In the nascent phase of the digital asset surge, there were grand promises of a transformation fueled by volatility and excitement. As we approach 2026, a genuine revolution is on the horizon, manifesting in a manner that is unexpectedly, yet strategically, mundane. As the global audience focused on price charts, a new financial ‘plumbing’ was quietly being established behind the scenes. Today, that infrastructure is referred to as the stablecoin. As of mid-February 2026, the stablecoin boasts approximately $307 billion in circulation, establishing itself as the crucial operational layer that dictates the functionality of institutional finance on-chain. I recently had a conversation with Sheila Warren, the former CEO of the Crypto Council for Innovation, who stated clearly: Stablecoins aren’t merely an asset class; they are the ‘jet fuel’ that will ultimately launch the digital economy into the stratosphere. “The catalyst that stablecoins are… that propulsion will continue to echo all throughout the broader global digital financial world,” Warren stated. Bitcoin represented the ideological breakthrough, while stablecoins serve as the operational layer. Their role serves as the liquidity foundation that enables all other operations to thrive. In their absence, tokenization remains a concept without practical application. With them, it is executable. The battle has now escalated for that very reason. In 2022, Warren remembers informing banking executives about her plans to establish the Crypto Council for Innovation. “I received a considerable amount of pats on the head,” she stated. “‘Oh, crypto, that’s so sweet.’” The tone has shifted. “They are out in full force,” she stated. The explanation is clear-cut. Yield. If stablecoins develop into interest-bearing assets that provide attractive returns, they will directly challenge conventional deposit accounts. This is not a discussion about technology. That is a discussion on funding.
Lawmakers and industry executives find themselves at an impasse regarding the permissibility of stablecoins offering interest or rewards, despite recent discussions at the White House intended to address the matter. Banks are not outright dismissing blockchain; rather, they are developing their own iterations of programmable money within their controlled environments. “What they really wanted to build was a melding of blockchain and tokenization of assets,” Warren stated. “Because where does it stop?” Bank deposits represent a specific aspect of the financial landscape. “It could go to all kinds of other things.” JP Morgan’s deposit token initiative exemplifies this strategy. It facilitates institutional settlement 24/7 while maintaining funds on a balance sheet. Stablecoins are drawing liquidity into open networks. Tokenized deposits ensure that liquidity remains within regulated institutions. This is not a battle between crypto and banks. It’s open rails against contained rails. The United States has gained clarity on stablecoins, yet it still lacks a structured framework. Warren observes advancements in the realm of stablecoins. The GENIUS Act laid down a federal framework for payment stablecoins in 2025, focusing on reserve requirements, supervision, and issuance standards. “We have landed in a very strong place,” she stated. “The devil’s always in the details.” The prevailing uncertainty revolves around the market structure. “We still don’t have a market structure bill,” Warren stated. “The high level here is not that hard.” The inquiry revolves around determining which agency holds jurisdiction over specific matters and how to categorize those entities. Her concern does not lie in technical impossibility. It is all about the political timing. “You’re fighting a calendar,” she stated. Election cycles hinder the progress of legislation. Regulatory momentum faces potential vulnerability due to changes in congressional control. The prevailing uncertainty fosters widespread hesitation. As discussions unfold in Washington regarding jurisdiction, other regions are taking definitive stances.
Hong Kong has announced its intention to issue its inaugural stablecoin licenses in March 2026, pending the review of initial applications. Mainland China has taken a contrasting approach, tightening restrictions on virtual currencies and emphasizing that unauthorized offshore yuan-linked stablecoin insurance is illegal. The divergence underscores a more profound issue. Stablecoins are emerging as tools of monetary power. If dollar-backed stablecoins dominate global on-chain liquidity, it will reinforce the centrality of the dollar in digital form. When jurisdictions impose restrictions or influence issuance, they are exercising their sovereignty decisions. Warren, a board member of the Bermuda Monetary Authority, highlights the territory as a prime example of early and strategic positioning. Bermuda revealed its intentions in January 2026 to develop a fully onchain national economy, backed by prominent players Circle and Coinbase. “This tiny little island is now kind of a player in this space in ways that other larger jurisdictions aren’t necessarily,” she stated. The distinction is evident. As certain governments engage in discussions over definitions, others are actively concentrating on developing the necessary infrastructure. As stablecoins continue to grow, the need for compliance must evolve beyond manual processes. “The technical question is going to be very interesting,” Warren stated. Regulators might have to evaluate not just reserves but also the security of smart contracts, the safeguards for interoperability, and the integrity of operations. “In theory, an AI agent could be utilized by the regulator to evaluate and assess security,” she stated.
If stablecoins are truly the jet fuel, then AI serves as the inspection system. In the absence of automated oversight, managing systemic scale presents significant challenges. Warren also anticipates a proliferation phase. “Everybody and their grandma right now is like, ‘we’re gonna have a stablecoin,’” she stated. “Most of these are not going to capture attention or serve a purpose.” This is not an easy task, friends. Issuance appears straightforward, at least in theory. Ensuring liquidity, trust, and compliance at scale presents significant challenges. The market is poised for consolidation. When it comes to success, distribution and regulatory durability take precedence over branding. Despite the expansion of digital rails, physical gold has experienced a significant surge in the face of geopolitical tension. Warren positions gold not just as an asset, but as a fundamental element of cultural infrastructure. “Dowries used to be paid in gold,” she stated. “It’s gifted.” It represents a significant cultural legacy. “It’s the sense that gold is useful in addition to being valuable.” The psychological layer is undoubtedly significant during periods of instability. The notion that stablecoins might not require a peg to fiat presents an intriguing possibility. “Let’s not forget a stablecoin can be pegged to anything,” she stated. “We’ve assumed that has to be fiat.” “It does not at all have to be fiat.” Amidst the fluctuations of sovereign debt and the backdrop of geopolitical tensions, the conversation around alternative pegs may gain significant traction once again. “Time will tell,” she stated.