Stablecoin Is Ready for Credit Unions. Are Credit Unions Ready for Stablecoin?

Though the GENIUS Act is nearly a year old, stablecoin is a payments technology that many, and perhaps most, credit union leaders have yet to reckon with. But that’s changing quickly as regulatory rulemaking advances and stablecoin’s upsides come into sharper focus. The new technology’s coming of age presents a particular opportunity for institutions looking to deepen and defend member relationships, and build new sources of payment revenue.

Signed by President Trump in July 2025, the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) creates a comprehensive regulatory framework for stablecoin, clearing the way for cryptocurrency’s entry into mainstream payments. Backed by high-quality liquid assets — typically pegged one‑to‑one with the U.S. dollar — stablecoins offer speed, transparency, and programmability that typical stored-value currencies can’t match.

Stablecoin adoption is expected to accelerate, creating both competitive pressure and a reason for credit unions to engage early. Roughly 161 million individuals worldwide hold stablecoin today — a figure projected to approach 1 billion by 2030. Annual transaction volume, currently estimated at $10-15 trillion, could reach $100-200 trillion within five years.

To be sure, some traditional financial institutions see stablecoin as a threat despite the rising tide. They anticipate that its growth will put pressure on their core revenue models, including by eroding interchange-fee revenues. These institutions also recognize that the firms, banks, and fintechs that have to date been leading the way on adoption have large consumer networks to leverage — including the country’s biggest banks plus Amazon, Walmart, Meta, and Stripe.

But such concerns are exactly why traditional institutions should seize the current moment and get off the sidelines. Those that engage early, even incrementally, will be better positioned to find new payment revenue on more favorable terms. Perhaps even more important, they’ll be demonstrating digital relevance to members and potential members who, all else equal, value their mission orientation and community affiliation but want to lower costs and reduce friction in their financial activities.

To learn more about how and why small financial institutions might take advantage, The Financial Brand spoke with Brian Kaas, President of TruStage Ventures, who is leading the development and launch of TruStage’s stablecoin (TSDA), which is designed for community-based financial institutions, like credit unions.

From Wild West to Regulated Rails

For credit union leaders and strategists considering stablecoin, a good first step is a close review of the new law with their compliance team. The GENIUS Act stands as a de facto response to credit union leaders who are likely to associate stablecoin with the same wild-west risk profile that cryptocurrencies in general have labored under.

With a strong focus on stability, transparency, and oversight, the new law mandates that stablecoins can only be issued by regulated entities: subsidiaries of insured depository institutions, non-bank entities approved by federal regulators, and state-regulated entities under $10 billion in assets. Issuers must maintain high‑quality dollar‑denominated assets to back coins at par, follow rules for segregation and regular attestation of reserves, and comply with robust AML and consumer‑protection standards.

Kaas describes the law’s passage as a tipping point: “We’ve long known that stablecoin has tremendous application for mainstream financial institutions, but until the GENIUS Act there was no way to get it to cross over.”

Meanwhile, the National Credit Union Administration published its first proposed rules implementing the GENIUS Act in February and May, establishing how credit unions may participate in stablecoin issuance.

Under the proposed rules, credit unions — many of them constrained by legacy infrastructure — can issue stablecoin only through a subsidiary of an insured credit union. Recognizing that most credit unions lack the scale to stand up such an entity on their own, the NCUA’s proposed framework explicitly anticipates cooperative models in which a single entity serves multiple credit unions.

The bottom line is that, to get started in stablecoin, credit unions must find the right technology and issuing partners, within the credit union ecosystem.

Protecting the Balance Sheet

Stablecoin creates both a liquidity opportunity and a liquidity threat for credit unions. But as much as institutions want their strategies to be rooted in growth — playing offense — stablecoin’s marketplace-structure implications require them first to think defensively.

The reality is, as stablecoin use spreads across fintechs and among retailers that partner with the likes of Chase or BofA, traditional institutions’ accountholders will increasingly want to keep transactional balances in other entities’ stablecoin wallets. That means credit unions could see progressive deposit erosion, especially among younger, more fee-sensitive, or more digitally active members, which in turn would put pressure on other aspects of their business.

Some credit union strategists may see such run-off as unlikely, based on what they know about their members’ financial preferences and habits. But consider a scenario in which a large online retailer like Amazon or Walmart, looking to reduce transaction costs, offers customers the option to create an on-platform stablecoin wallet. It then begins displaying a reduced “stablecoin price” alongside standard pricing. Owing to its scale, the retailer would benefit from the funds it holds on behalf of customers and from lower interchange costs, while returning a portion of those gains to customers as a reward for participation.

For credit unions looking to stay ahead of deposit outflows, the key is to provide members with stablecoin functionality within their own platform. “Consumers understand savings and they’ll figure out where the savings and rewards are,” Kaas said. “For credit unions, the goal should be to enable your members to access the same advantages but using your wallet.”

Seizing New Revenue Opportunities

With deposit defenses in place, credit union strategists can turn to the question of whether stablecoin can also generate new revenue — compensating for interchange erosion while deepening member relationships in the process.

Many of the payment services smaller institutions provide, ultimately generate only a modest return for the credit union, Kaas said. Legacy payment rails leave little room for an institution to price competitively. With a stablecoin-based system, which reduces intermediaries, it becomes possible for credit unions to price new payment services at rates members will find attractive while still generating more revenue than legacy rails would have allowed.

Kaas offers the example of cross-border transfers. A member sending money abroad today pays somewhere in the range of $30-50 for a transaction that can take days to settle while passing through multiple intermediaries along the way. The same transfer on stablecoin rails settles in three to five seconds, at a cost of roughly a penny. A credit union that charges $8 for that transaction is offering the member a dramatically better deal, and still likely earning more per transaction than it did before.

Business accounts present another opportunity to earn custody and transaction fees. Stablecoin enables 24/7 liquidity management and immediate settlement — capabilities that matter to commercial members whose working-capital efficiency depends on the timing of fund transfers. Community-based institutions with strong local merchant relationships might take a ground-up approach, building networks in which participating merchants gain access to faster settlement alongside loyalty rewards and discounts for members.

Getting Back on the Front Foot

Ultimately, member relevancy and engagement might matter as much as balance sheet or revenues. Small traditional financial institutions, of all types, have long struggled to recruit and retain younger accountholders. Participating in a hosted stablecoin program can make a difference. More tech-forward and fee-conscious, these younger consumers might be most at risk of jumping to a fintech- or retailer-hosted stablecoin opportunity. But they may also be the most likely to respond to a stablecoin offering from an institution they already trust.

Credit unions that can deliver the speed and cost efficiency of stablecoin payments within their own platform have something neither fintechs, large banks, and global retailers can replicate: an existing affinity-based relationship and a commitment to member protection.