CIO guide to stablecoins: What they are and how to choose

What are stablecoins?

A stablecoin is a type of cryptocurrency. It is functionally a digital asset designed to maintain stable value relative to a reference asset, typically the U.S. dollar.

Types of stablecoins

There are three primary types of stablecoins:

• Fiat-backed. These hold reserves of traditional currency to back each token 1:1. This model resembles bank deposits but operates on blockchain networks. The two dominant players are USDT (Tether) and USDC (Circle).
• Crypto-backed. This type of stablecoin uses cryptocurrency as collateral. This offers decentralization benefits but introduces complexity and volatility risk that makes it less suitable for conservative treasury operations.
• Algorithmic. An algorithmic stablecoin uses code-based algorithms rather than asset backing. This model failed catastrophically when TerraUSD collapsed in May 2022, resulting in the loss of billions in assets.

How stablecoins differ from other cryptocurrencies

Unlike other types of cryptocurrency, such as Bitcoin or Ethereum, which fluctuate wildly in value, stablecoins aim to maintain a consistent value equivalent to the reference asset. This stability makes them suitable for payments, accounting and treasury management.

Bitcoin and Ethereum are designed as stores of value or application platforms with prices determined by speculation. Stablecoins are designed as digital money substitutes optimized for transactions and predictable value.

Enterprise treasurers don't hold bitcoin for working capital because daily price swings create unacceptable volatility. However, they are increasingly holding USDC or USDT as dollar equivalents that settle instantly on blockchain networks. The U.S. GENIUS Act and SEC guidance clarify that compliant payment stablecoins are not securities and are subject to different regulatory requirements than speculative crypto assets.

Why should CIOs care?

Stablecoins have evolved beyond just another type of cryptocurrency into an enterprise payment infrastructure.

Preston Fischer, managing director at FTI Consulting, describes this as "post-cloud plumbing."

"Stablecoins are a practical innovation in bringing 24/7, programmable transaction settlement into existing systems without adding price volatility to balance sheets," Fischer said. "Key to realizing this value is establishing a well-integrated, well-governed and auditable system, which is squarely within the CIO's remit."

There are four key reasons why CIOs should care.

1. Enterprise payments

Stablecoins offer the potential for lower costs and faster settlement times for cross-border payments.

"For CIOs in retail and SaaS, some payments providers now enable stablecoins checkout, so customers can pay in USDC while merchants still receive dollars," Fischer noted. "This is useful for international expansion without changing bank setups."

Cristiano Ventricelli, vice president of decentralized finance and digital assets at Moody's Ratings, noted that there are also practical treasury applications.

"A corporate treasurer at an international firm could use stablecoins to pay foreign suppliers almost instantaneously and at reduced costs compared to conventional banking channels," Ventricelli said.

2. Treasury and finance integration

Stablecoins enable 24/7 treasury management with real time positioning across global markets.

"As CIOs prioritize optimizing the risk-return profile of institutional portfolios or corporate treasuries, stablecoins present innovative possibilities for improving traditional cash management," Ventricelli explained. "The attributes of stablecoins, such as near-instant settlement, cross-border transfer capabilities and 24/7 market accessibility, could mitigate idle cash drag and settlement risk."

Ventricelli also noted that stablecoins serve as a medium for settling digital assets, including tokenized securities and cryptocurrencies, enabling portfolio managers to efficiently transition between cash and investment securities on a unified platform, reducing frictions and delays.

3. Technology modernization

Stablecoins offer integration capabilities that legacy payment systems lack. Unlike traditional wire transfers, which require batch processing and adhere to banking hour constraints, blockchain-based stablecoins enable programmatic payment initiation, real time transaction tracking, and automated reconciliation through standardized APIs.

"CIOs who treat stablecoins as part of core payments infrastructure will be the ones who unlock real working-capital benefits and operational resilience," Fischer said.

4. Risk and compliance

Regulatory frameworks are evolving rapidly, creating both clarity and compliance obligations that CIOs must navigate to ensure effective management.

"For CIOs, stablecoins also deserve attention because they can change how money moves inside and outside an organization," Brown said. "CIOs must help build the guardrails that keep the organization compliant and safe."

How to choose the right stablecoin

Selecting a stablecoin isn't about cryptocurrency speculation. It's an infrastructure decision that determines your organization's risk exposure, regulatory compliance and operational capabilities. The decision requires evaluation across six critical dimensions:

1. Regulatory standing: Legal clarity, licensing and jurisdiction

Start with regulatory alignment. It's critical to understand where the issuer is domiciled, who supervises them and whether that matches the jurisdictions where your business operates. For EU operations, MiCA compliance is mandatory now. For U.S. operations, compliance with the GENIUS Act becomes essential by January 2027.

2. Reserve backing and transparency: Audited reserves and issuer trustworthiness

Reserve quality directly determines whether an organization can recover its investment during stressful events.

Fischer suggests that organizations ask if the issuer publishes regular, independent attestations backed by cash and treasuries, and has redemption worked under stress.

Going a step further, Brown added that organizations should verify whether reserves are cash-equivalent, segregated, and independently audited, ideally on a daily or near real time basis.

3. Technology and interoperability: Integration with enterprise systems

Technical infrastructure determines operational capabilities.

Fischer noted that it's critical to ask which blockchains are supported and if your organization's payment providers or treasury systems accept them.

Additionally, Brown suggests that organizations evaluate whether to use the stablecoin for the FedNow payment service, real time payments or eventually central bank digital currency. Also, if it scales without driving up fees.

For enterprise integration, evaluate whether your ERP, treasury management system and payment processors support the stablecoin.

4. Adoption and ecosystem: Who else is using it

Network effects matter in payments infrastructure. A stablecoin widely accepted by exchanges, payment processors, treasury platforms and business partners provides more utility than one with limited integration.

5. Security and governance: Protections against fraud, cyber risks and failures

Corporate governance has a direct effect on counterparty risk and the likelihood of experiencing fraud, loss or business disruption. For institutional enterprises, transparent governance from publicly traded, regulated issuers substantially reduces reputational and operational risk. Private issuers require enhanced due diligence and ongoing monitoring.

Brown emphasizes that CIOs must also consider factors beyond the issuer itself. That includes third-party risk management as it relates to wallet providers, stablecoin issuers and custodians. The entire infrastructure stack requires a security assessment.

6. Cost and efficiency: Transaction costs and settlement times

While cost savings often feature in stablecoin value propositions, speed is also important.

Transaction costs vary by blockchain network and use case. For payment use cases, compare all-in costs, including costs such as:

• On-ramp costs: Converting fiat to stablecoin.
• Transaction fees: Such as gas fees for blockchain transfers.
• Foreign exchange spreads: When converting between currencies.
• Liquidity provider fees: If routing through decentralized exchanges or liquidity pools.
• Off-ramp costs: Converting stablecoin back to fiat.

Case examples

Among the publicly disclosed examples of stablecoin in real-world deployment is Stripe, which purchased Bridge, a stablecoin infrastructure provider, for $1.1 billion in February 2025. Within months, Stripe partnered with Visa to issue stablecoin-linked cards. Stripe also announced Open Issuance, which enables businesses to launch their own stablecoin in a matter of days.

There are concrete examples that demonstrate how enterprises are using stablecoins today across diverse industries and use cases.

"Enterprise adoption is already moving from pilot to production among major financial institutions and retailers," Fischer said. "These are not speculative experiments. They're live examples of how stablecoins are helping to modernize cross-border settlement, vendor payouts and treasury operations in ways CIOs can immediately translate into efficiency and resilience."

There are also some practical treasury operations according to Ventricelli. "A corporate treasurer at an international firm could utilize stablecoins to pay foreign suppliers almost instantaneously and at reduced costs compared to conventional banking channels," Ventricelli said. He said that they could also optimize idle cash by investing in tokenized money market funds without needing to convert stablecoins back into fiat currencies.

Another emerging market use case cited by Ventricelli is the mitigation of risk associated with holding foreign currencies in unstable economies.

"Creating a reserve of stablecoins with high credit quality could help mitigate foreign exchange devaluation in subsidiaries located in emerging markets where maintaining a USD-denominated bank account is impractical," he said.

This addresses a persistent challenge for multinational corporations operating in countries with currency controls or unstable local currencies.

USDC vs. USDT

There are currently two primary stablecoins that dominate the landscape -- USDC and USDT. The choice between the two dominant stablecoins comes down to regulatory posture versus market reach.

"USDT is predominantly utilized in emerging markets where access to USD is limited and extensively employed on cryptocurrency exchanges as the default USD-pegged trading pair due to its substantial secondary market liquidity," Ventricelli explained. Meanwhile, USDC has gained significant traction in regulated and institutional markets, where it is favored for settling tokenized securities, such as funds, due to its transparent and regulatory-aligned nature as a digital cash option.

Fischer noted that USDC is often considered for transparency, U.S. regulatory alignment and integrations with global partners. While USDT is entrenched in exchange trading and emerging market flows.

Fischer said that for CIOs, the decision comes down to use case -- regulatory clarity and auditability or liquidity and global reach. "Many enterprises may support both, steering specific use cases to the asset that best fits risk appetite," he said.

Risks and challenges CIOs must consider

There are several risks and potential challenges that CIOs should consider when evaluating stablecoins.

• Regulatory uncertainty. While the U.S. GENIUS Act and EU MiCA provide frameworks, implementation details continue evolving. The Treasury Department's September 2025 rulemaking on illicit finance detection, foreign regime comparability, and federal versus state oversight won't finalize until 2026, with a compliance deadline of January 2027. Additionally, multi-jurisdictional complexity remains challenging. The same stablecoin may be classified differently across jurisdictions
• Counterparty and operational risk. Stablecoin holders are typically unsecured creditors in the event of an issuer's failure, not FDIC-insured depositors. While the GENIUS Act establishes bankruptcy priority and requires full reserves, recovery ultimately depends on the quality of the reserves and the outcome of legal proceedings.
• Integration complexity with legacy systems. Connecting blockchain-based stablecoins to traditional banking, ERP, treasury and accounting systems can potentially introduce integration complexity.
• Market perception and reputational risk. Despite growing institutional adoption of stablecoin, there are some market perception risks, as cryptocurrency overall maintains an association with volatility and fraud in public perception.

The CIO role in stablecoin adoption

CIOs have multiple areas of responsibility, including handling technology infrastructure requirements.

Stablecoins can and should be part of modern digital infrastructure. Unlike other forms of cryptocurrency, stablecoins are not speculative; rather, they should be part of infrastructure modernization for digital transactions.

"CIOs are not just implementers; they are strategic partners in deciding 'if' and 'how' stablecoins are adopted safely and at scale," Brown said.

While the technological elements of stablecoin are important, there are also broader implications, which is why the CIO should work in a collaborative approach with other stakeholders in the organization. Brown suggests that the CIO's recommendation on stablecoin should be developed in conjunction with risk, compliance and finance leaders to ensure governance, stress testing and clear exit plans if the coin's risk profile changes.

Looking forward, the outlook is likely that stablecoins will emerge to become a stable building block for enterprise digital finance, according to Brown.

"Stablecoin adoption is not a crypto trend, it's part of the ongoing modernization of how money moves and isn't going anywhere," Brown said. He added that CIOs who approach it with clear business goals, strong risk controls and compliance by design will help their organizations innovate responsibly while maintaining the trust of regulators, boards and customers.

 Sean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He has pulled Token Ring, configured NetWare and been known to compile his own Linux kernel. He consults with industry and media organizations on technology issues.