Prepaid cards have come a long way from handwritten gift certificates sold at McDonald’s. But their next evolution may be even more radical—turning stored value into stablecoins.
Javelin Strategy & Research’s Prepaid and Stablecoins: Turning Liabilities Into Assets suggests that stablecoins and other tokenized digital assets could transform prepaid cards from balance-sheet liabilities into asset-backed tools that offer greater flexibility, efficiency, and security.
Making a Gift Card a Bottom-Line Asset
Understanding the next generation of prepaid cards will require open minds and a willingness to examine the structural burdens in today’s gift card marketplace. With stablecoins emerging as a potential solution to the delays and costs that have long plagued cross-border payments, these two trends may be converging.
From the prepaid side, stablecoins offer a form of balance-sheet protection. A prepaid card is typically recorded as a liability, but if it instead holds stablecoins rather than fiat cash, it can be treated more like an asset class—potentially increasing flexibility in how those funds are managed and deployed.
“There are some program managers that hold the liability in place of the brands,” said Jordan Hirschfield, Director of Prepaid at Javelin. “Now you’re holding it as an asset and you can do a lot more with it. It provides flexibility, it modernizes the opportunity in gift carding in particular, and it opens up cross-border potential for these products.”
From Liability to Tokenized Asset
Right now, consumers are generally unaware that a gift card represents a liability on a retailer’s balance sheet. Tokenizing that value changes the accounting treatment, but not the user experience. Customers still see it simply as money available to spend.
“Nothing’s going to change for the end user,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin. “It’s all going to be on the back end. Companies will benefit from holding these stablecoins on their balance sheet from a yield perspective. The retailer won’t have access to any of that, but they can have a unified ledger, which opens the door to more optionality.”
Prepaid stablecoin-based cards could also offer advantages for struggling retailers. When an organization like women’s fashion retailer Francesca’s goes out of business—as happened earlier this year—its gift cards can become worthless. If the underlying value were instead held in a transferable stablecoin-based system, that value could be preserved and reissued as a gift card for another brand or redirected for another use. In this model, consumers gain greater assurance that their stored value retains meaning even if a single retailer fails, while brands gain a more durable way to extend the utility of gift card programs.
“I see stories every day of retail brands that are at risk, but are still solid companies,” said Hirschfield. “This gives them some potential, a backstop in terms of saying, this is a secured asset, not an unsecured liability that literally is the first thing to get wiped off the books. “
An Improving Regulatory Landscape
The regulatory outlook has made this scenario more realistic. Prior to the passage of the Genius Act in July 2025, there was no widely accepted framework for stablecoins as a form of digital money.
“A lot of companies looked into it in the past and just threw in the towel,” said Hugentobler. “Now they’re likely to circle back and start having these types of conversations because the impact is real, and the use cases are real. Now there’s a regulatory framework, with the balance sheet requirements, attestations, and all those things that give companies confidence to use this technology. In three or four months since the Genius Act passed, 16 or 17 companies started implementing these types of solutions, so there was a huge impact.”
The Clarity Act, now advancing in the Senate, is expected to provide additional market structure for the stablecoin industry. Rather than regulating stablecoins directly, it focuses on exchanges, market makers, and custodians—key intermediaries that shape how these assets operate in practice.
“The crypto industry has needed regulation for a long time,” said Hugentobler. “The native crypto user has not wanted regulation, but for this stuff to really take effect and gain mass adoption, we need to see it. The Clarity Act will definitely help.”
Getting Out in Front of the Issue
Further legislation and regulatory clarity will likely be needed before prepaid stablecoin products become commonplace, but several companies are already courting these opportunities. Prepaid remains a trailing segment in stablecoin adoption, but for stakeholders interested in the space, now is the time to begin engaging legal and regulatory teams.
“This is the time where you don’t want to fall behind,” said Hirschfield. “It’s an area where the leaders—just like the leaders who took advantage of gift cards in digital wallets—are so far ahead of everyone else. The same thing is going to happen here. If you’re prepared to be a leader, you don’t have to be first to market. But if you are in that lead group, that is where you need to start doing research and understanding what’s happening in digital assets, Learn more so you can get your product ready. Then when it’s time to hit the development button, you’re ready to go.”
Hugentobler added: “When you’re a leader, you can still have those first mover advantages while working out the kinks and getting all the ducks in a row. There are a lot of vendors and third part infrastructure providers as well as compliance that will need to come in the picture as well.”
Both analysts caution that it is important to get ahead of this shift. Late movers risk facing a steep learning curve and significant catch-up costs.
“Like an avalanche, it’s slow, slow, slow, and then boom, everything and everyone kind of falls into place,” said Hirschfield. “If the prepaid market isn’t ready, they’re going to be way behind.”
The post The Next Phase for Prepaid Cards Could Be Stablecoins appeared first on PaymentsJournal.
