How Stablecoins Use Blockchain and Data Streaming to Power Digital Money

For years, the crypto spotlight has been on Bitcoin, Ethereum, and countless altcoins. Most of the attention went into price speculation, not real business adoption. Yet in the background, blockchain and smart contracts have been quietly maturing. The next phase of that evolution is now unfolding: the rise of stablecoins as an infrastructure layer for the financial system. Unlike volatile cryptocurrencies, stablecoins are designed for reliability. They connect traditional finance with the digital world. And behind every serious stablecoin stands a real-time data backbone: one that continuously streams, processes, and validates transactions. A Data Streaming Platform powered by Apache Kafka and Apache Flink is essential for this. This article explains why.

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Understanding Stablecoins: Digital Money with Real Value

A stablecoin is a digital token whose value is tied to a reference asset such as the U.S. dollar or the euro. This link is maintained through fiat reserves like cash or short-term Treasuries, or through on-chain mechanisms. The purpose is simple: stability. Where Bitcoin fluctuates wildly and Ether reflects network demand, a stablecoin aims to keep one token equal to one unit of fiat.

This stability makes stablecoins useful for payments, settlements, and smart contracts. They behave like money but move with the speed of blockchain. That combination now attracts not only crypto traders but also banks, fintechs, and governments.

Unlike Central Bank Digital Currencies (CBDC), stablecoins are issued by private companies rather than central banks. CBDCs represent official government money in digital form, directly backed and controlled by the central bank. Stablecoins, in contrast, rely on reserves and trust in the issuer’s governance. This makes them more flexible and globally accessible, but also subject to different regulatory and operational risks.

How Stablecoins Are Becoming a Trillion-Dollar Market in Global Finance

Stablecoins have become one of the fastest-growing areas in digital assets. According to CoinGecko, a leading platform that tracks cryptocurrency prices and market data, the total market capitalization now exceeds 310 billion USD at the time of writing this article. Tether (USDT) remains the dominant player with around 179 billion USD in circulation. It is a U.S. dollar–pegged stablecoin widely used for trading and liquidity across global crypto markets. Circle’s USDC follows as the leading regulated stablecoin. It is fully backed by cash and short-term U.S. Treasuries, designed for compliance and transparency, often preferred by institutions and fintech companies. Together, these stablecoins form the foundation of digital finance, enabling instant settlement, cross-border payments, and liquidity for decentralized and traditional markets alike.

Reuters recently reported that almost 90 percent of all stablecoin transactions are used to move funds between crypto markets. Only 6 percent of transactions involve real-world payments for goods or services. The rest are often linked to high-frequency trading, betting platforms, or unregulated transfers.

Despite that limited use in commerce, momentum is growing quickly. Circle, which went public in mid-2025, reported 658 million USD in revenue and 251 million USD in profit in Q2 2025. An excellent proof that stablecoins can generate significant income through reserve management and treasury yields (Axios, 2025).

Analysts from JP Morgan expect stablecoins to create 1.4 trillion USD in additional dollar demand by 2027 (Reuters, 2025). Citigroup goes even further, forecasting issuance of up to 4 trillion USD by 2030 (Citigroup Report).

So far, the stablecoin economy has been almost entirely U.S. dollar-based. Roughly 99 percent of all circulating stablecoins are tied to the dollar (Reuters, 2025). But that dominance is starting to face competition.

In October 2025, a consortium of ten major global banks (including Bank of America, Deutsche Bank, Goldman Sachs, UBS, Citi, MUFG, Barclays, TD Bank, Santander, and BNP Paribas) announced a joint initiative to explore stablecoins tied to G7 currencies (Reuters, 2025). At the same time, a separate group of European banks, among them ING and UniCredit, is developing a euro-denominated stablecoin (Reuters, 2025).

Together, these efforts signal that traditional finance is no longer observing blockchain from the sidelines. It is entering the field, building infrastructure that connects regulated banking with digital currency.

Stablecoins Move Beyond Trading into Enterprise Applications

Today’s stablecoins mostly serve as settlement tools in crypto markets. Tomorrow, they will drive enterprise transactions. Imagine instant payroll for freelancers worldwide, automated supplier payments in trade finance, or real-time settlement in securities clearing.

Stablecoins can also act as programmable cash inside smart contracts, releasing funds only when certain conditions are met. For example, after shipment confirmation or risk checks.

Banks and fintechs already pilot internal stablecoin systems for cross-border cash management. Clients can move liquidity between subsidiaries at any hour, bypassing cut-off times. In trade finance, tokenized deposits could enable automatic payment to service providers when goods reach a port, verified by IoT data.

These examples show how stablecoins are becoming core components of enterprise applications. They enable automation, real time settlement, and new ways to manage money across global operations.

Why Banks Build Their Own Stablecoins

Banks see stablecoins as a way to modernize payments and liquidity management. By issuing their own digital currency, they can enable instant transfers, 24/7 liquidity, and programmable payments within a regulated framework. A bank-backed stablecoin also gives full control over money flows and reserve management.

Yet this approach introduces complexity. The Bank of England and the European Central Bank have both warned that private stablecoins could create risks for monetary policy and financial stability (Reuters, 2025). To avoid market fragmentation, ten major global banks — including Bank of America, Deutsche Bank, Goldman Sachs, UBS, Citi, MUFG, Barclays, TD Bank, Santander, and BNP Paribas — are now exploring a shared stablecoin model tied to G7 currencies (Reuters, 2025). This consortium approach would create interoperability and consistent regulatory standards across institutions.

Blockchain: The Infrastructure Behind Stablecoins

The technical foundation for these initiatives varies. Most public stablecoins, such as Tether (USDT) and USD Coin (USDC), operate on open blockchain networks like Ethereum, Solana, or Tron. These blockchains act as shared ledgers that record every transfer, mint, and redemption on-chain for anyone to verify.

Banks and large financial institutions, however, often favor private or permissioned blockchains to protect confidentiality and meet compliance requirements. JPM Coin runs on Onyx, JPMorgan’s internal blockchain network for institutional payments. Societe Generale’s EUR CoinVertible, built on Ethereum but under restricted access, follows a similar model. Singapore’s Project Guardian also uses permissioned networks to test cross-border settlement and asset tokenization between regulated entities (MAS Project Guardian).

Some banks skip blockchain entirely and experiment with tokenized deposits: digital versions of customer balances represented in existing systems. These tokens behave like stablecoins but are managed through a traditional event-driven architecture rather than distributed ledgers or blockchain. Citi, for instance, treats tokenized deposits as a short-term priority for delivering programmable payments while staying within the traditional regulatory perimeter (Reuters, 2025).

In summary, most stablecoins use blockchain, but not all. The technology depends on how much transparency, control, and regulation the issuer requires. Whether based on a public chain, a permissioned ledger, or an internal streaming system, the goal is the same: to build real-time, compliant, and resilient financial infrastructure. Achieving that requires continuous, trusted data synchronization — something that a modern Data Streaming Platform provides.

Why Data Streaming Is Essential for Stablecoins

Stablecoins usually run on a public or private/permissioned blockchain, but their backbone is an event-driven architecture. Every mint, transfer, redemption, and audit event must flow through multiple systems: ledgers, risk engines, compliance tools, accounting platforms, and external banking APIs. A Data Streaming Platform (DSP) powered by Apache Kafka and Flink can orchestrate this data in motion.

Data streaming provides real-time ingestion, transformation, and monitoring of millions of events per second. They guarantee data consistency and traceability, which is crucial for financial compliance. With exactly-once semantics, Kafka ensures that each event, like a token mint, a redemption, or a reserve update, is processed once and only once. Flink adds real-time analytics: fraud detection, anomaly scoring, reserve reconciliation, and instant reporting.

For a stablecoin platform, this means that minting, burning, and transaction validation can happen reliably and immediately. Reserve data from custodians can be streamed into dashboards to verify that every token remains fully backed. Regulatory audits and public transparency reports can be generated from the same live stream of events.

Integration is another key advantage. Stablecoins must connect with banking systems, payment gateways, exchanges, and compliance providers. Kafka’s wide API and connector ecosystem allows all these systems to publish and consume real-time data without building fragile point-to-point interfaces. As the ecosystem grows, Flink pipelines can enrich transaction data with identity checks, sanctions screening, or liquidity metrics before the event even reaches the blockchain.

Data streaming also supports interoperability. If a bank stablecoin interacts with other tokens (for example, a G7-pegged coin or a partner bank’s deposit token), Kafka can synchronize events across chains or networks. The result is a real-time, multi-asset payment rail built on continuous data.

Apache Kafka and Blockchain

I published a comparison of Data Streaming with Apache Kafka and different Blockchains a few years ago. Stablecoins did not exist at at that time. But the article is still relevant to understand how Kafka and blockchain complement each other.

Apache Kafka is not a blockchain. But it shares many of the same architectural traits that make blockchains powerful. Kafka provides a distributed, immutable log that can replicate data across clusters for high availability. It also supports role-based access control and decouples producers and consumers to allow flexible, scalable data flows across systems.

These characteristics make Kafka a strong foundation for many enterprise use cases often associated with blockchain, such as reliable data sharing and auditability across multiple systems.

Real time data streaming sets Apache Kafka apart from most blockchains. While many blockchains struggle with scalability or latency, Kafka handles both efficiently, even for transactional workloads and synchronization with non real time systems:

However, Kafka lacks three key features that define true blockchain networks:

1. Tamper-proof guarantees: Kafka data can be changed by those with permissions, unlike blockchain’s cryptographic immutability.
2. Encrypted payloads: Kafka focuses on performance and integration, not full cryptographic privacy.
3. Deployment across independent organizations: Kafka typically runs within one company’s control, while many blockchains are designed for trustless collaboration between multiple parties.

In short, Kafka can complement but not replace blockchain. It’s ideal for trusted, real-time enterprise data streaming, while blockchains remain essential for multi-party environments requiring trust, transparency, and cryptographic integrity.

Together, data streaming and blockchain form a powerful foundation for building a stablecoin platform that combines real time transaction processing with secure, verifiable record keeping.

A Realistic Bank Use Case: Stablecoins, Data Streaming, and Real-Time AI

Imagine a large international bank developing its own stablecoin to modernize cross-border payments and cash management. Such an initiative would require not only blockchain technology but also a data streaming platform to connect systems, process transactions in real time, and feed AI models with fresh contextual data.

The system could operate across three layers:

1. Issuance and Transaction Layer: This layer manages the creation and redemption of the bank’s stablecoin. Each event, whether minting, burning, or transfer, passes through Kafka as the central event bus. It connects front-end requests, reserve verification, and blockchain transactions in real time. Flink processes these events to detect anomalies, prevent double issuance, and provide a continuous audit trail. The same stream supplies contextual input to AI models for fraud detection and risk scoring, improving security without slowing transactions. This layer integrates directly with blockchains such as Ethereum or Solana, ensuring that on-chain transactions remain synchronized with off-chain systems in real time.
2. Services and Compliance Layer: The second layer governs reserves, custody, KYC/AML, and regulatory reporting. Streaming pipelines ensure that every change in reserve status, customer data, or risk exposure is propagated instantly across systems. AI systems trained on streaming data can identify suspicious behavior, automate compliance checks, and generate live reports for auditors or regulators. Instead of static end-of-day reports, compliance operates continuously and contextually.
3. Client Experience and Integration Layer: This layer exposes APIs and dashboards to corporate customers and fintech partners. Clients can use the stablecoin for instant treasury operations, supplier payments, or liquidity transfers between subsidiaries; all powered by real-time event streams rather than overnight batch updates. AI assistants use streaming data to provide dynamic insights: predicting liquidity needs, suggesting optimal settlement routes, or flagging anomalies in transaction behavior.

This architecture does not replace a bank’s core systems; it augments them. Most banks still rely on mainframes for mission-critical workloads such as payments, ledgers, and customer records. A data streaming backbone provides the 24/7 integration layer between this legacy mainframe environment and the new digital world to synchronizing blockchain transactions, AI-driven analytics, and operational workflows in real time.

Over time, the same foundation can support tokenized deposits, programmable trade payments, or interbank stablecoin transfers. Once data streaming and AI are embedded into the stablecoin platform, the bank gains real-time agility across all operations. Every decision, transaction, and compliance check then runs on fresh, contextual data instead of static reports.

The Path Forward for Stablecoins and Data Streaming with Agentic AI

The future of stablecoins goes far beyond speculation. It belongs to programmable, compliant, and data-driven financial systems. Banks and fintechs will not succeed with blockchain alone. They will succeed when blockchain connects to live, contextual data that flows continuously, securely, and transparently.

Data streaming provides that foundation. Apache Kafka keeps information moving in real time across systems as a reliable and scalable event broker. Apache Flink adds continuous intelligence via stream processing. Together, they turn stablecoins from a crypto tool into a core business platform for modern finance.

The next stage will be shaped by Agentic AI – integrated via a data streaming platform leveraging standards such as MCP and A2A. Autonomous financial agents will monitor liquidity, optimize reserves, predict risk, and trigger payments in response to live conditions. These agents rely on accurate, streaming data to act with confidence. Learn more: How Apache Kafka and Flink Power Event-Driven Agentic AI in Real Time.

Data streaming becomes the central nervous system of finance. It connects stablecoins, AI agents, and legacy systems into one responsive, intelligent network where decisions happen instantly and reliably. To see how data streaming with Kafka and Flink drives innovations across financial services, read the full article here: How Data Streaming with Apache Kafka and Flink Drives the Top 10 Innovations in FinServ.

Join the data streaming community and stay informed about new blog posts by subscribing to my newsletter and follow me on LinkedIn or X (former Twitter) to stay in touch. And make sure to download my free book about data streaming use cases that includes various FinServ use cases and customer stories.