The post Stablecoin Custody: A Strategic Priority for Banks appeared on BitcoinEthereumNews.com.

Rebeca Moen
Nov 01, 2025 11:57

As stablecoins become integral to finance, banks must navigate custody challenges, balancing security, compliance, and operational efficiency, according to Paxos.

Stablecoins have rapidly emerged as a crucial component of the global financial landscape, with over $150 billion in average daily transfer volume across public blockchains. As digital dollars increasingly facilitate payments, settlements, and trading activities worldwide, banks face the critical question of how to safely offer stablecoin services, according to Paxos. The core challenge lies in custody. Similar to their traditional role of safeguarding deposits and securities, banks must now devise strategies to securely manage stablecoins. The chosen custody model will impact their ability to manage risks, ensure compliance, and capitalize on digital finance opportunities. Custody Is Critical for Stablecoins Stablecoins differ from traditional deposits as they are bearer assets, meaning whoever holds the cryptographic keys controls the funds. This presents both technological and fiduciary responsibilities. Banks must store stablecoins while balancing security, regulatory compliance, and operational efficiency. Strategic Considerations for Banks Global regulatory bodies are establishing standards for digital asset custody. In the U.S., the OCC and SEC have issued guidance, while Europe’s MiCA framework introduces requirements for safeguarding client digital assets. Singapore’s MAS is also setting global best practices with its upcoming stablecoin framework. Banks must align their custody models with these regulations to build trust and avoid regulatory issues. When choosing a custody model, banks have two primary options: Build Direct Custody: Developing in-house wallet infrastructure and controls. Leverage Third-Party Custody: Partnering with regulated trust companies or qualified custodians. Many banks are expected to adopt a hybrid approach, maintaining direct custody for strategic purposes while utilizing regulated infrastructure providers like Paxos for scalability and risk management. Institutional-grade custody requires robust wallet technology, such…

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Filed under: News - @ November 2, 2025 12:23 am