🧠 The Stablecoin Industry is on Notice

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Hey Fintech Nerds 👋,

I’ve been at the Tempo offsite in Portgual all week and having far too much fun with Claude Code. This week, I made a little stablecoin dashboard to track bridging activity and started on a “Simon bot” so you can pick his brains instead of mine 😀 .

The big Fintech news was BVNK and the Visa Direct partnership. You’re familiar with push to card (payouts to a card), well, now there’s push to wallet with stablecoins. (More in Things to Know).

The other big hoopla is the Market Structure Bill delay. It seems we still don’t have clarity on if stablecoins can pay yield, or what is a security. The delay means stablecoin indirect yield will continue, at least for a little while. Rumor is that the White House is displeased with Coinbase for walking away. (More in Things to Know)

And I did not expect to see the ETH Treasury holding company Bitmine investing $200m in Mr Beast. This is possibly the most 2026 headline ever.

My Rant this week follows the Kontigo drama and is a plea to anyone building in stablecoins. You’re on notice. Let’s do this right.

I’ll be at Fintech Xchange Utah in a couple of weeks if you’re coming?

Oh and check out the tweets this week, some bangers in there.

Here's this week's Brainfood in summary

📣 Rant: The stablecoin industry is on notice

💸 4 Fintech Companies:

1. Swipe Lux - The single API for stablecoins & fiat.

2. Truemed - The HSA/FSA Marketplace

3. Architect* - Brokerage & Perps on Traditional and Crypto Assets

4. Axal - The stablecoin savings account

👀 Things to Know:

1. The Crypto Market Structure Bill is postponed.

2. BVNK is now powering stablecoin services for Visa Direct in select markets.

📚 Good Read: Reflections on 2025 by Samuel Albenie

Weekly Rant 📣

The stablecoin industry is on notice.

Every stablecoin founder I meet, I grab them with both hands on the shoulders and say “PLEASE, PLEASE, make AML and sanctions policy a priority. If you don’t, it will be incredibly painful.”

Kontigo is why.

ICYMI, Kontigo is a stablecoin wallet startup. This week, Jason Mikula of Fintech Business Weekly published a 5,000-word investigation into the company. The findings are damning.

First, the sanctions exposure. Kontigo enabled transactions to sanctioned entities including Banco de Venezuela—and the founder posted screenshots of off-ramping to that bank. Then announced the ability for “Venezuelans to open free virtual accounts at JPMorgan Chase to move money.”

Then, the operational failures. Kontigo was deplatformed by their BaaS provider (Checkbook) and its bank (JP Morgan). A hack saw 1,005 users lose nearly $350,000. A second hack hit just days later.

If you’re anywhere near stablecoins, study Jason’s piece. This will be the first of many such stories.

This is giving me BaaS flashbacks

In March 2023, I wrote “BaaS is Dead” around the time of the Synapse collapse. Hundreds of thousands of customers lost access to their accounts. What followed was a regulatory full-court press into Fintech and bank partnerships.

The parallel is uncomfortable. Fintech companies often relied on infrastructure providers (Synapse) and sponsor banks (Evolve). This created an accountability gap. From that piece:

Having lived through that movie, it was inevitable stablecoins would follow. They win the full house on the bingo card of risk:

• Cross-border

• Sanctioned jurisdictions

• Crypto

• Third parties intermediating banks and customers

• Rapidly growing startups with founders not from finance

Compliance is not optional

Whether through naivety (common) or malfeasance (less common), scaling companies rarely start with compliance. They start with growth.

The problem? A growth company is the ideal target for criminals and sanctioned regimes to exploit. Nobody starts a company to deeply understand compliance, but everyone who survives in Fintech comes to the realization Max Levchin did:

“PayPal is a security company masquerading as a payments company.”

Unless you come to that exact same realization, you will get found out.

Jason kept the receipts. His piece is full of screenshots where the founder actively mentions the ability to off-ramp to a sanctioned entity.

Law enforcement has a long memory. Sins of today will be examined tomorrow—perhaps under an administration whose regulators are much more aggressively digging for skeletons than they have been lately.

What to do now

If you’re running a stablecoin startup: Prioritize hiring a head of compliance, ideally a CRO. Plenty of talented fractional staff can help you get started, and firms like Strategy Brix, Klaros, and FS Vector can help get policies and controls in place.

A blockchain forensics tool is table stakes (Chainalysis, TRM, Elliptic)—but it’s not enough in isolation. You need real-time AML, transaction monitoring, and fraud infrastructure (like Sardine* or Alloy).

If you’re a wallet or infrastructure company: “It’s self-custodial” isn’t an excuse. You have third-party risk obligations. Your examiners will come asking.

This is your notice.

The regulators will come. The journalists are watching. And law enforcement has a very long memory.

ST.

PS. Replying to everything negative someone says on Twitter with legal threats is more reminiscent of a North Korean dictatorship than a fast-growing startup.

4 Fintech Companies 💸

1. Swipe Lux - The single API for stablecoins & fiat.

Swipe Lux provides a single API for stablecoin on-ramping, providing customer wallets, and payouts to fiat. For on-ramping, it offers its own direct capability, or integration with 3rd party on-ramps, and then helps route to the best pricing by region. It enables conversion from crypto to stables to fiat, and aims for best-route-execution. Clients can use Swipe’s EU VASP licence or bring their own, and the service offers baked-in KYC, transaction monitoring and sanctions screening.  

🧠There’s a ton of stablecoin orchestrators, so what makes this different? While Bridge and BVNK focus more on stablecoins, Swipe Lux looks more like a European-focused Zerohash. It’s a toolkit for anyone who wants to move different types of value across different chains without assembling all of those parts themselves. The value prop around reconciliation and compliance feels much more like a classic Fintech than crypto. When there’s so much M&A in the infrastructure space lately, it’s good to keep your eye on companies like this. (Also interesting their licence is in Slovakia and Estonia, not seen that combo before)

2. Truemed - The HSA/FSA Marketplace

Truemed helps people use their existing Health Savings Account (HSA) and Flexible Spend Account (FSA) funds to buy much more than was traditionally available. Instead of being limited to first-aid or copays, users can buy nutrition or fitness equipment. When buying through the marketplace, you qualify for a Letter of Medical Necessity (LMN), which can save up to 30% vs store-bought items.

🧠Prevention > cure. Collagen and creatine gummies are healthcare now. Over the long term, the affluent and mass market are paying more attention to nutrition with each passing year. This leans into a trend, and it unlocks latent spending for merchants with a potentially massive discount to the user. Seems obvious in hindsight. 

3. Architect* - Brokerage & Perps on Traditional and Crypto Assets

Architect* provides a single API to build a single brokerage platform across equities, derivatives, and crypto assets. For sophisticated funds and family offices that want a single pane of glass for fast, high-quality execution. Architect also launched AX, a platform that enables perpetual futures on traditional (non-crypto) assets.

🧠One of the most interesting features of crypto capital markets is the “perp,” the perpetual future. It is a perpetual derivative. It never expires. Unlike a traditional future, which has a specific settlement date, the perp rolls indefinitely, staying synthetically pegged to the underlying asset's spot price through a funding rate mechanism. It’s simpler, it's often more margin efficient and preferred by traders. Bringing this back into TradFi makes a ton of sense.

*I hold a small angel position in Architect.

4. Axal - The stablecoin savings account

Axal offers users between 6 and 10% yield through a simple mobile app. Users sign up, send service dollars, and start earning yield. Behind the scenes, their funds are placed into Morpho vaults, which are over-collateralized lending pools. Today Axal doesn’t take a margin on those vaults, but in time will take a 15% share.

🧠There’s great power in simplicity. Sometimes just having an easy way to make 6 to 10% on your cash is the whole product. The moat here is mostly about brand and GTM. It’s essentially Privy + Morpho + a mobile app, technically. But I quite like their transparency in the whole thing. Some folks still wonder how is it giving 10%?! The answer to which is. You’re essentially buying into a collateralized private credit fund as an investor. The borrowers are crypto traders who want to trade in and out of positions and are willing to pay for that. 

Things to know 👀

1. The Crypto Market Structure Bill is postponed.

The Senate was set to vote on the crypto market structure, the CLARITY ACT, this past Thursday. It was delayed due to disagreements over stablecoin yield.

On Wednesday, the Senate Banking Committee postponed its markup, following an earlier delay by the Agriculture Committee. The bill must clear both before reaching a vote. The crypto industry withdrew support over restrictions on stablecoin yield, increased surveillance requirements, and ambiguity around a new "ancillary assets" classification that could invite SEC enforcement without clear jurisdictional boundaries.

🧠 The yield debate is hotly contested: Banks earn 5% on Treasuries. They pass you 0.01% in checking. Coinbase wants to pass you 5% on USDC. This week's vote decides if that's legal.

🧠 GENIUS banned direct yield but not indirect. Last year's GENIUS Act banned stablecoin issuers from paying yield directly. But Coinbase and Kraken aren't issuers. They're platforms. They've been passing treasury yield as "rewards."

🧠 Community bankers are furious. The American Bankers Association wrote to the Senate with a number they want you to remember: $6.6 trillion. That's what they claim could flee deposits if stablecoin rewards stay legal.

🧠 The crypto counter is simple: Congress knew platforms weren't issuers. The distinction was intentional. If issuers earn 5% backing stablecoins with Treasuries, someone should pass that efficiency to users.

🧠 The big bank lobby argument is in bad faith. $6.6 trillion is nearly the entire checking deposit base. There’s no way stablecoins take that. Especially when the same banks are predicting $2 trillion of stablecoin supply by 2030. The vast majority of which is offshore and corporate treasury users.

🧠 🧠 It seems the White House is very annoyed at Coinbase for pulling support. Because delays beyond the midterms may kill this bill entirely. If the banking and crypto lobbies, as well as the Senate, cannot reach an agreeable text, the bill may not pass this year. With a different, possibly less crypto-friendly Senate, what eventually passes could be much more in the banks’ favor.

🧠 As that happens, we still have consumers who can buy memecoins and tokens and are getting pulled into Telegram scams with no clear protections. Ultimately, we need something. I’d quite like that thing to pass sooner rather than later.

Really good background here from Alex Johnson if you want to go deeper.

2. BVNK is now powering stablecoin services for Visa Direct in select markets.

Under a new agreement, Visa Direct customers will be able to pre-fund payouts using stablecoins and payout directly to a stablecoin wallet. Last May, Visa’s venture arm invested an undisclosed amount in BVNK following the firm’s $50 million Series B round.

🧠 Visa Direct is Visa’s money-moving business. People think of Visa as the card network that enables banks to move money. But Visa Direct moves more than $1.7 trillion a year, often in payouts. E.g., withdrawing from your Robinhood account to a card, or an insurance payout to a card.

🧠 Stablecoins become a new option: Push to Card, Push to Account, Push to Wallet. If you’re a global company doing payouts, stablecoins may be cheaper and more convenient for your users. Why not have another endpoint.

🧠 The pre-funding is interesting as a lot of companies are now increasingly using stablecoins for corporate treasury (I’d argue its the killer app). You could send a wire to Visa Direct, but stablecoins, if you have them may be cheaper and faster for your treasury. Especially as a crypto native customer of Visa Direct.

Good Reads 📚

1. Reflections on 2025 by Samuel Albenie

Skepticism towards AI from the most hardened engineers has turned into almost every engineer using AI tools like Claude Code and Cursor in their daily workflow. Why didn’t we have this magic before? Sam says “It’s the compute stupid.” A 1998 prediction said “human-level cognition requires on the order of 100 million MIPS” and that would be achieved by the 2020s. 

🧠 This paragraph alone is why you should read this piece when talking about why evals (benchmarks) for AI are so hard.

Tweets of the week 🕊

That's all, folks. 👋

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(1) All content and views expressed here are the authors' personal opinions and do not reflect the views of any of their employers or employees.

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