Stablecoins are emerging as a preferred solution for real-time collateral management, offering speed, transparency, and efficiency in financial operations.
Although stablecoins can simplify TradFi’s collateral management systems, adoption by financial institutions might require more precise regulatory requirements.
Stablecoins and cryptocurrencies are becoming more well-known in the traditional finance (TradFi) sector due to their capacity to improve the efficiency of current financial systems and expedite payments.
Collateral management, as used in finance, controls the underlying collateral used to secure other financial transactions, like loans or derivatives, to reduce credit risks and guarantee seamless transactions.
According to a recent pilot by DTCC Digital Assets, digital assets, especially stablecoins, are the “perfect” financial instrument for real-time collateral management. This means that stablecoins, in particular, might modernize and streamline this crucial function.
During a discussion at Consensus 2025, Joseph Spiro, product director at DTCC Digital Assets, stated that “digital assets are the perfect use case for collateral management, whether it be uncleared derivatives, clear derivatives, central counterparties, repo, or any other type of collateral.”
Due to strict criteria for locked-up collateral that can only be delivered to the right parties at predetermined periods, collateral management necessitates complex human operations.
Spiro stated that “all the manual processing can go away” and that “smart contracts and digital assets can accomplish all of that better, faster, and more efficiently.”
US politicians are conducting the pilot, known as the “Great Collateral Experiment,” in an effort to establish stablecoin regulations.
At least 60 of the leading cryptocurrency creators convened in Washington, DC, on May 14 to endorse the GENIUS Act, which stands for Guiding and Establishing National Innovation for US Stablecoins. On May 8, the bill first failed to garner enough Democratic backing.
The GENIUS Act requires complete adherence to anti-money laundering regulations while attempting to provide collateralization guidelines for stablecoin issuers.
Key Democrats, some of whom expressed concerns about US President Donald Trump possibly making money off of digital assets through his crypto-related endeavors, failed to support the bill, and it halted on May 8.
Lending and settlement can be streamlined with stablecoins.
According to National Credit Union Administration head Kyle Hauptman, adding stablecoins to conventional fiat-backed loans might further expedite TradFi procedures.
Stablecoins’ programmability may simplify and provide transparency for all parties involved in the loan repayment process. Hauptaman stated at the same panel discussion that the existing procedure is “clunky where they settle at the end of the month,” adding:
“Stablecoins and their programmability can make this vastly easier.”
We made it simpler for credit unions to resolve these issues—you could do so for lower sums of money—but the borrower should benefit more since it now possesses specific characteristics of a significant bond issue. It’s liquid now,” he declared.
On April 2, the House Financial Services Committee approved another piece of legislation, the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, by a vote of 32–17. The bill awaits the House of Representatives to schedule a floor vote and debate.
