Stablecoins cannot fully escape banking risk, says Frgmnt CEO Aurélien Roussel

Key points

• Roussel says stablecoin infrastructure must assume that individual banking counterparties can fail, after the bank failures of 2023.
• He argues Tether's USDT dominance rests on network effects, and compliance alone will not unseat entrenched liquidity.
• Sub-cent Layer 2 settlement costs will push issuers to compete on distribution and services rather than transaction fees.

Fiat-backed stablecoins cannot fully escape traditional banking risk, according to Aurélien Roussel, co-founder and CEO of the stablecoin infrastructure company Frgmnt.

Roussel said the banking failures of 2023 showed that issuers must plan for individual banking counterparties to fail. He recommends diversifying banking relationships, segregating reserves, publishing real-time attestations and keeping redundancy across liquidity venues and redemption mechanisms. Blockchain, he added, makes parts of the financial architecture more transparent and auditable but does not remove financial risk.

On competition, Roussel said Tether's USDT holds its lead in global trade through deep liquidity and merchant acceptance, and that compliance alone will not displace it. He expects the market to split into segments serving retail payments, corporate treasury and institutional settlement, with distribution and infrastructure mattering more than the token itself.

He also addressed regulation, comparing fragmented rules such as Europe's MiCA to the internet operating across different legal systems, and called for interoperable standards on reserves, identity and redemption. Private stablecoins and central bank digital currencies are more likely to coexist than compete, he said. With Layer 2 fees now below a cent, he argued issuers will earn less from transactions and more from services built around the dollar.

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