The Stablecoin Opportunity That Banks Are Missing

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Hey Fintech Nerds 👋,

Crypto had its very own Black Friday, triggered by volatility after Trump announced potential new tariffs. The largest sell-off in its history. But far from being a panic sell, some structural issues in how centralized exchanges priced stablecoins like USDe, making them appear to have depegged and re-priced other assets, triggering a cascade of liquidations. (Despite those assets NOT depegging.)

It’s now “common wisdom” that AI must be a CAPEX bubble, but it also appears AI token demand is 2x higher than new compute supply. Combined, we saw a pullback in stocks and crypto markets.

Perhaps both were overdue. But they’re also a distraction from the secular trend. AI has started delivering massive revenue and value. Stablecoins have product-market fit. And real-world assets are now being tokenized at scale. Maybe the media narrative dies, maybe we have a correction.

But to assume crypto and AI were just another tech bubble is overly simplistic. The market structure of finance and the economy is being reshaped around AI and tokenization. The questions are how and when. Not if.

Stablecoin summer is becoming acquisition fall. BVNK is said to be in talks with Mastercard and Coinbase for an acquisition in the $1.5bn to $2.5bn range. Most of BVNK’s growth is domestic and US-focused on corporate treasury.

Stablecoins and tokenized deposits are an office of the CFO story, not a remittance story.

Weekly Rant 📣

Stablecoins are A Massive Opportunity

Nothing frustrates me more than people acting against their own interests.

The push against stablecoin yield is a perfect example. It misses the actual transformation happening right in front of us.

Banks could become wildly more efficient, unlock new revenue streams, serve their customers better, and cement their role in the financial system for the next 50 years. This is what consumers want. What corporates want. What regulators ultimately want. Hell, it's what the crypto industry wants.

Here's what makes it maddening: In my day-to-day, I see banks, large and small, actually trying to figure out stablecoins and tokenization. Doing the hard work. Getting deeper on the topic.

My worry is if we fight this kind of yield, another, more risky one will quickly take its place. Stablecoins won’t go away, nor will yield.

The real and important question is whether banks win from tokenization or watch from the sidelines while fintech companies and GSIB banks eat their lunch.

There’s a lesson from recent history. In 2011, Congress accidentally created Chime, Cash App, and a generation of billion-dollar fintechs. They did it by trying to help community banks compete with big banks through the Durbin Amendment.

In 2025, they're about to do it again with the GENIUS Act.

The bank lobby is screaming about stablecoin yield being a 'loophole.' They're right. It is. And just like Durbin, that loophole is going to bootstrap an entire generation of onchain financial companies.

Today

1. The Anti Stablecoin Yield Case (And Why Deposit Flight is Bad)

2. But Stablecoins Are not the Same Risk, so the Same Regulation doesn't fit.

3. The Fintech boom and Durbin Amendment is a lesson in opportunism

4. Historically, merchants create money when it’s too slow or inefficient for the modern economy, for it to later be brought back inside the banking system

5. Stablecoins are a gift to banks for new revenue from onchain finance

6. The market is pushing banks to innovate, and the good ones are.

1. The Anti-Yield Case (And Deposit Flight is Bad).

The GENIUS Act prohibits stablecoin issuers from paying interest directly to holders. Banks claim issuers are skirting this by paying third parties (like exchanges), who then offer rewards or yield to users.

The US Treasury estimates this could drain $6.6 trillion from bank deposits. 

That stat is like pressing the holy shit the house is on fire button for every community banker in the US. Fewer deposits, fewer lending, fewer revenue, inevitable decline, sale or closing.

Here’s the “loophole”

• Stablecoin issuers (e.g. Circle) buy Treasury Bills to back their stablecoins.

• Stablecoin issuers then earn yield on reserves (T-bills at 4.5%+). 

• They keep some, pass most to distributors (e.g. Coinbase)

• Distributors use some for operations, spend some on customer acquisition through rewards.

Most banks don't pass yield through to depositors. They use deposits as cheap funding for lending. The spread between deposit rates and loan rates is net interest margin (NIM) - the core of community bank profitability. A competitor that shares Treasury yields with depositors directly threatens that margin.

That lending serves a purpose, as the ICBA lays out (emphasis mine):

Stablecoins under GENIUS were intended to be a payment technology, not a competitor for deposits. When you add to this, companies like Coinbase and Circle are rushing to gain banking charters for Fedwire access, there’s a good reason to be concerned as a banker.

The banks argue that if consumers place their faith in stablecoins, they lack the protections that bank deposits have (like FDIC insurance). If there's a run on the stablecoin, consumers don't have equivalent government guarantees. Bank deposits have FDIC insurance - the ultimate backstop. Stablecoins lack this federal guarantee, which raises legitimate questions about consumer protection.

2. But It’s Not the Same Risk/Same Regulation Paradigm

The concern about community bank lending is legitimate. But the consumer protection argument conflates two different risk profiles, and the practical reality is more nuanced. Stablecoins aren't primarily competing for Main Street deposits - they're capturing cross-border flows, corporate treasury functions, and payments that were never in the banking system. And the market dynamics are shifting fast.

a) Consider the Risk Profiles

• Banks are leveraged 10:1. For every dollar deposited, they create $10 in loans. When this breaks - and it periodically does - taxpayers provide the backstop. FDIC insurance and too-big-to-fail aren't safety features; they're acknowledgments of systemic risk.

• GENIUS-compliant stablecoins: No leverage. One dollar in Treasury bills backs every dollar in circulation. Held in bankruptcy-remote trusts with regular attestations. If something fails, the loss falls on sophisticated investors, not taxpayers.

Which is safer? Different risk profiles, different protections. Banks offer deposit insurance but carry leverage risk. Stablecoins offer reserve backing but lack federal guarantees. The question isn't which is 'safer' - it's which is appropriate for which use case.

Note: Some assets called “stablecoins” are highly leveraged and more complex instruments. Take USDe, often called a stablecoin, and in today’s market, it is. But it operates a “delta neutral hedge” to maintain its dollar peg, rather than reserve backing. It uses earnings from this strategy to reward users and fund growth. Great in good times. Untested in bad times.

b) The mainstream reward threat is temporary.

• This rewards model is funded by the current rate environment. Where higher rates are set by the Fed for holding Treasury Bills. All indications are we could be heading to a recession, and the Fed will increase the pace of rate cuts.

• Coinbase is already walking back the rewards they offer. Coinbase is removing its 4% APY on USDC unless you’re a member. Are they betting rates will fall, or that the bank lobby will win on “rewards” being a yield loophole in GENIUS? Probably both.

But here's what matters: Even without yield, stablecoins solve real infrastructure problems. They enable 24/7 settlement, instant cross-border payments, and programmable money. The yield is a growth subsidy. The infrastructure value is permanent.

Stablecoins are useful with or without those rewards. But the ability to offer them is what unlocks a business model for a new type of go-to-market, and that is worth preserving.

c) If you remove this loophole another one will appear. 

• Stablecoins are programmable. A user could hold tokenized money market funds, automatically swapping into stablecoins at the point of transaction. Build the wrong regulatory fence, and the market routes around it instantly

• There are more complex stablecoins like USDe that offer 10%+ yield. They’re not backed 1:1 or GENIUS compliant, but they are the fastest-growing stablecoin.

A battle against innovation is a losing one.

d) The Strategic Risk of Short-Term Thinking

The bigger concern is timing and competitive positioning. While banks debate yield mechanics, the competitive landscape shifts.

From 2002 to 2022, the number of chartered banks in the US fell by half. The causes are well-known: regulatory costs rising, technology budgets constrained, competition from both fintech upstarts and mega-banks intensifying.

Now add a new variable: international banks and GSIBs are moving aggressively into tokenization. Société Générale has onchain lending live. HSBC, JPMorgan, and Citi offer tokenized deposits to corporate clients. Singapore is building a regulatory framework designed to win this market.

The question isn't whether tokenization happens - it's whether US community and regional banks participate in it or watch from the sidelines. 

Rather than fighting this shift, banks should aggressively lean into tokenization to grab a share of this market and shape it while its still relatively small. This happened in recent memory, when “partner banking” became a thing and led to the Fintech boom of the 2010s.

3. The Law Ammendment That Created a Fintech Boom

The Durbin Ammendment is Fintech lore.

Durbin capped debit card interchange fees at $0.21 + 0.05% for banks over $10B in assets.  But banks under $10B? Still charging ~$0.44 per swipe. The goal was to give community banks a fighting chance in a market increasingly dominated by the largest banks.

a) That carve-out for community banks created a new opportunity. Fintechs like Chime, Cash App, and Square partnered with sub-$10B banks. They issued cards, collected higher interchange, and used that revenue to fund growth, rewards programs, and better customer experiences.

b) Chime generated most of its $1.6bn from interchange in 2024. They used it to offer early paychecks, no overdraft fees, and mobile-only banking to consumers making less than $100k per year. The same segment is often viewed as unprofitable by banks. I’d argue that the Durbin Amendment was the most effective government mechanism for consumer-centric fintech innovation ever.

Years later, this model would prove so successful that regulators would require US banks to offer a similar product for low-income populations.

c) Now we're watching the same pattern emerge with stablecoins.

• Circle earns yield on USDC reserves. 

• Coinbase offers 4.1% APY to users holding USDC on their platform. 

• That 4.1% isn't coming from Circle directly

• It's Coinbase using yield economics as a growth engine.

The playbook: distributor captures value, shares it with customers.

From 2002 to 2022, the number of chartered banks in the US fell by half. The banks that didn’t adapt to Durbin have (with a few noteworthy exceptions) struggled to grow. They face threats from the expansion of the top 4 banks, fintech companies, M&A, rising regulatory costs, and all with far smaller tech budgets than the big competitors. 

Stablecoin growth is surging. Giant corporations like Ant Group are pushing their banks to tokenize. These two trends are convergin,g and the time to win market share and revenue is now.

4. Merchants have created money outside banks before.

History don’t repeat, it just rides the same beat.

20th-century money is too slow, expensive, and infrequent for the demand of internet-scale payments.

We’ve seen similar patterns before.

The UK in the 1770s suffered a coin shortage. The Royal Mint physically couldn’t supply coins fast enough to meet the demand of the new wage-based economy. In the 1830s, US banks couldn't supply gold fast enough to meet the demand for westward expansion. 

In each of these examples, the private innovation was triggered to meet demand that the existing system couldn’t meet. In the first two, there was a formal expansion of money creation by the government of the time, followed by a re-centralization later.

(Credit Dave Birch for finding this pattern and pointing it out to me).

Stablecoins solve a bottleneck in the internet economy. 

2020s Internet: 20th-century money can't meet the demands of 24/7 global platforms and AI micropayments. Private companies issue stablecoins. The government is formalizing it now via GENIUS.

Stablecoins, AKA Digital cash backed 1:1 by cash equivalents, are instant, 24/7, and programmable. And they’re created mainly by nonbanks, now formalized by the US Government (under the GENIUS Act). 

5. Stablecoins are a gift to banks* for new revenue.

Stablecoins are an existing, low-cost, international payments rail with a slew of new revenue opportunities. Every F500, merchant, wallet, fintech company and tech platform is actively trying to adopt them from corporate treasury to consumer remittances. 

Banks have some superpowers.

1. They have priority access to true settlement (FedWire). This is why every big stablecoin platform is applying for a charter. But this will take time, and won’t be for everyone.

2. Banks can lend to the lenders. Savvy banks have begun doing loans for solar, or taking part in private credit tranches. Onchain lending could represent the next massive opportunity (That’s an entire Rant in itself).

3. The vast major of consumers want bank brands not crypto. Regional and domestic banks already do buy/sell/hold. Stablecoins as they normalize would be a natural extension.

Depending on the size of the bank, I see three separate sets of opportunity, ranked by immediacy. 

a) Sponsor banks can be

• Be a partner bank for stablecoin issuers. There are vanishingly few domestic US banks that do this well. You can count them on one hand. This could mean BIN sponsorship for stablecoin-linked cards. 

b) Regional banks have the opportunity to:

• Help customers with crossborder. This could be consumers with remittances or helping import/export, and MSB corporates with treasury management. Companies like Space X, Flywire and dLocal already use stablecoins for this. US import/export businesses operating in long-tail markets are particularly well-suited to this product. Some companies already use stablecoins; at a minimum, they serve them with a good offramp.

c) Regional and GSIBs also share an opportunity set: 

• Become the primary “wallet” for corporates. This is the biggie. Corporates likely have 3, 5 or even 10 banks they operate with. Each with a login, and ERP integration. Wallets could collapse all of those into a single view and management center. This is the key battle for the next decades. 

GSIBs clients are already demanding this capability for inter-bank instant, 24/7, global settlement. Banks like HSBC, Citi and JPM offer it internally, but the push now is to make that open-loop. 

d) Onchain lending is an enormous opportunity.

If you assume eventually, all deposits and cash (stablecoins) will be tokenized. All treasury goes onchain, naturally, lending would follow. And that would happen in a market of wallets, not accounts. The data available is enormous. Right now, onchain lending is overcollateralized. What if it wasn’t?

Every bank wants to be second to market. And the good news is, if they did onchain lending today, they would be! 

Societe Generale partnered with Morpho Labs to enable its bank-subsidiary-issued stablecoin to be used as collateral for onchain lending. Far from being a deposit flight, that’s deposit capture. 

And that’s jus the deposit side of the ledger. Just as Coinbase has partnered with Morpho to offer collateralized loans and 10.6% APY, banks could deploy lending into those markets.

6. Smart banks should see the opportunity here, not the threat.

Here's what I know from working with banks every day: The good ones are trying to figure this out. They're asking the right questions. They're doing the homework.

But the public debate is focused on the wrong question. Yield mechanics matter less than strategic positioning.

When banks choose to innovate, they often win. Card networks, SWIFT, CLS, even Zelle - all dominant. All were built by banks willing to embrace new infrastructure.

Stablecoins and tokenization are the next infrastructure shift. The question is whether banks lead it or follow it.

That market needs calculated risk-taking, accountability, and the ability to create credit. The market needs banks.

The DTCC is tokenizing. Nasdaq is tokenizing. Société Générale is tokenizing. Fortune 500 treasurers are demanding it.

The question is whether American banks lead this infrastructure shift or watch international banks and fintech companies build the market while the US debate focuses on yield mechanics.

The yield question will resolve itself - either through regulation, market forces, or both. The strategic positioning question won't wait.

Prioritize accordingly.

ST.

* ™ Tony McGlochlin, CEO of Ubyx.

4 Fintech Companies 💸

1. Polyrouter - Plaid for Prediction Markets

Polyrouter provides a single developer API for data from Polymarket, Kalshi and Limitless. The service also adds quality of life features like arbitrage detection, price comparison and sports market analysis. 

🧠 Prediciton markets are here to stay, and there’s so much to say. Sports betting and prediction markets are the fastest growing consumer discretionary spend category. They’re mainstream, and the opportunity for investors is enormous. I have two worries. Firstly, consumer financial health is in the toilet already (in a bull market), and the rise of these markets compound the issue. I’d love to see some movement the other way. Secondly, I worry the incentive to create unpredictable outcomes to monetize will be hard to ignore. Future Rant coming on this.

2. Tranched - Private Credit Onchain

Tranched helps fintech lenders launch their financing structure in real-time, and assign future loans to that “pool.” Investors get access to institutional-grade financing from super senior to first-loss with zero paperwork. It works by tokenizing each loan by connecting to the fintech lender's loan system to create onchain representations of those loans for investors to buy. The protocol automates the priority of payments.

🧠Onchain private credit feels like an asset class waiting to explode. Today Coinbase offers its customers 10.8% APY by lending their assets to other borrowers using the Morpho protocol. SocGen FORGE just partnered with Morpho to make its stablecoins available in that ecosystem too. This ecosystem will live or die with liquidity. Big funds like Apollo are already starting to experiment with tokenizing funds. It feels like a matter of time until these two worlds collide.  

3. Paygentic - The AI native Billing and Payments engine 

Paygentic turns any metric into revenue (great tagline). Customers can bill on revenue share, usage, outcome, or some complex hybrid model. They also promise “no fixed payment fees and no integration costs” (shots fired). They provide billing, payments, and merchant of record in a single provider. 

🧠 What if Stripe builds it? They just did. There are a lot of companies building Stripe Billing for AI, but it's hard to call that a moat. There’s a problem to solve, which is that subscription models break above a certain threshold (and there’s a ton of free trial abuse happening in AI). But when Stripe just adds those features its hard to compete. Unlike Lava, Polar or other billing specialists, Paygentic also packages payments, MoR and lower fees on transactions. That combo could carve out a space in the market. But how will they go to market and attract developers? Stripe likes to brag that every single major AI company that accepts payments uses Stripe. Commodity pricing isn’t the moat in payments. 

4. Lunos - The AI for AR

Luno helps companies manage the complex cycle of outreach, reconciliation and email management finance teams have. It can reconcile payments processor data with CRMs and ERPs. It can also update contracts automatically (e.g. if a customer is upsold on a new line item for billing). 

🧠 2 years ago this would have been a SaaS or “BNPL for B2B” company. But with AI why fix having complex integrations when you can just let AI handle the complexity and reconcile it all together? There’s plenty of AI for accounts payable (from places like Ramp), but receivables are the unloved cousin. Hidden pain is AI’s speciality. PS. their website is aesthetic, shout out whoever did the illustrations.

Things to know 👀

1. Mastercard and Coinbase Bidding to acquire BVNK, 24 hours after Citi Ventures invested in stablecoin infrastructure firm BVNK

Fortune reports both Coinbase and Mastercard are trying to acquire London-based BVNK for $1.5-2.5bn.Fortune says "Coinbase currently has the upper hand."Citi Ventures invested in BVNK at a valuation HIGHER than the $750M from their last round (although the amount was undisclosed). BVNK processes over $20 billion annually in stablecoin transactions for enterprise clients including, Worldpay, Flywire, and dLocal.

🧠 Mastercard is a strange bidder for me. 

• They do operate payments infra like Vocalink (Faster Payments) in the UK. 

• And I could see BVNK being an offering to their clients. 

• But I wouldn't see the BVNK business flourishing there. 

🧠 Coinbase is much more logical

• They already have massive scale advantages in crypto

• They're already a massive crypto onramp servicing enterprises

• This gets them deeper into enterprise payments

Coinbase wants this because they're becoming infrastructure—the AWS of crypto. Owning the pipes that move corporate money through stablecoins puts them at the center of B2B payments for the next decade.

🧠 BVNK TPV growth is explosive. They passed $20bn TPV (annualized). Notably the rate of growth is actually increasing. Ed at Zerohash said they’re seeing the same on the Tokenized podcast recently. And Stripe’s founders noted Bridge’s growth is significantly faster than Stripe’s was in its early days (!!)

🧠 TPV is how proper, grown up payments companies measure themselves. This isn’t “stablecoin volume” that comes from trading. It’s real payment flows for corporate treasury, remittance and stablecoin-linked cards. 

🧠 Plot twist. The US market has been their fastest-growing over the last 12-18 months. The GENIUS Act passed July 18, 2025 - the first federal regulatory framework for payment stablecoins in the US.

🧠 Every bank is looking for the right strategic partners. Corporates are pushing their banks to adopt tokenization. BVNK is on track to be profitable in 2026, holds multiple regulatory licences and has enterprise customers.

🧠 Please don’t ask for consultants help on finding partners. I’ve seen some consulting slides on stablecoins lately, and they’re awful, just shockingly bad. From the biggest logos. If you need help, reply to this email. 

2. Ant International is the second company to list an EU regulated payment token. 

Ant International, the mobile payments wallet with 1 billion users, will use a EURO token BREUR, to manage in-house treasury the European market. They're only the second company to be listed by the European Regulator ESMA for this.

🧠 Most people missed this story, but pay attention. Ant group has over 1 billion customers. They’re a massive corporate treasury. They have their own blockchain (Antchain), and they’re pushing their banks to tokenize.

🧠 JP Morgan and HSBC just announced doing instant, cross border FX for Ant International. Banks move when their corporates force them to. This is the real reason banks are doing deposit tokens and tokenization. Because their clients are demanding it.

🧠 I sent this to a few european bankers, here’s a sample response “WOW!!!!!!!!!” 

Stories I didn’t have time to cover

• Coinbase is removing its 4% APY on USDC unless you’re a member. Are they betting rates will fall, or that the bank lobby will win on “rewards” being a yield loophole in GENIUS? Probably both.

• Fiserv partnering in the launch of North Dakota’s stablecoin “Roughrider.” I guess free banking is back?

• JP Morgan spends $2bn a year on AI to save $2bn in costs. As a headline that sounds like treading water. It doesn’t tell you that it’s about 75bps of annual revenue. Or that Meta is spending close to 40% and Google over 20%. We might be in an AI Capex bubble, but what comes after will be so much bigger long term. Nobody is expecting banks to go that big. But it’s a fascinating stat.

• Square added free AI  voice ordering for restaurants. Smart strategy, let customers call, collect the orders, improve conversion, and collect more sales. Square doing things that help their customers get more sales, means they get more revenue.

Good Reads 📚

1. Since GENIUS 13% of Corporates use Stablecoins - 54% within 12 months

After GENIUS passed in July 2025, EY Parthenon interviewed 350 senior finance execs at Global Corporates. Finding, 54% intend to be live with stablecoins in 6 to 12 months, 63% want access through traditional banks, not new providers. 70% would be more willing to use stablecoins if integrated into ERP or treasury systems.

🧠Do not underestimate the demand for stablecoins in corporates. If the corporates want it, banks will support it.

🧠How banks go onchain, open loop is unsolved. The legal and regulatory challenges are still massive. What are the conditions for a chain to be a master record (enabling true atomic swaps)? How will this work across borders where jurisdictions have different rules? How will privacy work, at scale, with performance? (That last one I think Tempo* has an interesting take on).

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.

(2) All companies or assets mentioned by the author in which the author has a personal and/or financial interest are denoted with a *. None of the above constitutes investment advice, and you should seek independent advice before making any investment decisions.

(3) Any companies mentioned are top of mind and used for illustrative purposes only.

(4) A team of researchers has not rigorously fact-checked this. Please don't take it as gospel—strong opinions weakly held

(5) Citations may be missing, and I’ve done my best to cite, but I will always aim to update and correct the live version where possible. If I cited you and got the referencing wrong, please reach out