Regional banks face stablecoin deposit risk, Tassat CEO says

Tassat CEO Glen Sussman said regional banks’ stablecoins strategy is too focused on building payment rails and not enough on protecting deposits. In a PYMNTS “Monday Conversation” with CEO Karen Webster, Sussman warned that if stablecoins scale to $5 trillion or $10 trillion, reserve flows could move deposits away from regional and community lenders toward the largest financial institutions.

Sussman said the banking industry has shifted quickly from avoiding blockchain discussions to treating digital-asset planning as a board-level requirement. “For two or three years, you literally couldn’t mention the word blockchain inside of a bank without getting thwacked in the head,” he said. “And now all of a sudden, everybody’s getting thwacked in the head for not having a digital-asset strategy.”

That reversal has produced many pilots and infrastructure projects, according to Sussman, but less evidence of firm strategic commitment outside the biggest global banks. He described much of the activity as “optionality preservation,” with institutions testing models, gaining expertise and avoiding irreversible choices.

How could stablecoins affect regional bank deposits?

Stablecoins are digital tokens designed to maintain a stable value, usually by holding reserves such as cash and high-quality liquid assets. Sussman’s concern is that those reserves must sit at financial institutions with custody capacity, balance-sheet scale and round-the-clock operational systems.

At present, he said, stablecoin reserves are small compared with the overall U.S. deposit base. If the market reaches trillions of dollars, he argued, those backing assets could concentrate at large institutions rather than remain at local or regional banks that use deposits to support lending in their markets.

“When you’re talking about $5 trillion, $10 trillion of stablecoin scale, that giant sucking sound is going to be all the deposits leaving all of the regional and community banks,” Sussman said.

Sussman said banks should distinguish between owning infrastructure and preserving their commercial relationships. He said tokenized deposit networks without users, or stablecoin connectivity that duplicates services larger rivals already provide, may not strengthen a bank’s business. “Banks need to be focused on building their businesses, not just building pool infrastructure,” he said.

What is Tassat building for stablecoin reserves?

Tassat, which previously operated blockchain-based settlement platforms for Signature Bank and Customers Bank, is now organized around digital-asset capital markets, tokenized bank products and stablecoin infrastructure, according to Sussman. Its Lynq network is a real-time settlement and collateral system backed by tokenized Treasuries, and the company is also supplying technology for an interbank tokenized-deposit effort.

For the regional bank deposit issue, Sussman pointed to Project NENYA, which Tassat introduced in July 2026 and plans to launch in early 2027. He said NENYA is intended to let stablecoin issuers distribute reserves across cash deposits and tokenized high-quality liquid assets, while allowing banks to compete for those balances.

The mechanism is closer to a market for reserve deposits than a new payment rail. Sussman said stablecoin issuers currently tend to place reserves where existing infrastructure can support them, which favors the largest players. Under NENYA’s premise, a midsize bank could compete for stablecoin reserve deposits on price and terms, as it would for other commercial deposit accounts.

Sussman also said he expects token issuance and token movement to become more commoditized. If that happens, he said, advantage will depend less on the rail itself and more on liquidity, distribution and applications. “What everybody’s focused on today is mind share and market share,” he said. “And that’s ultimately where the game is won.”

Will customers use stablecoins?

Webster said the projections depend on commercial customers deciding stablecoins are better than current payment methods. “Someone has to think that they’re good enough or better than what they’re using today in order to drive the demand,” she said.

Sussman said many applications that would support stablecoin adoption have not yet been developed. “Stablecoins are going to need to thrive on programmatic use cases and applications, many of which are yet to be developed,” he said.

His argument for smaller banks is therefore restrained: test digital-asset capabilities where useful, but do not confuse infrastructure spending with a deposit strategy. For regional and community lenders, he said, the central issue is whether they can keep competing for customer balances as stablecoin reserves grow.

This story draws on original reporting from PYMNTS.