BlackRock Report: Why Ethereum is Poised to Dominate Crypto Settlement
Stablecoins have evolved from a convenient tool for crypto traders to a foundational element attracting attention from traditional finance giants like BlackRock. No longer simply a way to park dollars between trades, stablecoins are increasingly viewed as potential settlement rails that could operate alongside, and even within, the traditional financial system. BlackRock’s 2026 Global Outlook explicitly states this shift, arguing that stablecoins are expanding beyond exchanges and integrating into mainstream payment systems, with significant potential for cross-border transfers and everyday use in emerging markets. This article delves into BlackRock’s analysis, exploring the implications for the future of finance and, crucially, which blockchain is most likely to become the bedrock for this new financial infrastructure.
From Trading Chip to Payments Rail: The Evolution of Stablecoins
Initially, stablecoins thrived on the volatility inherent in the cryptocurrency market. The need for a 24/7 unit of account and settlement asset, free from the limitations of traditional banking hours and fiat rails, fueled their adoption. However, BlackRock’s perspective highlights a maturation beyond this niche. The firm emphasizes that integration into mainstream payment systems and cross-border payments is a natural progression, particularly in regions where latency, high fees, and complex correspondent banking relationships pose significant challenges.
A key catalyst for this evolution is the increasing regulatory clarity. The passage of the GENIUS Act in July 2025 in the US created a federal framework for payment stablecoins, including crucial reserve and disclosure requirements. This legal clarity doesn’t guarantee mass adoption, but it significantly alters the risk assessment for banks, large merchants, and payment networks subject to stringent compliance standards.
The Growing Scale of the Stablecoin Market
The market’s size is no longer theoretical. As of January 5, 2026, the total value of stablecoins stood around $298 billion, with USDT and USDC continuing to dominate the market. BlackRock’s report, utilizing CoinGecko data through November 27, 2025, demonstrates that stablecoins have consistently reached record market capitalizations even amidst fluctuations in broader crypto prices. This underscores their role as the primary source of “dollar liquidity and on-chain stability” within the crypto ecosystem.
This combination of legal recognition and substantial market size is driving the emergence of stablecoins in previously unexpected areas, such as the back-office operations of global payments. Visa’s December 2025 announcement of USDC settlement in the US exemplifies this trend, allowing issuer and acquirer partners to settle transactions using Circle’s dollar stablecoin. Initial banking participants settled transactions over Solana, showcasing a willingness to explore high-throughput chains for specific use cases.
Settlement: Where Value Accrues
If stablecoins are effectively digital dollars, the critical question becomes: where do these dollars reside as the system scales? As stablecoins move towards more complex applications – including collateral, treasury management, tokenized money-market funds, and cross-border netting – the underlying base layer becomes paramount. This layer requires predictable finality, deep liquidity, robust tooling, and a governance and security model that institutions can trust for decades, not just a single market cycle.
Why Ethereum is Positioned to Lead
While numerous blockchains compete for stablecoin settlement, Ethereum’s value proposition in 2026 isn’t necessarily the lowest transaction cost. Instead, Ethereum has established itself as the anchor layer for an ecosystem that separates execution and settlement. Ethereum’s documentation explicitly highlights this in the context of rollups, where Ethereum acts as the settlement layer, providing security and objective finality in case of disputes on other chains.
This separation of concerns is crucial. When transactions occur rapidly and cheaply on Layer-2 solutions, the base chain still serves as the ultimate arbiter. The more valuable the activity being settled, the more valuable the role of this “referee” becomes.
Tokenization and the Gravitational Pull of Ethereum
BlackRock’s analysis also frames stablecoins as a stepping stone towards a tokenized financial system. Tokenization involves representing ownership of real-world assets, such as Treasury bills, on a blockchain. Stablecoins then facilitate the cash leg for subscriptions, redemptions, and secondary market trading.
Currently, Ethereum dominates this space. As of January 5, 2026, RWA.xyz reports that Ethereum hosts approximately $12.5 billion in tokenized real-world assets, representing roughly 65% of the market share. BlackRock’s own tokenized money-market fund, BUIDL, debuted on Ethereum and has since expanded to other chains, including Solana and various Ethereum Layer-2s, demonstrating the clear use case for on-chain finance.
Even with a multi-chain strategy, the institutional pattern is consistent: start where liquidity, custody integrations, and smart contract standards are most mature, then expand outward as distribution channels develop. JPMorgan has followed a similar path, launching a tokenized money-market fund with shares represented by digital tokens on Ethereum, accepting subscriptions in cash or USDC, and citing the regulatory shift following the GENIUS Act as a key driver.
The Risks and Challenges Ahead
BlackRock’s outlook isn’t without caution. In emerging markets, the firm acknowledges the potential for stablecoins to broaden access to dollars while simultaneously challenging monetary control if domestic currency usage declines. This presents a political economy challenge, potentially triggering restrictive policy responses in regions where stablecoins find product-market fit.
Issuer risk also remains a concern. Not all stablecoins are created equal, and market structure can hinge on trust. S&P Global Ratings downgraded its assessment of Tether’s reserves in November 2025, citing transparency concerns. This serves as a reminder that the stability of the entire system can depend on the assets backing the peg.
Beyond Ethereum: Competition and Portability
Ethereum isn’t guaranteed to be the sole settlement layer. Visa’s USDC settlement work demonstrates that large players are willing to route stablecoin settlement over other chains when it aligns with their operational needs. Circle’s strategy of natively supporting USDC across dozens of networks aims to make stablecoin liquidity portable and reduce dependence on any single chain.
However, portability is a double-edged sword. As stablecoins proliferate, the premium shifts towards layers that can provide credible settlement, integration with tokenized assets, and a robust security model capable of reassuring institutions that they can safely park cash and collateral on-chain without encountering unforeseen governance issues.
The Bottom Line: Ethereum as the Bedrock for Tokenized Dollars
If stablecoins truly become the bridge between traditional finance and digital liquidity, as BlackRock suggests, that bridge still requires a solid foundation. In the current crypto market architecture, Ethereum is the bedrock to which most institutions consistently return. It’s not about winning every benchmark; it’s about providing the settlement court where the most valuable cases are heard.
Key Takeaways:
- BlackRock’s endorsement of stablecoins as foundational to the future of finance is a significant development.
- Ethereum’s role as a settlement layer is strengthened by its separation of execution and settlement, and its dominance in tokenized real-world assets.
- Regulatory clarity, particularly with the GENIUS Act, is crucial for broader adoption.
- Issuer risk and potential political challenges in emerging markets remain key concerns.
The future of finance is likely to be a hybrid system, blending the strengths of traditional and decentralized technologies. Ethereum, with its robust ecosystem and established security model, is well-positioned to play a central role in this transformation.
Mentioned in this article:
Ethereum 
USDC 
Tether 
BlackRock