Stablecoins gain mainstream status as wealth managers increasingly allocate funds and develop strategies

Nearly nine in ten wealth managers now report a “good or better” understanding of stablecoins, signalling a significant shift in institutional attitudes towards this once niche segment of digital assets. New global research from Brava Finance, conducted across 13 countries including the US, UK, EU, UAE, Brazil, Singapore, South Korea, Switzerland, and Hong Kong, reveals that 88 per cent of wealth managers have solid familiarity with stablecoins, with 16 per cent describing their knowledge as “excellent.” This marks stablecoins’ rapid transition from retail speculation fringes into the mainstream of wealth management.

More than 90 per cent of those surveyed have already allocated funds to stablecoins, with an overwhelming 94 per cent using them specifically to generate yield through decentralised lending and credit strategies. The chief executive of Brava Finance, Graham Cooke, explained that wealth managers see stablecoins as offering strategic opportunities within decentralised finance (DeFi), enabling them to streamline processes, reduce frictions, and diversify yield sources to improve risk-adjusted returns for clients.

Stablecoins, digital tokens generally pegged to fiat currencies such as the US dollar, are increasingly valued for more than just their stable prices. They are now seen as versatile instruments for payments, liquidity management, and gateways to decentralised financial markets. Every wealth manager surveyed indicated they are developing a strategy to invest in stablecoins, with around 36 per cent having already implemented one.

The survey highlighted several leading use cases for stablecoins: 74 per cent of respondents cited fast, low-cost transactions; 72 per cent pointed to access to DeFi opportunities; and 66 per cent identified portfolio diversification and the ability to “park” funds amid market volatility. Yield generation from lending protocols was the primary focus for about 22 per cent of respondents.

Brava Finance itself has introduced institutional products to meet this rising demand, including a Stablecoin Separately Managed Account (SMA) and a credit fund offering regulated access through a Cayman vehicle. The fund, which utilises custody services from Fireblocks and Northern Trust, targets annual returns between 8 and 12 per cent with next-day liquidity. Its returns come from numerous collateralised lending markets where crypto holders deposit assets and borrow stablecoins at interest rates. Automated liquidation mechanisms are embedded to mitigate default risks when collateral values decline.

Institutional confidence in stablecoins is underpinned by a broader shift towards regulated and yield-bearing digital asset infrastructure. According to Brava Finance, 90 per cent of wealth managers expect institutional adoption of stablecoins to rise significantly over the next three years. This expectation is echoed by recent market developments, including BTG Pactual’s launch of a dollar-backed stablecoin in Brazil, WisdomTree’s attainment of a special licence to issue regulated digital tokens, and Deutsche Bank’s asset management unit preparing its own stablecoin issuance.

Looking forward, the survey found nearly all wealth managers, 98 per cent, anticipate asset managers will issue more stablecoins within the next five years, with 42 per cent predicting a “dramatic” increase. Usage forecasts are similarly optimistic, with 96 per cent expecting rising adoption for low-cost transactions and DeFi participation, 86 per cent anticipating greater use for yield strategies, and strong growth predicted for investment diversification and liquidity management.

Despite the positive sentiment, Brava Finance’s research also acknowledges risks. Cyber and smart contract vulnerabilities in blockchain-based lending remain a concern for institutional investors. About 70 per cent of respondents view protection or insurance against these risks as important, while 20 per cent consider it essential. Additionally, around two-thirds have already used third-party insurance products to guard against smart contract exploits, reflecting a cautious approach to risk mitigation.

The evolution of stablecoins from experimental assets to foundational layers in global digital finance is marked by a growing $150 billion market in circulation. Institutions are increasingly deploying stablecoins into structured, overcollateralised strategies that blend transparency with automated risk management, enabling them to generate stable yields while avoiding the directional risk typically associated with more volatile cryptocurrencies like bitcoin.

For wealth managers adapting to a world of higher interest rates and market volatility, the hybrid nature of stablecoins, combining features of cash, money-market funds, and settlement rails, offers an appealing tool for modern portfolio construction. The ongoing regulatory developments and institutional-grade custody solutions further bolster their appeal, reinforcing stablecoins’ expanding role in diversified digital asset strategies.