Stablecoins Poised to Revolutionize Real-Time Collateral Management in Traditional Finance

Stablecoins are emerging as a transformative force in traditional finance (TradFi), with industry leaders and regulatory bodies recognizing their potential to modernize real-time collateral management. A recent pilot project by DTCC Digital Assets, dubbed the “Great Collateral Experiment,” highlights how digital assets—particularly stablecoins—can streamline outdated, manual systems in lending and derivatives markets.

Digital Assets as a “Perfect Fit”

Collateral management, the process of managing assets pledged against financial transactions like loans or derivatives, is typically cumbersome due to complex manual workflows and strict asset release timelines. According to Joseph Spiro, product director at DTCC Digital Assets, digital assets and smart contracts can eliminate these inefficiencies.

“Whether it’s uncleared or cleared derivatives, repos, or central counterparties, digital assets are the perfect tool for real-time collateral flows,” Spiro said at Consensus 2025, emphasizing the potential to automate previously manual processes.

Regulatory Clarity Still a Hurdle

While the technology promises efficiency, wider adoption hinges on regulatory clarity. The GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins) aims to set collateralization and compliance standards for stablecoin issuers. Although it stalled in the House on May 8 due to insufficient Democratic support, the bill remains a focal point for crypto regulation advocates.

The legislation gained renewed momentum after more than 60 top crypto founders rallied in Washington, DC, on May 14 to push for its passage. If enacted, it would require stablecoin issuers to adhere to strict anti-money laundering (AML) standards while promoting broader institutional adoption.

Enhancing Lending and Settlement Efficiency

Stablecoins could also redefine loan issuance and repayment processes in TradFi. Kyle Hauptman, chairman of the National Credit Union Administration, noted that stablecoin programmability allows for real-time, transparent settlements, unlike traditional loans that settle monthly.

“Repayments could become more liquid and efficient, even for smaller loans,” Hauptman said. “Borrowers could also benefit from improved terms, similar to those in large bond issuances.”

Another key legislative effort, the STABLE Act (Stablecoin Transparency and Accountability for a Better Ledger Economy), was approved by the House Financial Services Committee in April and now awaits a full House vote. The act aims to boost transparency and accountability in the stablecoin sector.

Outlook

Stablecoins are increasingly seen as vital tools for real-time financial operations in TradFi, particularly in collateral management, lending, and settlements. But for the transition from pilot programs to full-scale integration, clearer regulatory frameworks will be essential.