Why Stablecoins & CBDCs Attract Institutional Investors

• Michael Willson
• April 03, 2025

Digital currencies are changing the way institutions approach payments and investments. Two major forms—stablecoins and central bank digital currencies (CBDCs)—have drawn attention from large investors.

Stablecoins are digital assets tied to real-world assets like the U.S. dollar to reduce price swings. CBDCs, on the other hand, are government-issued digital versions of national currencies.

This article explains why institutional investors are drawn to these assets, with real-world examples and recent developments.

What Are Stablecoins and CBDCs?

How Do Stablecoins Maintain Their Value?

Stablecoins are designed to hold a steady price by linking their value to fiat currencies, commodities, or other reserves. This makes them useful for payments and a safe store of value, avoiding the price swings seen in traditional cryptocurrencies.

How Do CBDCs Differ From Regular Digital Payments?

CBDCs are official digital versions of a nation’s currency, issued directly by central banks. They function just like physical money but in a digital format. Because they are backed by governments, they carry a higher level of trust than privately issued cryptocurrencies.

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Why Do Stablecoins Appeal to Institutional Investors?

Is Regulation Making Stablecoins Safer for Institutions?

Regulatory clarity plays a key role in attracting institutions. Governments have been working on clearer rules for stablecoins. A major step was the Senate Banking Committee’s approval of digital asset laws, which established a proper legal framework for stablecoin issuers. This move reassured institutions that these digital assets were being recognized and regulated.

Can Stablecoins Improve Payment Speeds?

Traditional banking systems often involve slow, expensive transactions, especially for cross-border payments. Stablecoins allow instant transfers at lower fees.

For example, the United Arab Emirates (UAE) introduced AE Coin, a stablecoin backed by the UAE dirham, to improve its payment system and establish itself as a crypto-friendly hub.

Are Financial Institutions Embracing Stablecoins?

Major banks and financial services are entering the stablecoin market. Companies like Bank of America, Standard Chartered, PayPal, Revolut, and Stripe have begun incorporating stablecoins into their systems. Their goal? Faster payments and seamless crypto integration.

Can Stablecoins Generate Investment Returns?

Beyond payments, stablecoins offer opportunities for yield generation. Many institutions use them in decentralized finance (DeFi) platforms to earn interest.

A Coinbase survey found that 84% of institutional investors are using or considering stablecoins for yield generation, currency exchange, and internal treasury management.

Why Are Institutions Interested in CBDCs?

Do CBDCs Offer More Security?

Since CBDCs are issued by central banks, they carry a level of trust and security that private cryptocurrencies cannot match.

For example, the European Central Bank (ECB) is moving forward with plans for a digital euro, designed to offer a reliable digital payment system for businesses and consumers.

Can CBDCs Make Financial Services More Accessible?

CBDCs could improve financial inclusion by making banking services more widely available.

These digital currencies allow direct access to government-backed money through digital wallets, reducing transaction fees and improving payment efficiency. This is a major reason why institutions see them as an investment-friendly innovation.

How Can CBDCs Improve International Transactions?

Projects like mBridge, a multi-CBDC platform developed by several central banks, are working to streamline global transactions.

This system enables instant cross-border payments without relying on intermediary banks, making foreign exchange operations faster and cheaper.

What Recent Events Are Shaping Institutional Interest?

How Is U.S. Policy Supporting Digital Currencies?

In the United States, a new executive order from President Donald Trump, titled “Strengthening American Leadership in Digital Financial Technology,” is boosting the crypto industry.

This policy encourages institutions to use public blockchain networks, engage in crypto transactions, and develop stablecoins pegged to the U.S. dollar.

What Are Lawmakers Doing to Regulate Stablecoins?

Senators Bill Hagerty and Kirsten Gillibrand introduced the GENIUS Act, a bill proposing dual regulations for stablecoin issuers.

This framework would offer clearer guidelines for stablecoin operations, making it safer for institutions to invest in them.

Are Other Countries Advancing Their Digital Currency Plans?

The U.S. government’s support for stablecoins has pushed other nations to accelerate their CBDC projects.

For example, the European Central Bank (ECB) aims to speed up legislative approvals for the digital euro, competing with U.S.-backed digital assets.

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What Real-World Examples Show Institutional Adoption?

How Are Stablecoins Being Used in 2025?

• Russia’s central bank is exploring XRP and stablecoins for trade with BRICS nations, shifting away from traditional financial systems (Watcher Guru, March 17, 2025).
• CME Group launched Solana futures on March 17, signaling growing mainstream acceptance of crypto and stablecoins.
• Standard Chartered announced its own stablecoin plans, aiming to streamline international payments (Bloomberg, February 21, 2025).

How Are CBDCs Gaining Traction?

• China’s digital yuan is already in daily use, with banks fully integrating it into their systems by 2025 (Mid-Day).
• India’s Digital Rupee trials are underway, aiming to reduce cash reliance while drawing institutional interest (Forbes, March 11, 2025).
• The ECB’s digital euro project is nearing completion, with an expected rollout by October 2025.

These developments prove that CBDCs are moving beyond trials and into real-world use, capturing the attention of institutions.

Why Are Stablecoins and CBDCs Important for Institutional Investors?

Stablecoins and CBDCs offer distinct advantages that make them attractive to large investors.

What Makes Stablecoins Valuable?

Stablecoins provide:

• Regulatory clarity through government-backed policies
• Faster and cheaper transactions for cross-border payments
• Integration with major financial institutions
• Yield generation opportunities through DeFi platforms

Why Are CBDCs Gaining Institutional Trust?

CBDCs appeal to institutions because they:

• Have government backing, reducing risks
• Promote financial inclusion, increasing global accessibility
• Improve cross-border payment efficiency, lowering costs

What’s Next for Institutional Crypto Adoption?

Will Stablecoins Become More Regulated?

Governments are pushing for stronger stablecoin regulations to ensure financial stability. More laws are expected, which could further boost institutional adoption.

How Fast Will CBDCs Roll Out?

CBDCs are already launching worldwide, with major economies like China, India, and Europe leading the way. Their wider adoption is only a matter of time.

Are Institutions Ready to Fully Adopt Digital Currencies?

With increasing regulatory support, financial integration, and real-world use cases, institutions are more open to digital currencies than ever before.

Stablecoins and CBDCs are no longer just concepts. They are active tools in modern finance, shaping how institutions transact, invest, and manage assets.