Stablecoins seen as ideal fit for real-time collateral management
Cryptocurrencies and stablecoins are gaining recognition in the traditional finance (TradFi) space for their ability to streamline payments and increase efficiency in existing financial systems
In finance, collateral management refers to the process of managing the underlying collateral securing other financial transactions, such as loans or derivatives, to mitigate credit risks and ensure smooth transactions.
Digital assets like stablecoins are the “perfect” financial instrument for real-time collateral management, according to a recent pilot by DTCC Digital Assets, which suggests that digital assets, particularly stablecoins, could modernize and simplify this critical function.
“Digital assets really are the perfect use case for collateral management, whether it be uncleared derivatives, clear derivatives, central counterparties, repo, or any other type of collateral,” said Joseph Spiro, product director at DTCC Digital Assets, during a panel at Consensus 2025.
Collateral management requires complicated manual processes due to stringent requirements for locked-up collateral that can only be released to the appropriate parties at pre-set intervals.
“All of that can be accomplished better, faster, more efficiently through digital assets and smart contracts,” Spiro said, adding that “all the manual processing can go away.”
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The pilot, dubbed the “Great Collateral Experiment,” comes as US policymakers work toward clear regulatory frameworks for stablecoins.
On May 14, at least 60 of the top crypto founders gathered in Washington, DC, to support the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act. The bill initially failed to get enough support from Democrats on May 8.
The GENIUS Act seeks to establish collateralization guidelines for stablecoin issuers while requiring full compliance with Anti-Money Laundering laws.
The bill stalled on May 8 after failing to gain support from key Democrats, some of whom have voiced concerns about US President Donald Trump potentially profiting from digital assets through his crypto-related ventures.
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Stablecoins can streamline lending and settlement
Incorporating stablecoins into traditional fiat-backed loans could further streamline TradFi processes, according to Kyle Hauptman, chairman of the National Credit Union Administration.
The programmability of stablecoins could make the loan repayment process more transparent and streamlined for all participants. It is currently a “clunky process where they settle at the end of the month,” Hauptaman said during the same panel discussion, adding:
“Stablecoins and their programmability can make this vastly easier.”
“We not only made life easier for credit unions to settle these things up, you could do it for smaller amounts of money, but the borrower should get a better deal here because now this thing has some of the traits of a large bond issuance. It’s now liquid,” he said.
Another piece of legislation — the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act — passed the House Financial Services Committee on April 2 in a 32–17 vote. The bill awaits scheduling for debate and a floor vote in the House of Representatives.
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