Recently, Bank of England Deputy Governor Dave Ramsden stated that the UK may need to protect stablecoin deposits in a manner similar to bank savings, with regulators actively studying how to maintain public confidence in money should a systemically important stablecoin encounter problems. This remark sends a very clear signal: stablecoins are increasingly being viewed through the lens of quasi-monetary infrastructure.
This shift implies that stablecoins are no longer seen merely as technical settlement tools or on-chain payment instruments. Instead, they are being recognized as assets that can affect financial stability, public trust, and the safety of payment systems. Once stablecoins begin to function like deposits, their regulatory framework inevitably moves closer to that of traditional banking—and at the core of that framework lies continuous, explainable, and actionable transaction oversight.
The Real Risk of Stablecoins Is Not Only “Reserves,” but “Behavior”
Traditional discussions around stablecoin risk often focus on reserve adequacy, custody arrangements, and redemption mechanisms. However, regulatory experience increasingly shows that what truly undermines confidence is not static balance sheets, but dynamic transaction behavior, such as:
- Sudden, large-scale, synchronized redemption activity
- Rapid concentration of funds into a small number of addresses or off-chain exits
- Use of stablecoins as intermediaries for illicit fund flows
- “Run-like” capital outflows during periods of market stress
- These risks rarely appear in whitepapers or audit reports. They emerge directly from real-time on-chain transaction activity.
From Deposit Protection to Transaction Visibility: Regulation Is Moving Toward KYT
If stablecoins are to achieve a level of safety comparable to bank deposits, regulators will inevitably require issuers and service providers to demonstrate not only that funds are properly backed, but also that transaction flows are continuously understood and controllable.
This is precisely where KYT (Know Your Transaction) becomes indispensable.
Unlike KYC, which focuses on who a user is, KYT continuously answers three fundamental questions:Where do the funds come from? How do they move? And where do they ultimately go?
In stablecoin ecosystems, these questions are critical.
KYT for Stablecoins: Addressing Systemic Risk, Not Just Formal Compliance
In response to the tightening regulatory expectations around stablecoins, our KYT product is designed specifically to address behavioral risk in assets that function as “digital money.” Its core capabilities include:
- Detection of Abnormal Stablecoin Flow Patterns Real-time monitoring of mass redemptions, concentrated transfers, and cross-chain movements, enabling early warnings before systemic stress becomes visible.
- Behavioral Analysis Under Stress Scenarios Identification of “run dynamics,” herd behavior, and liquidity drain patterns, helping institutions understand how confidence shifts are reflected on-chain.
- Recognition of Stablecoins’ Role in Illicit Fund Flows Accurate detection of stablecoins used as laundering intermediaries, value parking tools, or cross-system transfer instruments, reducing the risk of being classified as high-risk infrastructure.
- Explainable and Auditable Behavioral Evidence Transformation of complex on-chain activity into clear, verifiable risk narratives that support regulatory communication, reviews, and accountability.
Conclusion: To Be “As Safe as Banks,” Stablecoins Must Also Be “As Visible as Banks”
The Bank of England’s message is not about copying the banking system wholesale. It reflects a broader regulatory judgment: if stablecoins are to operate within the mainstream financial system, they must accept far higher standards of behavioral transparency.
In this process, KYT is not merely a compliance tool—it becomes part of the trust architecture of stablecoins themselves. Those who build a deep, proactive understanding of on-chain transaction behavior today will be far better positioned to be seen as trustworthy infrastructure in the next phase of regulatory evolution.
The future of stablecoins will not be decided by whether they are regulated, but by whether they are truly prepared for regulation.