Behind closed doors, banks are stress-testing the future of money — building “stablecoin sandboxes” where tokenised cash can move, settle and interoperate across rival blockchains.
Inside the world’s leading banks, engineers and treasury teams are building the wiring for tokenised cash to move across multiple networks. Their starting assumption is blunt but useful: there is no single blockchain for finance.
Different rails will likely dominate different functions — corporate payments here, FX settlement there, tokenised securities somewhere else. That means assets must move between ledgers that don’t naturally speak the same language, without getting stuck.
This is the future for stablecoins: not used as a store of value, but as a settlement asset. As noted by Yuri Hamano, corporate tax director at BDO UK, transaction trends already point to this dominant use case: in September, Morgan Stanley put the stablecoin market cap at around $300 bn, while a16z’s 2025 State of Crypto tallies roughly $46 trn of annual stablecoin transaction volume. That velocity is textbook for a high-frequency settlement asset.
“This is a pivot from the traditional use case of stablecoins, which was that they would be stores of value – for example, in emerging countries struggling with hyperinflation, where they could be an alternative to a volatile local currency,” says Hamano.
“The narrative has certainly shifted towards settlement, driven by the regulatory environment – particularly the Genius Act in the US and MiCA in Europe, which have helped provide the critical mass to consider stablecoins as a legitimate settlement asset.”
Most recently, the Financial Conduct Authority designated stablecoins as a strategic priority for 2026, committing to progress work on UK-issued sterling stablecoins.
This is also where crypto grows up, establishing its place at the heart of the financial system.
“Bitcoin is something of an anomaly in that it’s digital gold; it’s not designed to transact,” says Marcus Treacher, executive chairman and CEO at RTGS.
“If you look at what people truly care about within old fashioned money, it’s your salary payments, your mortgage payments, even just paying your bus fare. Settlement is the oil of the financial world; it drives everything. Crypto moving into that space is a coming of age, and stablecoins are the spearhead.”
So, stablecoins are already used to trade fast, settle instantly and work around traditional banking hours. Banks see those benefits at the edge of their own businesses — and sometimes through direct engagement — which creates a very specific assignment: prove this behaviour works safely within banking guardrails. Hence: stablecoin sandboxes.
The quiet response
A stablecoin sandbox, also known as a proof of concept (POC) environment, is an internal test environment where banks simulate how tokenised cash operates in practice. They are used to simulate cross-chain settlement, liquidity provisioning, compliance and other functions across rails. Inside these sandboxes, institutions replicate the crucial elements of traditional finance to see how they behave in a tokenised context.
John Hallahan, Head of Business Solutions & Advisory EMEA at Fireblocks, describes it simply: banks are “building the infrastructure to create wallets for customers, and to deploy the smart contract in relation to the stablecoin – for instance, the rules around how you create and burn tokens.”
Sandboxes are a dress rehearsal for the activities that define banking itself: cross-border settlement, liquidity management and regulatory compliance, all in a controlled environment.
Take cross-border settlement: one of the key problem areas stablecoins promise to solve. Large corporates still move excess cash only during banking hours, and intraday liquidity management locks up billions in idle reserves. In sandboxes, banks can experiment with how to make those limitations disappear. If they are successful, the resulting public launches could revolutionise global payment capabilities.
The opportunity is broader than just speed. Treacher, of RTGS, notes: “A blockchain-supported asset has more built-in intelligence, which allows you to be more creative – things like managing the way an asset can be utilised. If you want to encourage usage in a certain way, for example, you can create programming links between the funds and the events. You can build it into supply chains, into commercial propositions.”
Legacy money, Treacher adds, is still tied to central or commercial banking systems. “Digital money breaks free of that… It gives you much more optionality and gives the individual much more control over the funds.”
Inside the sandbox
The architecture inside a stablecoin sandbox is typically more flexible than the legacy systems most people associate with finance. These environments are modular and configurable, designed to let teams assemble and reassemble components quickly to test different scenarios.
Each cluster represents a different part of a digital financial system – wallets, payment rails, compliance documentation and orchestration layers – all working together to showcase how tokenised money behaves.
Ryne Saxe, CEO and co-founder at Eco, describes this as the defining feature of the sandbox environment. “The impressive fact about these blockchain testnets and sandboxes is that they’re very modular,” he says. “You can run a cluster of different scenarios through them, and customise your flows accordingly. This is in contrast to the very monolithic server architecture many banks have habitually run.”
That modularity lets banks interrogate the robustness of stablecoin usage even in extreme scenarios. “Banks can run serious stress tests through these environments — things like price shocks, FX conversions, large-scale liquidity sweeps — without putting real customer funds at risk,” adds Saxe.
“And when it comes to compliance, the same rules apply with regard to KYC, AML and so on. Consequently, the test scenarios can factor compliance checks into complex flows, ensuring the necessary data is available and validated throughout.”
In other words, sandboxes let banks build a tokenised mirror image of their existing payment infrastructure – one that is faster, programmable and unconstrained by banking hours. The practical challenge, says Fireblocks’ Hallahan, is making this invisible to the end user: “How do I integrate the wallet into my retail banking app so it doesn’t look like a wallet, it just looks like a different balance of a new asset? How do I make sure that users can transfer easily and without worrying about things like wallet addresses or managing private keys?”
“Success looks like being able to track the integration path into whatever the bank’s systems are at the moment. So being able to add the blockchain platform as a new rail while preserving a solid user experience and adding the benefits of faster payments,” he adds.
“If a bank isn’t using its own stablecoin but rather an external one, it will also be testing technical things like how to get access to that external stablecoin, how to add it into an account, how to transfer it into different customer accounts.”
Choosing the rails
Behind every stablecoin or tokenised deposit test lies the question: which network should carry the assets?
Saxe, of Eco, says the technology has matured to the point that it can serve institutional use cases. “This represents a real shift in capabilities: four or five years ago blockchains were not close. Now they compete for money movement at an institutional scale.”
Many banks, he adds, are running private or permissioned blockchains to secure their own funds – but they also need to interoperate with dollar flows on public chains. “Beyond experimenting with proprietary blockchain infrastructure, many banks are connecting them to public testnets to simulate what dollar movement between them might look like,” he says. “The goal is all about orchestration, ensuring that messages and transactions are processed in the correct order across both private and public blockchain rails.”
For Hallahan, of Fireblocks, the key is to match the rail to the use case. Tokenised deposits usually run on private or permissioned blockchains. “It’s like a traditional bank deposit,” he says. “You need to be a customer of the bank to hold it, which means a private blockchain is largely fit for purpose.” Stablecoins, by contrast, create value through openness:
“They can be held by people outside of your bank. They’re more freely transferable. The way that you drive value is doing it on a public blockchain.”
Most banks aren’t issuing across multiple networks yet, but they’re already testing interoperability providers that could bridge between them. For now, those efforts remain inside the sandbox. Hallahan also notes that banks are becoming more nuanced about the debate between stablecoins and tokenised deposits.
“It’s not a mutually exclusive decision,” he says. “You can have stablecoins for use cases that are more public facing – transferring to crypto exchanges or buying assets. And then there are use cases that are more appropriate for tokenised deposits, like remortgaging. You don’t need to pick between the two, but rather focus on the use cases fit for each option.”
When choosing a public blockchain, three broad criteria are critical:
- Institutional participation: Are other regulated institutions using it? “That helps with ecosystem liquidity so institutions can drive the most utility of their stablecoins,” Hallahan says.
- Technical resilience: Is the technology battle‑tested? Are there off‑the‑shelf components, such as audited smart contracts?
- Developer depth: Is there a robust developer community if the bank needs external expertise?
On those measures, Ethereum and EVM-based networks lead.
They are among the largest in terms of numbers of developers, smart contracts and regulated institutions already on the platform. That maturity makes them the default environment for most experiments, even as new institutional‑grade ledgers gain ground.
Regulators are watching the interoperability question carefully. The Bank of England’s recent consultation, in which it proposed testing stablecoin use in wholesale settlement in its own Digital Securities Sandbox, captures the tension. “Payments are networks – the more people use them, the more powerful they become,” the bank said.
A key interoperability challenge is that, as we move to a digital asset ecosystem, settlement will involve many, many more assets.
“Today, we have 200 or so fiat currencies, with about 10 key players – euro, dollar, yen, sterling and so on,” says Treacher, of RTGS.
“We’re moving to a world with thousands or even millions of assets that can all be exchanged between each other. Creating settlement platforms for that – creating the ability to move money smoothly and quickly without loss between different assets – is absolutely critical.”
That, ultimately, is what these stablecoin sandboxes are building toward: a world where banks can transact across public and private chains, stablecoins and tokenised deposits, with the same certainty and finality they expect from fiat rails today.
Stepping out of the sandbox
Across Europe and beyond, the quiet work inside stablecoin sandboxes is starting to spill into collaborative pilots.
Take the GBTD initiative, a tokenised version of the UK’s Real-Time Ledger Network project involving more than 60 banks. “Each bank is going to have its own tokenised deposit, but they need a mechanism to interact between them,” says Hallahan. “It’s about ensuring that the infrastructure between the banks works, and what real‑world use cases that infrastructure can enable.”
The efforts to create a euro-denominated stablecoin, led by ING, is another example. These projects hint at what comes next – tokenised cash that can move freely between institutions, geographies and asset classes without losing its identity or value.
The prize, as RTGS’ Treacher frames it, is a breakthrough akin to the dawn of the internet. Even the interview format illustrates it: connecting on a video call between Australia and the UK, we take the technology for granted, concentrating on the conversation as countless datapoints ping from one side of the world to the other, allowing us to hear the other speak and see them nod along.
“The settlement challenge aims to create that same interconnection for the financial world,” Treacher says.
“If we can move money between parties in the same way that we’re moving these images and sounds, then we have unleashed the global economy.”
