according to a report from Goldman Sachs issued Wednesday (Aug. 20).

Whether these tokens become the backbone of global commerce or the next subprime crisis remains an open and fiercely debated question. What’s becoming clear, however, is that stablecoins now sit at the intersection of payments, banking and public policy, with implications that stretch beyond cryptocurrency.

Read also: Big Banks Pile Into Stablecoin Infrastructure as Wall Street Eyes Crypto Custody

Institutionalization and Commercial Expansion of Stablecoins

For years, the biggest obstacle to mass stablecoin adoption wasn’t technology but trust. Crypto’s history of volatility, hacks and collapsed experiments (from Terra’s implosion in 2022 to the contagion of FTX) soured mainstream investors. While traders used stablecoins inside exchanges as a dollar proxy, few institutions were willing to place them at the center of financial flows.

The U.S. GENIUS Act changed that equation. By requiring stablecoin issuers to back tokens one-to-one with high-quality liquid assets, primarily Treasuries and insured bank deposits, and subjecting them to federal supervision, Congress effectively gave stablecoins a seal of legitimacy.

The Goldman Sachs report found that stablecoins could likely become a foundational payment and settlement layer, not only in crypto markets but also in global commerce, remittances and tokenized financial systems.

For issuers, the economics are straightforward. A stablecoin is minted when a customer delivers dollars to an issuer, who then invests those reserves in safe assets. The issuer collects the interest. With hundreds of billions of dollars in circulation and Treasury yields above 4%, that’s a lucrative model.

Circle, now a publicly traded company, disclosed that the bulk of its reserves sit in short-term Treasuries and repos, the report said. Tether, the dominant issuer with roughly $166 billion outstanding, revealed it is among the top 20 Treasury holders worldwide.

Yet the real business story isn’t about today’s float. It’s about the expansion of tokenization. Tokenized assets (stocks, mortgages, real estate) will inherently create demand for a blockchain-native settlement currency such as stablecoins.

See also: Will the Stablecoin Industry’s Compliance Dilemma Be Solved in Our Lifetime?

Shifting Dynamics in Banking, Payments and Treasury Markets

Stablecoins first gained traction in cross-border remittances, where the potential to bypass costly intermediaries seemed obvious. Why pay fees on top of fees to send money abroad when you can transmit digital dollars nearly instantly?

However, the reality is more nuanced. Most of the costs in remittances aren’t about moving money but are about compliance, onboarding and currency conversion. Stablecoins don’t eliminate those.

Traditional networks like Visa and Mastercard already play a role in stablecoin transactions, facilitating settlement at the consumer end, the Goldman Sachs report said. Visa expects to process over $1 billion in stablecoin volume in the 12 to 18 months.

Stablecoins aren’t replacing payment infrastructure; they’re layering into it. They may streamline certain corridors, especially in emerging markets where dollarization is common, but they also depend on existing rails for distribution, fraud prevention and compliance.

For legacy providers, the risk isn’t existential disintermediation but the slow erosion of margin.

Read also: Stablecoins ‘Perform Poorly’ as Money and Could Face Uphill Payments Battle

Financial Stability Risks and Policy Trade-Offs

The impact of stablecoins on the Treasury market is one of the most consequential but least understood dynamics. Every new stablecoin minted requires equivalent reserves, often in short-term Treasuries. That creates a new structural buyer of government debt, potentially stabilizing demand just as deficits swell.

At its core, the stablecoin debate boils down to stability versus fragility.

The Goldman Sachs report found that proponents see the GENIUS Act as analogous to the National Bank Act of 1863, which ended the wildcat banking era by standardizing banknotes with Treasury backing. Stablecoins, in this telling, extend the dollar’s reach into a digital, global age.

Skeptics see the opposite, or a replay of the Free Banking Era, where private notes proliferated, values diverged and confidence crumbled. Stablecoins may look safe in calm conditions, but crises rarely respect technical safeguards.

The divergence in views reflects a broader uncertainty about how private digital money interacts with sovereign monetary policy. Central banks can smooth liquidity shocks through tools like discount windows and quantitative easing (QE). Private stablecoin issuers do not. If they falter, taxpayers could again find themselves footing the bill.

What happens next depends on adoption. Today’s $270 billion market is dominated by Tether and Circle. The next five years may prove decisive. If tokenization accelerates and consumers grow comfortable holding digital dollars, stablecoins could graduate from crypto plumbing to mainstream infrastructure. If not, they may remain a niche tool for traders and cross-border users, important but peripheral.

Either way, the genie is out of the bottle. Stablecoins have injected themselves into debates about the future of money, the structure of banking, and the management of U.S. debt. Their rise reflects not just technological innovation but a global hunger for dollars in a digital form.