Source: Cointelegraph
Original text: (Stablecoins are seen as ideal choices for real-time collateral management)
Cryptocurrencies and stablecoins are increasingly recognized in the traditional finance (TradFi) space for their ability to streamline payment processes and enhance the efficiency of the existing financial system.
In finance, collateral management refers to the process of managing the underlying collateral that secures other financial transactions, such as loans or derivatives, to reduce credit risk and ensure the smooth execution of trades.
According to a recent pilot study by DTCC Digital Assets, digital assets like stablecoins are the 'perfect' financial tool for real-time collateral management, indicating that digital assets, particularly stablecoins, can modernize and simplify this critical function.
Joseph Spiro, Director of Digital Asset Products at DTCC, stated during a panel discussion at the 2025 Consensus conference: 'Digital assets are indeed the perfect use case for collateral management, whether it's uncleared derivatives, cleared derivatives, central counterparties, repos, or any other type of collateral.'
Due to strict requirements for locked collateral, collateral management requires complex manual processes, and these collateral can only be released to the appropriate parties at predetermined intervals.
Spiro stated: 'With digital assets and smart contracts, all of this can be done better, faster, and more efficiently.' He added, 'All manual processing can disappear.'
This pilot is referred to as the 'Great Collateral Experiment,' coinciding with U.S. policymakers' efforts to establish a clear regulatory framework for stablecoins.
On May 14, at least 60 top cryptocurrency founders gathered in Washington, D.C. to support the (Guiding and Establishing the U.S. Stablecoin National Innovation Act) (GENIUS Act). The bill failed to gain enough support from Democrats on May 8.
The GENIUS Act aims to provide collateral guidelines for stablecoin issuers while requiring full compliance with anti-money laundering laws.
The bill stalled on May 8 due to a lack of support from key Democrats, some of whom expressed concerns that U.S. President Donald Trump could profit from digital assets through his crypto-related businesses.
According to Kyle Hauptman, Chairman of the National Credit Union Administration, incorporating stablecoins into traditional fiat-backed loans can further simplify TradFi processes.
Hauptman stated during the same panel discussion that the programmability of stablecoins could make the loan repayment process more transparent and streamlined for all participants, which is currently an 'awkward month-end settlement process,' he added.
“Stablecoins and their programmability can make this process very easy.”
“We not only make it easier for credit unions to settle these things, you can handle smaller amounts, but borrowers should get a better deal here because now this thing has some characteristics of large bond issuances. It is now liquid,” he said.
Another piece of legislation—the Stablecoin Transparency and Accountability Act (STABLE Act)—passed the House Financial Services Committee on April 2 with a vote of 32 to 17. The bill is awaiting arrangements for debate and a full vote in the House.
Related: Senate plans to pass stablecoin bill next week, removing language aimed at Trump