The digitalisation of the asset management space is continuing to evolve at pace. Tokenisation and digital assets are, for instance, increasingly part of the private markets landscape. Now, stablecoins are central to the conversation too.

Despite being around for more than a decade - stablecoins first emerged in 2014 with the introduction of USDT (Tether) - 2026 looks set to be a pivotal year in their journey, with the industry seeing a rapid acceleration in terms of issuance and volume.

A form of privately issued digital asset, stablecoins operate on both public and private blockchains, the underlying principle being that they are a digital currency that can be used for regular and routine transactions because of their stable value.

And, as a recent paper entitled ‘The Impact of Stablecoins’ published jointly by IFI Global and Jersey Finance shows, stablecoins are increasingly adding real value to the alternative investment space, representing a significant opportunity for bringing liquidity, inclusivity and operational benefits to the private markets.

Natural evolution

2025 was a significant year for stablecoins, with the sector growing by 20% in the third quarter of the year (JP Morgan, ‘What to Know About Stablecoins’, September 2025). In fact, the sector’s growth is currently outpacing that of traditional asset classes. Today, it has reached a total market capitalisation of close to US$300 billion (RWA.xyz, February 2026). 

This growth is largely driven by greater adoption by institutional investors, with stablecoins becoming an established part of the investment industry, as investors recognise the benefits they can bring to the investment process and wider infrastructure. 

Key benefits of stablecoins for private funds, for instance, include enhanced liquidity in a sector that has traditionally been highly illiquid, improved investor accessibility, cross-border interoperability and speed. 

At the moment, investing in a private asset fund, for example, is a multi-day process – but the use of stablecoins can deliver significant efficiencies. By enabling near-instant settlement, stablecoins streamline the transfer of value between parties, reduce reliance on traditional intermediaries and deliver cost-efficiencies. 

Furthermore, asset managers can have the option to programme dividend payment or profit distribution through smart contracts. Stablecoins act as the medium of exchange within these contracts, allowing for automated dividend distributions and profit sharing. This can reduce cost and enhance the transparency of fund operations. 

At a time when many private fund managers are facing pressure from rising operational costs (a recent Calastone report forecasts a 32% increase in fund processing costs for asset managers over the next three years, for example) and when they are looking to diversify their investor base, this could be of considerable help.

Most commonly, however, stablecoins are being considered in connection with tokenisation. Stablecoins are an integral part of tokenisation as they provide a stable medium-of-exchange and near instant settlement for assets on chain, something that has the potential to lead to significant growth in secondary market activity. 

Overall, the appeal of stablecoins is in making private capital nimbler and more attractive to any LPs who are currently put off by the illiquidity in this sector. And the evidence is that uptake will continue to grow in practice - 70% of UK and US private fund managers surveyed for the Jersey Finance/IFI Global report said they were considering incorporating stablecoins into their operational development.

The indications are clear - supporting stablecoin development is a substantial opportunity and represents a natural step in the evolution of the investment funds landscape. Exploring the full opportunity presented by stablecoins, and assessing how to adapt, will be critical for managers in the coming years. 

Challenges

This acceleration in the adoption of stablecoins is not without its challenges, though. Managers and other participants face a number of structural, operational and regulatory issues. 

Cash and treasury management arrangements are an example of this. Managers will be required to create new systems to track, verify and reconcile stablecoin transactions, which will likely be on multiple ledgers, whilst also maintaining their traditional operational processes at the same time. 

Custody and counterparty arrangements are going to be another challenge as stablecoins are not yet fully supported by most traditional regulated custody providers. Managers will need to transition from their existing TradFi service providers to regulated digital asset custodians, who have the infrastructure and experience in supporting the settlement, reporting and compliance of digital assets. In addition, the counterparty risks associated with the stablecoin issuer must be managed, particularly if the issuer is an offshore entity. 

Finally, compliance and regulatory reporting processes are often ill-suited to handle blockchain-based instruments. Stablecoin transactions may well trigger anti-money laundering (AML), know-your-customer (KYC) and sanctions-screening obligations that differ from those applied to traditional payments. Integration with standard reporting systems also remains incomplete, as most financial market infrastructures are built around traditional payment rails, rather than tokenised cash equivalents. 

Critically though, none of these challenges are insurmountable – and from a regulatory perspective, emerging frameworks around the world are signalling a shift towards recognising stablecoins as an integral part of the future financial system.

In the US, for instance, the introduction of the GENIUS Act has given the stablecoin market a clearer regulatory pathway. The Bank of America estimates that there will be a US$75bn bump in stablecoin supply from the introduction of the GENIUS Act alone (CoinDesk, ‘Stablecoin Supply to Grow as Much as US$75B Following Passage of GENIUS Act’, July 2025).

Vital link

Challenge or not, what is clear is that stablecoins are a major part of the new digital infrastructure that is coming to the asset management industry. They are no longer peripheral; they act as a vital link between traditional and decentralised finance and have the potential to be transformational to the private markets. 

Foundational to liquidity, operational efficiency and inclusivity in private markets, in 2026 stablecoins look set to play an increasingly important part in the next era of private capital formation. Against that backdrop, asset managers will not be able to ignore them.

The report, ‘The Impact of Stablecoins’, can be found here.