O’Connor suggests that while crypto has succeeded as a monetary tool, it has not yet evolved into a form of capital.
By John O’Connor|Edited by Betsy Farber Jun 13, 2026, 4:51 p.m. 3 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on (Unsplash/Alexander Grey)Stablecoins are arguably the most successful aspect of the crypto landscape, achieving recognition as a fundamental monetary tool for transactions, collateral, and settlements.
However, their role has expanded as a form of money rather than as capital.
Currently, approximately $315 billion is held in stablecoins, yet a large portion of this amount functions like digital cash. These assets remain in wallets, on exchanges, or within corporate treasuries, easily transferable yet largely inactive. While we've digitized dollars, we haven't utilized them effectively. For a sector that values efficiency, this should be concerning. In traditional finance, idle cash is typically a temporary state, not a desired one. Institutions usually invest excess balances into money market funds or credit markets to generate returns and enhance capital use. The hundreds of billions that remain inactive in crypto represent a flaw, not a feature.
Efforts to address this issue included introducing crypto-native yield options such as staking rewards, liquidity mining, and leveraged DeFi strategies. Initially, these appeared productive. However, much of this yield was circular, relying on token emissions and new investments rather than genuine economic activity. Convincing investors of this model's sustainability is becoming increasingly challenging. What they seek now is yield that is robust, transparent, and linked to tangible assets.
The next logical step is not merely more crypto-specific yield but integrating onchain dollars with real-world assets. The goal should not be to create better cash wrappers, but rather to connect onchain dollars to familiar assets that investors can evaluate: money market funds, U.S. treasuries, corporate bonds, and credit. This approach focuses on maximizing the utility of onchain dollars without diminishing their usability.
This transition is already underway. Tokenized real-world assets have emerged as a significant category beyond stablecoins, with tokenized treasuries alone valued in the billions. Nevertheless, treasury tokens alone do not entirely resolve the issue; they typically remain distinct investment products. The greater opportunity lies in having a dollar that remains usable across the crypto space while simultaneously generating returns from real assets underneath.
The ongoing policy discussions reflect this shift. When digital dollars can be held, transferred, and used as collateral while earning returns, they cease to be viewed merely as payment instruments. They start to compete with traditional banking products like deposits and cash management accounts. This is why U.S. banking organizations have urged Congress to limit interest, yield, or rewards on stablecoin holdings. This conflict extends beyond product design; it encompasses who controls the economic benefits.
This contention was evident recently when JPMorgan CEO Jamie Dimon criticized parts of the CLARITY Act that would permit crypto companies to provide interest-like rewards on stablecoin holdings without being classified as banks. Dimon contended that any entity accepting deposits should adhere to the same capital, liquidity, reporting, and compliance standards as traditional banks, warning that financial institutions would oppose the legislation. Regardless of differing opinions on this matter, it highlights a crucial point: stablecoins are no longer seen as a niche product within crypto. They are increasingly regarded as competitors to essential banking services, raising a central question: should digital dollars remain merely passive cash equivalents, or evolve into active capital?
Should U.S. regulations prevent this evolution domestically, it will influence the progress of stablecoins within the American market. However, it will not resolve the larger issue. Other regions with distinct regulatory environments will continue to advance this model.
When stablecoins start generating returns from real assets, the dilemma between merely holding dollars and making them work is eliminated. The returns must stem from authentic assets, legitimate underwriting, and transparent reporting, which is what will make them credible.
In the crypto world, every enhancement is often labeled a revolution. This situation is more straightforward. Stablecoins have achieved digital settlement; now they must ensure dollars are utilized more effectively.
StablecoinsNote: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.
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