Community Banking’s Stablecoin Moment: Why Now Is the Time to Act

hello hello hello welcome to another great episode of travelli next very excited about this one And very happy to have two of the leaders in the industry right now. We have Alex Treese, CEO, co-founder from StableCore. We also have Brandon Hanson, president director from Bank of Utah. And I guess you're outside Salt Lake City, right, Brandon?

Yeah, headquarters just north of Salt Lake City, about 45 minutes. About 45 minutes. That's right. And Alex, I think you're based in Dallas.

So thank you for joining me this afternoon. Really appreciate it. Where do I even start? There's so much going on.

I was just doing a little prep work and I asked Scott GPT to give me the latest stories on stablecoin. And boom, boom, boom, right after one after another, just big stories this week. We won't go into them. We have a limited amount of time, but that's what's on everybody's mind these days.

And it's trickling down to our clients at community banks for sure. As we proceed with legislation and you're seeing the big banks get together, but really wanted to start this off with you, Alex, since you are the co-founder of StableCore. What fundamental problem inside banking were you trying to solve with building StableCore? Yeah, it's a great question.

So maybe some history. I mean, if you go back 18 plus months ago, it was actually challenging for banks to be in this space because of a number of the sort of blockers on the regulatory side. But thankfully, a lot of those have been cleared in the last 12 months. And so what remains for banks today is really around technology and overall infrastructure.

And there's really kind of two specific things. I mean, one is that there's this entire banking technology stack that exists today. So things like digital banking platforms, core banking platforms, all the compliance tools that banks use today. And today, those tools do not support digital assets, right?

And so any bank that's wanting to build in this space has a big gap on that side. And if you look on the other side, you've got all this digital asset infrastructure that exists, right? That's things like all the digital asset custodians, all the stablecoin issuers, and sort of many other firms in that space. And those firms are great for things like custody and wallets and on-off ramps, but they don't have all the pieces and parts you need to actually integrate into banking.

And sort of said another way, it takes a lot more than just API keys, you know, into a digital asset custodian to actually run a digital asset product inside of a bank. I mean, there's just many, many other pieces that have to come together. And so what you have here is this gap between these two sides, again, on that one side, all that banking infrastructure that banks rely on. And on the other side, all this digital asset infrastructure that has key important pieces, but doesn't integrate into that banking technology.

And so you have that big gap there. And that gap is really where StableCore sits. And that's really the problem that we solve. And so you can think of this as being like a digital asset core effectively.

But what that really means is that we are bringing these two sides together. So on one side, integrating to all the digital asset infrastructure, so all the custodians, all the stablecoin issuers, all the digital asset compliance tools. And then on the other side, integrating into all of the banking technology stack. So integrating directly into digital banking platforms, directly into core banking, directly into all the compliance systems and really meeting banks where they are and saying, hey, you shouldn't have to change all your banking infrastructure to be able to support these products.

And this is really the hard problem that needs to be solved. Again, there was previously kind of the regulatory problem, but now it's getting these technology systems to work together. And so we've created a company that just focuses on that. So we work exclusively with banks and credit unions in helping them solve this technology challenge.

No, it's great. And you have one of your partners and investors actually here, Bank of Utah, Brandon. We'd love to hear from the bank side. What convinced you at StableCorp was the right partner and actually investment opportunity for Bank of Utah, Brandon?

Yeah, Keith. So I've kind of been in the digital asset space since 2017 and have kind of watched all of this evolve and knew that at some point it was going to enter into the traditional banking system. And as Alex mentioned, regulatorily, we were largely prohibited from doing anything in this space. When Genius Act came out and basically provided some consumer protections around stable coins and opened the regulatory door for traditional financial institutions to play in the space, I began looking for a partner.

Spent six or seven months, looked at a couple of different options that are out there, and then met Alex at a banking conference, had a really fantastic discussion with him. And as many of you know, the most critical piece in partnering up with someone like this is the people. And Alex just really impressed me with his vision about how these digital assets should really live in traditional finance, right? Most people are not going to have a Coinbase or a Kraken account, right?

What Alex is doing is really bringing this digital asset offerings to our customers at the level that they interact with our bank. So that was the exciting part of all this. No, it's fantastic. And we see so much news out there, Alex, legislative news, as I was saying before, just articles, everything.

Every day there's something new on stablecoins and digital assets. Why do you think now is the inflection point for banks and credit unions to modernize, to bring on digital assets, to be open to this new technology and this new asset base? Yeah, there's really three things I would point to that kind of make now the right time. The first is on the regulatory, which both Brandon and I had mentioned, but just to kind of point to some specifics.

I mean, again, prior to 2025, it was basically impossible for banks to be in this space because of these regulatory blockers. But thankfully, over the last 12 to 18 months, that's changed. So for example, in March of April last year, you had the banking regulators, the OCC, FDAC, and the Federal Reserve Board all update their policies around digital assets to say that these are all permissible activities, things like digital asset custody, things like using stablecoins for payments, for example.

And then later, of course, we had the Genius Act, which was passed in July, which really formalized the regulatory structure for stable coins in particular and laid out what is a stable coin? What is the underlying reserves of a stable coin How is a stable coin issuer regulated for example and put in place a lot of important consumer protections that I would say massively de the whole space and made it possible for banks to actually engage here And so that one big bucket on the regulatory side that changed recently The other thing is just looking at the overall growth of the market and just how it's expanded.

So if we go back five years ago, for example, there was around 30 billion of total supply of stable clients. And today that number is around 330 billion. So we've gone roughly 10x in the last five years. And all the projections are that that number is going to grow to be somewhere between three to four trillion over the next five years.

Wow. year two. And so that's another 10x, right? And so if you're a bank, you know, there's a very good chance that when there's three to four trillion of stable coins circulating in the financial system, that your clients are going to come into contact with them, right?

So you need to take that seriously. And then the last point I'd say is that, you know, because of the regulatory blockers, you've had fintechs and other non banking competitors that have been able to build products in this space and offer these products for a long time, many years. And so they've built very big businesses. And if banks don't get serious here about actually offering these products that clients want, then these other fintechs and other non-banking competitors are going to challenge banks as the primary financial account.

So I think all three of those reasons, A, the regulatory, B, just the growth in the market, and C, just what the competitive landscape looks like are good reasons why folks should be taking this seriously right now. Yeah, no, it's critical. I think it's mission critical right now. And Brandon, over to you, being in a regulatory, you know, regulated environment, you know, highly regulated industry.

How do you evaluate kind of the innovation versus kind of maintaining strong regulatory risk protocols at your bank? And what should other banks be thinking about also? Yeah. So Bank of Utah, you know, we're sort of leading in this space.

There's other banks doing that as well. And we're being very cautious, right? third-party risk management, the documentation, understanding AML and BSA concerns. And so we're being super careful.

We're spending a lot of money on attorneys and consultants to make sure that we get it right. And then just having that open communication with our regulators. I've been talking to our regulators about digital assets for a number of years, and I've always gotten the side eye and the skeptical look. And it was really awesome because I had a conversation with my point of contact at FDIC this week, and I mentioned to him that we were really close to rolling out some digital asset services and the tone had changed 180 degrees.

It was like excitement. And I mentioned I wanted to come down with our team and kind of talk through how we've mitigated the risks and how things have been documented. And they were really excited to hear from me and understand things and learn things. So I think, you know, the day and age where cryptocurrency was kind of considered, you know, a tool of criminal use and fraud, people are understanding that there's real use cases, real value in these distributed ledgers and the opportunities there.

And Alex is right. I mean, I might sound like an alarmist, but I think blockchain technology represents an existential risk to the banking system. The cryptocurrency companies, it's called DeFi, decentralized finance. Their whole goal and mission has been to displace the banking system.

And so they've had all this time to build up their systems and processes. Now some of these firms are getting bank charters, trust charters. And if we don't get ourselves ready, there's going to be a lot fewer banks around in the future. No, stop being an alarmist.

I think it's just you're trying to get the word out. And we've been trending in that direction, but I think this is going to speed it up. On that note, Alex, what do you think traditional banks still misunderstand about digital assets? What do you think is the biggest kind of misconception out there?

Well, I think what's helpful to understand that not all bankers have graphs yet is that whether we're talking about stable coins, whether we're talking about tokenized deposits, even if we're talking about things like Bitcoin, these all leverage the same underlying technology. It's all part of the same underlying secular technology shift. And every once in a while, there's these big technology shifts that happen, right? So in banking, maybe, you know, it's going from branches to online banking, and then later going from online to mobile.

And again, those were big technology shifts that happened that had many implications across banking. It changed the way that banks actually interacted with their clients. And I would argue that this is just another one of these big secular technology shifts that's happening. And the reason that's important to understand is because it means that the decision to support these assets or these use cases, whether it's stable coins or something else, it's not just about that.

It's also about whether you want to participate in this evolution of this financial infrastructure. And I think that's just something that's helpful to understand. And once boards and once executives understand that, it helps them kind of see the bigger picture in that it's, you know, and clearly any given bank wants to find a given use case that makes sense to start with, but you're also putting in place the infrastructure that will support this whole category of products that is already at very large scale.

And so I think that's something, again, that is a little bit misunderstood. And when boards and executive teams understand that, it tends to resonate. It tends to sort of give them an overall greater sense of urgency on this topic. Yeah, no, that's great.

And kind of over to you, Brandon, on that note, where do you see some of the biggest opportunities for banks with programmable money, smart contracts, tokenized assets, blockchain-based settlements? What do you see some of these activities and the biggest upside for banks? Sure. I mean, a really simple use case is a cross-border payment.

And for Bank of Utah, we're $3.7 billion in assets, but we send 8,000 wires a month, and about half of those wires are cross-border related to our aviation trust business. And so you get real-time settlement at a fraction of the cost, and I would argue is safer than the wire fraud that we experience in this day and age. So that's an easy use case.

I think a lot of bankers, when they learn about stablecoin, they kind of think, well, what's the big deal? This is just another real-time payment rail. What's so special about it? Well, what's special about it really hasn't completely been developed yet, and that's the conditional payment or the smart contract, right?

So instead of just sending money real time. Well, what if I can send money only based upon certain conditions being fulfilled? I'll give you a simple example. You order from Amazon, your account gets debited right when you order the item, but you hope it shows up at your house.

A better experience would be I order that item on Amazon the package is tracked via GPS and when it arrives on my porch then Amazon gets paid And an even better use case for us in banking we do a lot of construction lending Right now we send an inspector out to a construction site to see that something's been completed. They pull out their checklist, their costs break down. They see that it's done. They sign off on it.

They give the report back to somebody that initiates the draw. Maybe they cut a check. It's this really clunky, cumbersome process. Well, in the future with programmable money, we could send a drone out there, or maybe there's a camera on site that records that that particular item has been completed and it triggers the payment directly to the contractor, satisfying that.

So completely automate the process. And that could happen on Christmas day when the bank's closed. So what people are really missing is the programmability of this money. And if you think about all the commerce that's going to happen with agentic AI, right, these bots are going to do commerce for us.

They're going to need programmable money. So these stable coins and tokenized deposits will be the currency of agentic AI in the future. So our world is rapidly changing. And again, you know, our initial digital asset offering isn't going to be that spectacular or amazing.

But just to get our clients familiar with the technology, to get our employees to understand it, there's a lot, a lot of work to do. It's a steep learning curve to understand the space. Yeah, no. I mean, I think, and Alex, I think you can attest to this.

So we're probably still in the first or second inning, right, of where we're going, not only with AI, but with programmable money, stablecoin, blockchain technology. What do you think is going to separate? Here's a question for both of you, actually. What's going to separate banks that will thrive in the next five to 10 years with ones that are going to struggle?

I know it's a broad question, but I'll start with you, Alex. Well, especially as it relates to digital assets, I think that the game that's being played on the field is that clients want to have all their accounts and all their rails in one place. And so if you look at, I mean, to give the fintechs and the neobanks credit here, something that they've done really well is that they've brought a lot of different products together into a single experience. And that's why they've been effective.

you know, obviously they've had this sort of regulatory advantage that I mentioned earlier, where they could play in a space at a time when banking could not. But they've also done a good job sort of aggregating. And so whether we're talking about fintechs, whether we're talking about neobanks, whether they're talking about crypto companies, the sort of de novo banks, or banks or credit unions, the game being played on the field is that clients want the primary financial account, and that's the end state.

And so I think that the institutions that do well in this transition, understand that and understand that if their clients are engaging with digital assets, whether that's something like stable coins or something like Bitcoin, that they need to be able to offer those products. Because if they don't offer those products, it means it's going to open up another primary financial account relationship where they will do that. And then you're going to lose deposits, you're going to lose transaction flows.

And so I think it's not just about embracing technology. Obviously, that's a big part of what's happening right now with AI and everything. It's also about that kind of mindset that you are the primary financial account, and that's the role that your clients want you to serve. And so I think the sort of banks that are going to do well the next five years are going to be ones that fully embrace that idea.

Yeah. Become solution oriented, not just a checking account, but how can we make your life easier, Mr. Customer? And Alex, I think you're talking about on the retail and the commercial side, I would think.

Absolutely. Yep. On both sides. Yeah.

And Brandon, over to you. You're being innovative. You're being proactive here. What do you think is going to separate the banks that are going to struggle over the next five to 10 years with banks that are going to thrive and grow?

Well, one of the things I'm really concerned about is this technology really fundamentally changes how consumers will manage money. And one of the things that we've gotten away with in the banking industry for so many years is we use low cost deposits, right? Our favorite type of deposit is a checking account because we don't pay any interest. And we don't pay interest on those accounts because they're transactional accounts or payment accounts.

But what banks do is we take those low cost deposit, those payment accounts, and we put that money into a 10 year fixed rate commercial loan, right? And there's kind of a mismatch in the duration. And what's going to happen is people won't want to keep any money in a checking account because this digital money will enable them to have it invested real time earning interest at, say, three or four percent, but then be able to use it as a payment. Right.

So this could fundamentally change banking and our balance sheets and cause us all to really have to pay a lot higher cost for funding. So banks that don't have good net interest margins today are really going to struggle when they have to compete with paying such high yields on deposits. And it doesn't matter if the market structure bill goes through and it prohibits payment of interest on stable coins. There's so many ways to get around that, attach it to a derivative.

There's already tokenized money market mutual funds and everything can settle on real time. So before you've got your money in a money market, you might not be able to get it back into your checking account for a day or two. Well, if I can get it immediately, there'll be money market funds that pay interest by the hour, right? And so I could have my money earning 4% in a money market fund and then buy a soda with it an hour later and get paid an hour of interest.

So this technology has that kind of capability to, again, fundamentally change how we do things and affect how we lend as well, in addition to just the payments and the deposit side. So I'm gathering banks that don't offer this type of solution to their customers who are going to be looking for this, once they get a taste of it and see what it is to have instant payments and what you were just talking about, Brandon, they're going to be, it could be a struggle. Okay. That's perfect.

Alex, to you, what does success look like at StableCorp over the next three to five years? I mean, you're growing rapidly, you're expanding, you're out there, you're getting the word out to banks, your investment from Bank of Utah and other companies. What does success look like from your perspective? Yeah, well, I mean, we're in the business of helping banks and credit unions offer digital asset products and stay as the primary financial account.

And today there's, you know, what, I think 8,500 banks and credit unions here in the United States. And it is a transition, as we mentioned earlier. I mean, there are a bunch of technology challenges, for example, to be able to actually fully integrate these systems. And so I think over the next three to five years, we're going to hopefully make meaningful progress to enabling a huge percentage of that 8,500 to be able to offer these products and to be able to stay as a primary financial account, to be able to compete against fintechs, to be able to compete against other non-banking competitors.

And it gonna take a lot of work to do that but that why we kind of focused ourselves on just selling to banks and credit unions just this market and just really understanding banking you know in this segment So yeah I mean for us it quite clear it you know helping banks and credit unions, you know, successfully navigate this transition over the next three to five years. Yeah, I love that, you know, here at Trevillion, we focus on community banks, and we're always saying we have such a passion, we want to see them grow and thrive.

And, you know, our product is talent, finding talent, of course, and but we understand the technology, talent, technology, you know, go together. So Brandon, from your perspective, to the bank CEO out there who might be watching this, smaller bank, billion, $2 billion, more traditional, very hesitant, reading all the stories online, hearing at the conferences about the stable coin and programmable money, but is very skeptical. What is your piece of advice to that CEO? Really just education.

Any CEO worth its pay should be understanding this space and what it brings. And, you know, there's lots of resources out there. There's lots of material. YouTube is an amazing source of information.

And there's podcasts out there that cryptocurrency companies do. So you can get a better feel for, you know, what they're looking at, what they're trying to innovate to start to do that. And there's probably already people in your organizations that have an understanding of this space, you know, figuring out who you have on your team that can already be a resource. You know, I was talking with Fidelity some time ago, and Fidelity was really early on the scene with Bitcoin, Bitcoin mining.

They have incredible custodial services now. And so I asked them, well, how did you guys get started? And they effectively had like a Friday afternoon call and just invited anyone from the company that had knowledge about digital assets to get on the call and discuss. And so they just sort of worked through it and started to understand and identify the value of the technology.

So I would just say, get up to speed, learn what you can learn. There's time to get up to speed. Like it's not going to be overnight that we have a problem. But again, it's a steep learning curve to really understand this space and you need to get started.

Yeah. And over to you, Alex, probably the same question. You know, you're meeting with a lot of CEOs, smaller banks, credit unions. Some are receptive.

Some are probably pushing back, maybe skeptical. Do you have a piece of advice for them? Well, yeah, I think the first step, especially if you're at square one, is to form some type of stablecoin and digital asset working group in your institution, or if not a working group, at least assign someone in your organization that is getting up to speed on these items. So getting up to speed on the technology, getting up to speed on the use cases, developing a point of view on business cases for your particular bank and sort of what you focus on.

And that's really important because if you don't start there, it's really difficult to do any of the downstream steps. It's hard to get to, you know, which initial product should I offer? If you haven't taken the time internally to sort of develop at least some of that expertise. And I think once you get there, once you kind of, you know, develop a point of view and you have someone internally that's working on that, then start exploring partners that are out there, right?

And whether it's on the technology side or otherwise, obviously it's difficult, we're more on the technology side and helping folks, you know, navigate there. But again, I think the first step is, you know, taking the time to actually develop some of that internal knowledge first. Yeah, and I think that's what you were saying, Brandon, And kind of going back to that internal knowledge, I would say reach out to you, Alex, reach out to you, Brandon. You know, you can definitely point them in the right direction.

But yeah, any closing thoughts? I mean, I love your enthusiasm, your love for the space. We speak with community bank executives all the time. They're great people.

And I think embracing this technology now, I think getting across that it's critical to at least start that journey now, right? It might seem like, oh, it's not here yet, but it's here. So any last words from you, Brandon? Well, again, I think it's a big threat.

It worries me. But I think ultimately, in the end, we win. And we win because we've got the client base and we've got the trust. And I'd love to use this example.

It's sort of like if you put a really good high school baseball team against a team of NBA All-Stars playing baseball, the high school team will probably beat the NBA All-Stars, right? Because the high school team has been practicing baseball for many, many years, and they know how to play the game and the NBA players have focused somewhere else. Well, we give the NBA players a couple of years to practice baseball and then we play that game again. I think the NBA players win because they're the superior athletes.

So the banks are like the NBA all-stars, right? But we just haven't been practicing the game. Give us some time to do that. We'll get up to speed.

And because we have the trust and confidence of the public, we win. I think we win. So, but we can't just sit idly by. Yeah, I got all pumped up, man.

We're ready to do some push-ups in my office right now. We win. And Alex, any closing thoughts from your perspective? It's positive out there.

People can be negative. Why is it changing? Like Brandon said, let's go out there. Let's compete.

Yeah, no, absolutely. I fully agree with everything Brandon said. You sort of said another way. I think banks can offer the best bundle here, and they have advantages over these fintechs and crypto companies that they're just not flexing today.

And again, historically, they couldn't flex them because of the regulatory blockers. But thankfully, those have been removed. And so we very often think about this as more like a defensive conversation, but banks can actually play offensive here as well. And quite frankly, that's what clients want.

Clients want to work with their banks. You're already the trusted financial relationship in their lives on the retail and consumer side, on the commercial side. The reason that they've gone to these other venues in these other places is because banks haven't been offering these products. But once they do, they're going to be in a very good position there.

And I think that's actually what most clients would actually prefer. Yeah, so it's being proactive before they start looking for another account with that product and letting that account in the door or letting that company in the door. Nah, so no, this is great. We can end it with we're going to win.

Alex, I know the way to reach you, StableCore, reach out to Alex. He can definitely bring you up to speed. They have a lot of videos out there. They're at conferences.

Brandon, same thing. I think you're really open to spreading the word to community banks and helping as much as you can. And so I thank you both for being on here and appreciate the time. And yeah, let's see where it goes.

We'll have another podcast in like six months and we'll see where we are. But thank you both. Yeah, thanks, Keith. Appreciate it.