Why Stablecoins May Never Escape Traditional Banking Risks: Frgmnt CEO
As stablecoins transition from decentralized finance tools to essential infrastructure for accessing U.S. dollars, an expert says their next phase of adoption depends on making blockchain technology invisible to the end user.
Key Takeaways
- Following 2023 bank failures, Frgmnt CEO Aurélien Roussel urged stablecoin issuers to diversify reserves.
- Tether leads global trade, but MiCA regulations force issuers to build 100% compliant local infrastructure.
- Sub-cent Layer 2 transaction costs will drive stablecoins beyond payments into yield-generating capital.
From Speculative Tools to Digital Dollar Access
When the first wave of decentralized finance (DeFi) swept through the global economy, stablecoins were primarily viewed as speculative lubricants, but that narrative is rapidly fading away. In emerging markets and across global commercial corridors, stablecoins are about access to the U.S. dollar.
As global macroeconomic environments shift, the mainstream adoption of digital fiat is pivoting from speculative yield-chasing toward everyday economic utility. Yet, as billions of dollars shift into digital formats, a fundamental financial question emerges: What happens to those dollars when they are not being used?
Aurélien Roussel, co-founder and CEO of Frgmnt, a stablecoin infrastructure company, believes the industry stands at a critical juncture. Having previously served as chief operating officer at Bricks.co, Roussel understands both the frictions of legacy finance and the power of technological scale.
Indeed, for users in emerging economies, the stablecoin value proposition has never been about complex DeFi protocols. According to Roussel, it is about basic economic survival that is protecting purchasing power against local currency depreciation, and moving capital without the crushing friction of traditional banking rails.
“I think the biggest shift is that stablecoins are becoming less about crypto and more about access to dollars,” explained Roussel. “That user doesn’t necessarily care about DeFi yields. They care about reliability, liquidity, and cost.”
According to Roussel, the next phase of global adoption will occur through products where the underlying blockchain becomes nearly invisible—embedded directly into remittances, payroll, corporate treasury, and merchant settlement.
“Once a user or business already holds digital dollars, a natural question follows: What happens to those dollars when they are not being used? This is where I think the distinction between transactional liquidity and productive liquidity becomes important,” he said. “The same dollar can remain liquid and available for payments while being deployed into a carefully managed strategy when it is idle.”
Rather than forcing mainstream users to become DeFi experts, Roussel argues that the industry’s job is to make the underlying infrastructure robust enough that users benefit automatically, without ever having to think about the underlying technical components.
Managing Banking Sector Counterparty Risks
The banking failures of 2023 exposed a core paradox of fiat-collateralized stablecoins: While they exist as decentralized, programmable assets onchain, they remain anchored to highly centralized, legacy banking institutions offchain.
This raises an important question: Can fiat-backed stablecoins ever truly decouple from traditional banking risk? Roussel is pragmatic.
“I don’t think a fiat-backed stablecoin can ever be completely decoupled from the traditional financial system. The question is how that dependency is structured and how much resilience is built around it,” he said. “The lesson from previous banking failures is that stablecoin infrastructure needs to assume that individual banking counterparties can fail.”
To safeguard against systemic failures, Roussel points to modular architecture as the essential roadmap for stablecoin issuers.
One way of achieving this is through diversification of banking relationships to eliminate single-point-of-failure counterparty risk. Segregation of reserves, transparent and real-time attestations, and operational redundancy across multiple liquidity venues and redemption mechanisms are other safeguards against systemic failures.
“Blockchain doesn’t eliminate traditional financial risk,” Roussel noted. “What it can do is make parts of the financial architecture more transparent, programmable, and auditable. The objective should therefore not be to pretend that stablecoins are completely independent from traditional finance, but to make those dependencies visible, diversified, and manageable.”
Tether’s USDT has long maintained a dominant grip on global non-Western trade due to deeply entrenched network effects. While regulatory compliance and institutional structuring are often touted as competitive moats, Roussel emphasized that compliance alone will not automatically unseat entrenched liquidity.
“Network effects are extremely powerful in money,” said Roussel. “Once a stablecoin has deep liquidity, broad exchange support, merchant acceptance, and strong distribution in a particular market, replacing it becomes difficult.”
However, Roussel does not view the market as a winner-take-all arena. Instead, he foresees a segmented ecosystem where different stablecoins specialize in distinct use cases ranging from retail payments and corporate treasury management to institutional settlement and long-term savings.
“For institutional users in particular, the decision is likely to depend increasingly on transparency, liquidity, regulatory access, custody, redemption, and integration with existing financial infrastructure,” Roussel said. “So I expect the stablecoin market to become more segmented rather than simply converging on one global winner. The important competitive advantage will increasingly be distribution and infrastructure, not simply the token itself.”
Navigating Regulatory Balkanization
As jurisdictions establish localized legal frameworks, such as Europe’s Markets in Crypto-Assets (MiCA) regulation and various regional initiatives, issuers face a fragmented landscape. This regulatory fragmentation forces infrastructure to adapt across geographic lines.
Yet, Roussel believes that regulatory friction will not halt global adoption, drawing a direct parallel to the evolution of the broader internet.
“The internet itself operates across very different legal systems,” Roussel said. “What emerged was not one global regulatory framework, but common technical infrastructure combined with local rules at the points where that infrastructure interacts with regulated economies. I expect something similar with stablecoins.”
The primary threat, according to Roussel, is the potential creation of isolated, jurisdiction-specific technical silos that destroy cross-border interoperability.
“The industry should aim for regulatory interoperability, even if full regulatory harmonization is unrealistic,” he advocated. “Standards around reserve transparency, attestations, identity, compliance, and redemption could become increasingly interoperable across jurisdictions. In that model, the protocol layer remains global, while regulated access points are localized.”
Meanwhile, as central banks globally pilot central bank digital currencies (CBDCs), questions arise over whether sovereign tokens will crowd out private stablecoins. Roussel sees the relationship as collaborative rather than adversarial.
“I see private stablecoins and CBDCs as more likely to coexist than simply compete,” Roussel suggested. “A CBDC can provide a sovereign form of digital money, but money is only one part of the financial stack. Users and businesses also need wallets, distribution, liquidity, cross-border connectivity, payments, credit, and treasury infrastructure.”
In this dual framework, CBDCs offer a sovereign, base-layer digital unit of account, while private stablecoins and commercial layers drive cross-border connectivity, agile platform integration, and tailored financial products.
“If CBDCs become widely used, they could actually reinforce the broader transition toward programmable digital money,” sayid Roussel. “Ultimately, I think the market will be less about CBDC versus stablecoin and more about how different forms of digital money interact with the financial infrastructure around them.”
Layer 2 Scaling and the Shift to Productive Capital
The mass migration of stablecoin traffic to Layer 2 networks and high-throughput Layer 1 blockchains has drastically compressed transaction costs. With sub-cent, near-instant settlement now a reality, the basic economics of issuing and managing stablecoins are undergoing a fundamental transformation.
When transaction fees drop toward zero, moving money ceases to be the primary revenue driver.
“If the transaction itself becomes almost free, issuers and infrastructure providers cannot rely primarily on transaction fees,” Roussel observed. “They will increasingly compete through distribution, liquidity, financial services, treasury products, and the ability to build useful services around the stablecoin.”
This fundamental shift aligns directly with Frgmnt’s mission of transforming stablecoins from passive transactional tools into active, programmable assets.
“A stablecoin shouldn’t just be a cheap way to move dollars. It can become a programmable financial asset that can move, settle, earn, and interact with financial infrastructure,” Roussel said. “And once the marginal cost of moving that dollar approaches zero, the economic value increasingly comes from what you can build around the dollar rather than from the transaction itself. That’s a very important transition for the industry: from cheaper payments to programmable and productive capital.”
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