Stablecoins In Finance

🚨 BREAKING: HSBC and Standard Chartered are about to get Hong Kong's first stablecoin licences. These two banks already print Hong Kong's physical banknotes. Now they'll issue digital ones. --- Hong Kong narrowed 36 applications down to 3 or 4. The HKMA deliberately picked its note-issuing banks first — prioritizing institutional credibility over innovation speed. Standard Chartered built a JV (Anchorpoint Financial) with Animoca Brands and HKT. HSBC surprised everyone — they never even joined the HKMA sandbox. The initial focus is HKD-pegged stablecoins. Hong Kong's Stablecoin Ordinance requires reserves backed exclusively by High Quality Liquid Assets, T+1 par redemptions, client asset segregation, and public reserve disclosures. This is a proper, grown-up stablecoin regime. Approval could come as early as March 24th. --- Artemis data shows China is the second-largest receiver of cross-border stablecoin payments globally. The Singapore-China corridor is the single busiest stablecoin route in the world. USDT on Tron dominates. Low fees. High liquidity. Hard to stop. China's Supreme People's Procuratorate declared using USDT for foreign exchange is illegal. The crackdown on Tether via Tron is intensifying. Stablecoins in China work the way VPNs do. Officially banned. Massively used. --- Hong Kong is building the regulated front door to the world's biggest unofficial stablecoin market. The stablecoin market crossed $312 billion this month. $33 trillion in transactions last year. Citi projects up to $4 trillion in supply by 2030. When your note-issuing banks become your stablecoin issuers, stablecoins begin to matter MUCH MUCH More in the global cross border conversation.

This was long overdue. European banks are finally stepping into the stablecoin play. Here’s the context you won’t find in the headlines. Stablecoins are the most serious challenger to the banks’ business model: • Instead of money sitting in bank accounts, it moves into tokens. For banks, that can erode their cheapest and most stable source of funding. • Stablecoins enable instant, on-chain settlement across borders, cutting banks out of payment flows and fee pools tied to card schemes and correspondent networks. • Stablecoins operate 24/7 and settle in real time, allowing corporates to manage liquidity continuously - and threatening banks’ cash-management revenues. And yet if banks don’t adopt stablecoins, they risk being pushed out of the digital money layer entirely. 𝗧𝗵𝗲 𝗺𝗮𝗿𝗸𝗲𝘁 Nearly the entire stablecoin market - about 99% - is tied to the US dollar. Why? • The dollar is the world’s reserve currency and the dominant settlement asset in trade and finance. • Stablecoin providers peg to USD because that’s where institutional demand and deep liquidity are. • The more activity that happens in USD stablecoins, the harder it becomes for other currencies to gain adoption. 𝗪𝗵𝗮𝘁 𝘁𝗵𝗶𝘀 𝗺𝗲𝗮𝗻𝘀 𝗳𝗼𝗿 𝗘𝘂𝗿𝗼𝗽𝗲 • European banks and corporates risk becoming price-takers in a dollar-denominated digital ecosystem. Even if a payment moves between two European parties, if it's in USD stablecoins, it runs through US-centric infrastructure. • Because euro liquidity in stablecoins is still thin, Europe lacks the depth to build robust digital financial rails of its own – leaving banks and corporates dependent on dollar flows. • Without credible euro-based stablecoins, Europe risks losing the race in programmable money and embedded finance. 𝗧𝗵𝗲 𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹𝗲 The above is exactly what the banks' coalition wants to address. • A euro stablecoin gives European banks and corporates digital money in their own currency. • Via the euro stablecoin banks get to keep deposits and yield, unlock new revenues, stay central to digital markets, and align with regulators’ push for sovereign, supervised money. • MiCA (the European digital assets regulation) forces issuers to hold fully backed, transparent reserves, audited under EU supervision. • A euro stablecoin needs scale, liquidity, and trust — no bank can achieve that alone, but many banks together can pool balance sheets, customers, and credibility to make it viable. • Banks can embed the stablecoin directly into accounts, treasury products, and settlement systems from day one. • European corporates will prefer a euro-native stablecoin for settlement, liquidity, and embedded finance over USD tokens that expose them to FX risk and US regulatory dependence. The question is: will European banks manage to break the dollar's stablecoin monopoly? Opinions: my own Subscribe to my newsletter: https://lnkd.in/dkqhnxdg

Have Digital Currencies Hit Product-Market Fit Yet? Stablecoins reached $270B market cap with $26T transaction volume. Yet, only 1% involves real-world payments. The infrastructure is ready, but adoption remains concentrated in crypto trading. Just analyzed BCG's deep dive into digital currency mainstreaming, and the data reveals a critical inflection point most are missing. ↳ Stats that demand attention: - Stablecoin market cap grew 57% year-on-year to $210B by end 2024, reaching $270B by August 2025 - Turkey processes $38B annually in stablecoin volume - 4.3% of GDP, highest globally - Nigeria's USDC transactions jumped 412% year-on-year, exceeding $3B monthly - Tokenized real-world assets grew 4x in two years to $28B market capitalization - J.P.Morgan's Kinexys processed $1.5T in corporate transactions with $2B daily volume - Global South driving adoption in corridors where speed and USD access create value ↳ Three insights reshaping digital money: 1/ Infrastructure-Adoption Gap Narrowing • Technical rails proven at scale - $26T transaction volume demonstrates capacity • Real-world usage concentrated in high-inflation, unstable currency markets B2B cross-border payments growing 30x in two years • Corporate treasury applications emerging through platforms like SpaceX-Bridge integration 2/ Regulatory Clarity Accelerating Momentum • GENIUS Act & Digital Euro • MiCA in EU, GENIUS Act in US, stablecoin frameworks in Hong Kong/UAE building confidence • Central banks advancing CBDCs • Banks exploring tokenized deposits as regulatory-aligned alternative to stablecoins 3/ Geographic Divide in Adoption Patterns • Heaviest usage in Global South where USD access, remittance costs, inflation create demand • Developed markets seeing corporate/wholesale applications before retail adoption • Cross-border use cases proving strongest PMF initially • "Stablecoin sandwich" model emerging as foundation for Banking-as-a-Service 2.0 ↳ My Take: 1/ Distribution Remains King: The winners control last-mile access, not the underlying tech. Stablecoin issuers face the same distribution challenge that constrained early digital wallets. 2/ Corporate Treasury is the Wedge: B2B adoption will drive mainstream acceptance before retail. Complex corporate needs justify infrastructure investment. 3/ Sovereignty vs Efficiency Trade-off: Dollar-denominated stablecoins create de facto dollarization, while CBDCs assert monetary sovereignty. This tension will define adoption patterns by geography. Banks' Stablecoin Strategy Dilemma: • Traditional banks face "innovate or intermediate" decision. • Supporting stablecoin issuers through custody and FX services captures value without balance sheet risk. • Direct issuance risks deposit disintermediation but offers control. Which factor will most accelerate mainstream stablecoin adoption? A) Regulatory clarity B) Corporate treasury adoption at scale C) Global South retail payment usage D) Banking infrastructure integration

International Monetary Fund - Technology, Payments, and the Rise of Stablecoins 5 Key Takeaways 1️⃣ Rapid Growth – Stablecoin firms now count millions of global users, enabling 24/7 cross-border transactions at low cost. 2️⃣ Opportunities – Faster, cheaper remittances and financial access in economies with weak domestic systems. 3️⃣ Risks – Potential dollarisation, hollowing out of banking deposits, fiscal erosion, and systemic vulnerabilities under stress. 4️⃣ Power Shift – Stablecoins backed by US Treasuries already hold more than some sovereign nations, reinforcing US dollar dominance. 5️⃣ Policy Challenge – The financial system is changing faster than the rules. Balancing innovation, privacy, compliance, and stability is now urgent. Real Life Example In Argentina, where inflation topped 140% last year, ordinary citizens increasingly use USDT and USDC to protect savings and pay for everyday goods. Stablecoins have become a lifeline—bypassing fragile banks and volatile local currency—demonstrating both their disruptive potential and the challenges they pose for monetary sovereignty 📌 Why It Matters Stablecoins could reshape global finance by rewiring payments, credit, and liquidity. They may strengthen the US dollar’s “exorbitant privilege,” but could also undermine monetary sovereignty elsewhere. For policymakers, the challenge is to reap the efficiency gains while guarding against systemic risk and regulatory blind spots. What Happens Next? Expect more regulatory clarity (MiCA in Europe, new US frameworks), deeper integration of tokenisation into capital markets, and rising competition between public (CBDCs, fast payments) and private (stablecoins, tokenised deposits) solutions. The outcome will define the next era of money.

There are a 𝑙𝑜𝑡 of conversations happening around stablecoins right now — and the tone has changed. This isn’t just crypto people debating tech anymore. It’s turning up in 𝐛𝐚𝐧𝐤 𝐞𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐜𝐚𝐥𝐥𝐬, 𝐩𝐨𝐥𝐢𝐜𝐲 𝐝𝐫𝐚𝐟𝐭𝐬, 𝐚𝐧𝐝 𝐫𝐞𝐠𝐮𝐥𝐚𝐭𝐨𝐫𝐲 𝐟𝐫𝐚𝐦𝐞𝐰𝐨𝐫𝐤𝐬. Take Bank of America’s CEO Brian Moynihan — his point was blunt: if stablecoins are allowed to pay yield, they could pull deposits out of banks and “take lending capacity out of the system.” And JPMorgan leadership (Jamie Dimon included) have raised the bigger structural concern: if stablecoins start behaving like deposits, we may be creating a parallel banking system — but without the same safeguards that sit behind traditional banking. Which is why this feels like a real shift: 𝐒𝐭𝐚𝐛𝐥𝐞𝐜𝐨𝐢𝐧𝐬 𝐚𝐫𝐞 𝐧𝐨 𝐥𝐨𝐧𝐠𝐞𝐫 𝐚 “𝐜𝐫𝐲𝐩𝐭𝐨 𝐭𝐨𝐩𝐢𝐜”. 𝐓𝐡𝐞𝐲’𝐯𝐞 𝐛𝐞𝐜𝐨𝐦𝐞 𝐚 𝐛𝐚𝐧𝐤𝐢𝐧𝐠 + 𝐩𝐨𝐥𝐢𝐜𝐲 𝐭𝐨𝐩𝐢𝐜. Here are the 6 stablecoin discussions shaping 2026 1) Yield / rewards (the real battleground) If stablecoins pay yield — directly or indirectly — they stop being “just payments”. They become a competing store of value. 2) Deposit outflows → lending capacity Banks fund lending through deposits. If a meaningful share migrates to stablecoins, credit tightens or becomes more expensive — SMEs get hit first. 3) Shadow banking risk Regulators worry stablecoins could recreate deposit-like intermediation outside the prudential perimeter — without the same capital, liquidity, or backstops. 4) Tokenised deposits vs stablecoins Two versions of digital money are competing quietly in the background: - bank-issued tokenised deposits (inside the system), vs - stablecoins issued by non-banks (reserve-backed, outside the system) 5) Reserve rules & redemption stress What counts as safe reserves? How fast can redemptions be met in a shock? This is where “payments innovation” meets “financial stability”. 6) Consumer protection & integrity Clear disclosures, governance, audits, AML/sanctions controls — all become non-negotiable if this scales. The interesting part is this: The industry isn’t debating whether stablecoins work. They clearly do. The debate is whether they remain a regulated payments layer… or evolve into a deposit alternative, forcing a redesign of credit intermediation and monetary plumbing. Where do you think this lands over the next 12 months? #Stablecoins #FinTech #DigitalPayments #Banking #Regulation #CryptoRegulation #Payments

🔴 Stablecoins are not a threat but an opportunity for short-term funding markets: papers from the Banque de France & the ECB👇 This article published in the Journal of International Money and Finance was authored by Jean Barthelemy from the Banque de France, together with Paul Gardin and Benoit Nguyen from the European Central Bank. 👉 They analyze the impact of the exponential growth of stablecoins on the financial assets backing their reserves, namely the short-term funding market. 🎯 Why does this matter? Because it touches directly on economic stability, raising a central question: could stablecoins destabilize the short-term funding available to corporates and financial institutions… …and, in turn, the very structure of the money market? 1️⃣ First finding: their growth did not affect market rates Between 2020 and 2022, the market capitalization of USD-denominated stablecoins grew from $5 billion to $150 billion, driven primarily by Tether and Circle. At that time, interest rates were very low, which pushed issuers to hold commercial paper (CP) as part of their reserves → By June 2021, Tether alone is estimated to have held over $31 billion in CP. 👉 According to the authors, addressing a common concern among regulators, these massive purchases did not affect CP market rates → Spreads remained unchanged despite the sudden and substantial increase in demand. Why? Because token mint/burn activity (i.e., circulating supply) is publicly observable onchain. This real-time transparency allows CP issuers to anticipate stablecoin-related demand and adjust their issuance accordingly. The paper shows empirically that the supply of CP (and later T-bills) adjusts smoothly and fully to stablecoin purchases, at least up to 2% of the total outstanding USD short-term asset market. 👉 This finding contradicts a recent BIS paper, which argues that stablecoins cannot adjust elastically because they must acquire reserve assets in order to issue new tokens, and therefore cannot function as an “elastic” form of money. According to the authors, these conclusions also apply to the T-bill market, which now makes up the vast majority of stablecoin issuers’ reserves, driven by safety considerations, rising interest rates, and emerging regulatory frameworks (GENIUS, MiCA, etc.). 2️⃣ Stablecoins are no longer just crypto instruments 👉 The paper describes issuers as full-fledged participants in short-term funding markets, and as such, they should be viewed as potential strategic investors. They are no longer just crypto curiosities, they are the first actors enabling researchers to study the convergence between the digital-assets universe and traditional finance. 👉 Link to the paper in the comments below At Blockstories, we’ll be following this closely 👀 — You can subscribe in the comments as well👇

RAKBANK’s Dirham-Backed Stablecoin: A Milestone for Regulated Digital Money in the UAE RAKBANK has received in-principle approval from the Central Bank of the United Arab Emirates to issue a 1:1 AED-backed payment token (stablecoin), subject to final regulatory and operational readiness This is not a crypto-native experiment, it is a regulated commercial bank stepping directly onto blockchain based payment rails under the UAE’s Payment Token Services framework Why this matters: ▶️ Regulated issuance: Reserves are expected to be fully backed by dirhams held in segregated, supervised accounts ▶️ Domestic payments focus: The framework prioritises stablecoins for #onshore #settlement and payments, not speculative trading ▶️ Bank-grade controls: Governance, compliance, auditability, and operational resilience are core design requirements, not optional add-ons ▶️ Local over Global: Issuers are regulated incumbents, not offshore entities ▶️ National First: Approvals sit within a single national framework, not fragmented sandboxes ▶️ Sequenced Rollout: The regulator is sequencing adoption deliberately, issuer by issuer This signals that #stablecoins in the #UAE are being positioned as #payment infrastructure, not parallel money systems ⸻ What this means for the UAE’s DA ecosystem? 1️⃣ Stablecoins move from “crypto” to “core payments”: AED backed stablecoins are now a #regulated settlement instrument which are suitable for merchant payments, wallet-to-wallet transfers, and #programmable disbursements. A potential bridge between traditional bank accounts and #tokenised financial products. 2️⃣ A foundation layer for tokenisation: Bank-issued payment tokens will enable #Atomicsettlement (DvP) for tokenised securities and funds. This should lead to cleaner integration with custody, trading, and post-trade infrastructure. 3️⃣ Clear regulatory differentiation: The UAE is drawing a bright line between - Domestic, fiat-backed payment tokens under central-bank supervision and “Unbacked” or foreign #currency stablecoins, which face tighter usage constraints. This clarity is precisely what institutional adoption requires 4️⃣ Competitive pressure on banks and PSPs: Once one or a few banks prove this model works, then others will face pressure to match programmable settlement capabilities (Payments, treasury, and cash-management propositions will increasingly be evaluated on on-chain readiness) ⸻ This is not about “a bank launching a stablecoin”, it’s about the UAE methodically building regulated digital money rails with banks, not around them RAKBANK’s approval marks a transition point: ➖ From pilots to production ➖ From theory to operating infrastructure ➖ From crypto adjacency to regulated financial plumbing The quiet part is now out loud: digital assets in the UAE are becoming operational, not experimental ________ Photo below: Raheel Ahmad (CEO) joined me during Season 3 of Couchonomics with Arjun #rakbank #digitalassets #paymenttokens #cbuae

Are we approaching the end of traditional payment rails, or just entering a new phase of evolution? Stablecoins seemingly landed the MVP award at this years Money 20/20 anyway.👇 For years, the foundations of payments have been remarkably stable. Card schemes, clearing houses and correspondent banks have underpinned everything from high street transactions to cross border trade. These systems are deeply embedded, heavily regulated and broadly trusted. But they are also ageing. As tokenised money and stablecoins move from concept to implementation, the payments conversation is shifting. What once sounded like fringe innovation is now being tested at scale by central banks, financial institutions and private players alike. A few themes are worth watching closely: ➡️ New rails, new rules. Stablecoins can settle in real time and reduce reliance on multiple intermediaries. This opens the door to faster, cheaper and programmable payments, particularly in markets where existing infrastructure is fragmented or inefficient. ➡️ Resilience versus agility. Traditional payment systems are proven, robust and grounded in legal certainty. New approaches may offer speed and flexibility, but they must prove their reliability and ability to withstand pressure at scale. ➡️ Interoperability is key. For tokenised payments to reach maturity, they will need to connect seamlessly with the systems already in place. Until that happens, hybrid models are more likely than full replacement. ➡️ Regulation will set the direction. The role of public institutions through policy, oversight and possibly direct issuance will determine how far private stable coin models can develop. Trust in money depends on more than just technology. ➡️ Different markets, different needs. The case for change in wholesale markets such as securities settlement or interbank transfers is not the same as in consumer payments. Innovation may follow parallel but distinct tracks. So the question may not be whether we are abandoning old rails, but how and where the next generation of infrastructure is being built, and who gets to shape it. The future of money is about more than just technology. It raises fundamental questions about who governs our financial systems, who earns our trust and who benefits from change. Money 20/20 last week truly showed me just how far the journey is already under way. What comes next will depend on how well we navigate the trade-offs between speed, safety and control.

𝗠𝗮𝘀𝘁𝗲𝗿𝗰𝗮𝗿𝗱 + 𝗙𝗶𝘀𝗲𝗿𝘃 𝗧𝗲𝗮𝗺 𝗨𝗽 𝗼𝗻 𝗦𝘁𝗮𝗯𝗹𝗲𝗰𝗼𝗶𝗻𝘀 This week, Mastercard and Fiserv announced a new partnership that brings stablecoins into the hands of traditional businesses, FI's, and consumers, all without needing to touch an exchange or wallet. Here’s what’s happening👇 𝗦𝘁𝗮𝗯𝗹𝗲𝗰𝗼𝗶𝗻 𝗦𝗲𝘁𝘁𝗹𝗲𝗺𝗲𝗻𝘁 𝗕𝗲𝗰𝗼𝗺𝗲𝘀 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀-𝗥𝗲𝗮𝗱𝘆 Fiserv is integrating Circle’s USDC into its platform, while Mastercard will help enable blockchain-based settlement across its global network The goal? → Let merchants and consumers send/receive stablecoins like fiat → Enable instant settlement, 24/7/365 → Provide programmable payments for modern use cases 𝗪𝗵𝘆 𝗧𝗵𝗶𝘀 𝗠𝗮𝘁𝘁𝗲𝗿𝘀 This partnership signals a foundational shift toward stablecoin interoperability and merchant-grade infrastructure → Fiserv (Clover, Carat) enables 6M+ merchant endpoints → Mastercard already has pilots for CBDCs and blockchain traceability → Circle’s USDC is regulated, transparent, and widely adopted Together, these players bring stablecoin rails to the legacy POS ecosystem, not just fintech apps. 𝗨𝘀𝗲 𝗖𝗮𝘀𝗲: 𝗖𝗿𝗼𝘀𝘀-𝗕𝗼𝗿𝗱𝗲𝗿 𝗣𝗮𝘆𝗺𝗲𝗻𝘁𝘀 𝗳𝗼𝗿 𝗦𝗠𝗕𝘀 📌 → A merchant in Mexico could accept USDC via Clover → Funds settle instantly, in dollars, without FX fees or delays → Mastercard APIs then help convert or route funds seamlessly back into fiat 𝗧𝗵𝗲 𝗿𝗲𝘀𝘂𝗹𝘁 → Cross-border commerce that works like domestic card acceptance. 𝗧𝗵𝗲 𝗕𝗶𝗴 𝗣𝗶𝗰𝘁𝘂𝗿𝗲 Stablecoins are quickly becoming the backbone of programmable payments, especially in markets where card settlement is slow or costly This partnership removes key adoption barriers like: ✔️ Instant settlement ✔️ On-chain transparency ✔️ Easy integration via Fiserv’s platforms ✔️ Global merchant acceptance via Mastercard rails 𝗪𝗵𝗮𝘁’𝘀 𝗡𝗲𝘅𝘁? As more payment processors and networks embrace stablecoins, expect to see: → Lower-cost remittances → Faster merchant settlements → Consumer apps built directly on tokenized money rails Source: Circle, Mastercard, FIS 🔔 Follow Jason Heister for daily #Fintech and #Payments guides, technical breakdowns, and industry insights