Every fintech company will become a stablecoin company.
Despite the hype, skepticism, hope, and concerns that stablecoins have generated, I believe we have crossed an important watershed. We are transitioning from the era of "Banking as a Service" (BaaS) to an era where stablecoins serve as infrastructure. B2C, B2B, and infrastructure companies centered around stablecoins will shape the industry in the next decade.
This transformation will be ten times more intense than the fintech boom of the past decade.
Because we are moving towards a new layer of infrastructure. People still see stablecoins as a new payment channel, and when they regard it as a platform that supersedes all other layers, we will eventually fully transition to native stablecoins. Stablecoins are a platform.
Key points of this article:
Previous Era: Banking as a Service (BaaS) and Its Implications for Stablecoins
Why stablecoins are an infrastructure layer (rather than just a new channel)
The Gold Rush of Stablecoins and Regulatory Unlocking
Full-stack application scenarios
Strategic positioning and future outlook
Lessons Learned from BaaS to Stablecoins
As the saying goes, fools are always impulsive.
We have just witnessed this in BaaS.
The financial services era of the 2010s was characterized by companies adopting mobile-first distribution and cloud-first infrastructure.
We have seen a new generation of infrastructure providers specifically designed for financial services. Every department and IT system of banks can now be accessed via APIs. This includes customer onboarding, anti-fraud, anti-money laundering (AML), credit card services, and in some cases even customer service. This enables new companies to launch mobile applications, wallets, and 'accounts', thus acquiring and servicing customers at a cost far lower than existing enterprises.
By combining API, mobile, and cloud technologies, fintech companies also benefit from the assistance of a few "sponsoring banks," which see the opportunity to provide banking channels, store funds, and transfer funds for this new sector. Some banks have achieved great success due to their "ease of cooperation."
Image source: Klaros Partners
For fintech companies, their initial business model is:
Revenue generated through interchange fees
Reduce customer acquisition costs through frictionless digital onboarding (CAC)
There's a saying: Show me the incentive mechanism, and I'll show you the results?
Some (but not all) fintech companies have optimized conversion rates, and when you do this, many of the norms of financial services appear to be friction. For example, requiring customers to provide multi-page documents for "Know Your Customer" (KYC) checks, or monitoring transactions for international terrorism risks, when the vast majority of customers are domestic.
When I wrote "BaaS is dead" in March 2023, we had already seen ominous signs.
The opening of the account is a crucial moment for both sides to catch the criminals. If you think of account opening as a tick box process that must be done with minimal friction, a minimalist interpretation of the BSA/AML rules will result in a high-converting opening process. Over the past two years, this has allowed fraud and money laundering to be carried out remotely on a large scale, attacking the weakest parts of the system. ——— excerpt from "BaaS is dead"
If you are a bad person, attacking small new banks and digital banks is an easy task.
But the result is not good.
On April 22, 2024, when the Blockchain as a Service (BaaS) provider Synapse went bankrupt, tens of thousands of customers lost their life savings. Fintech applications were unable to access these funds, and the underlying banks could neither track nor verify the whereabouts of the funds.
This event has made headlines in mainstream media, and within the banking industry, regulators have issued a series of consent orders, finding deficiencies in banks in the following areas:
Third-party risk management (i.e., API providers and fintech companies)
Anti-money laundering (i.e., the control measures of these companies may be inconsistent)
Board governance (i.e., whether to hold management accountable)
Image source: Klaros Partners
The consequences of these failures are immense.
If you cannot stop the flow of funds to bad actors, criminals will be rewarded, thus providing funding for human suffering.
However, the lesson here is not that BaaS or fintech is bad; far from it.
Today we have:
The ability for immigrants and low-income individuals to open free accounts.
The ability to use cash flow (the funds you have) for loan approval means that more people can avoid bankruptcy.
Good spending management card
Provide embedded loans for the market, small and medium-sized enterprises, and vertical SaaS.
Successful large financial brands have reshaped the industry. Cash App, Venmo, Chime, Affirm, Revolut, Monzo, Nubank, Stripe, Adyen, and your favorite brands have become household names in their markets and industries. Financial technology has fundamentally changed the way finance is distributed and raised the standards of user experience.
We just learned some lessons along the way.
The scale of investment in stablecoins and cross-border activities could lead to any collapse having epic consequences.
Although I know it is impossible to completely prevent bad things from happening, I hope that companies centered around stablecoins can learn from the mistakes and successes of the BaaS era and not be blinded by the upcoming gold rush.
Regulatory Unlocking and Capital Surge
2.1 Regulatory Unlock
The current draft of the "GENIUS Act" could change everything. According to the draft, if you are an approved stablecoin issuer, you can treat stablecoins as cash equivalents on your balance sheet. This is a significant matter.
Take prepaid cards as an example. They require funds transfer permissions, repayment rules, and consumer protection requirements. Cash is like the money in your pocket. It is much simpler to hold and manage. Stablecoins can inherit this simplicity.
2.2 The Gold Rush of Stablecoins
The funding for stablecoin-related businesses is expected to grow 10 times year-on-year.
Funding situation of stablecoin-related businesses
If the "GENIUS Act" is passed, a new regulated stablecoin channel and a new category of narrow banks, called licensed payment stablecoin issuers (PPSIs), will emerge.
This means that every entrepreneur, venture capitalist, payment company, shadow bank, and even large banks will take action to defend or seize this new opportunity.
Argument: Stablecoins as a Platform
Nowadays, stablecoins are used as an alternative cross-border payment channel, and in the future, they may become a domestic payment channel.
But if you only see these, you are missing the bigger picture. Stablecoins are also a platform that transcends channels such as SWIFT, ACH, PIX, and UPI, becoming the infrastructure that connects all these channels. This will unlock new use cases and opportunities.
Eventually, stablecoins will create an abstraction layer on top of existing payment channels, much like the internet has done for telecom operators. Similarly, the industry as a whole will become "stablecoined", just like we see with video, messaging, and e-commerce. This network layer will ultimately eliminate middlemen and reduce costs. ——— excerpt from "Stablecoins Aren't Cheaper; They're better."
I envision it as follows:
Stablecoins as a platform
This is what platform disruption looks like. Telecom traffic has increased by 60% year-on-year, and revenue has increased by 1% year-on-year. In 15 years, traffic has grown more than 1000 times faster than revenue.
Existing enterprises that cannot adapt to the new platform layer will be commoditized.
The impact of stablecoins on payments is like the impact of the internet on telecommunications — it creates a platform layer that commoditizes the underlying infrastructure into a pipeline.
We can see this infrastructure layer gradually emerging in every payment process and business model. Here is how it works.
4 How Stablecoins Work in the Entire System
Yes, stablecoins operate today as an alternative payment channel. But this is just the foundation. Most people see it as a payment channel in the image below, rather than a platform:
Stablecoins as a payment channel - they are not only that, but they also have more functions.
The real opportunity lies in the functions they can achieve as infrastructure.
4.1 Stablecoins for International Payments - Starting Point
There is no doubt that the main use case of stablecoins is cross-border payments. The primary currency route is from Asian countries, followed by the route from the United States to Latin American countries (Mexico, Brazil, Argentina).
G20 passes Tron and Tether to lead payment activities for global south countries
There are various types of cross-border payments. Let's take a deep dive into each payment process.
B2B Early Adoption Use Cases:
Large-scale enterprises expand their market (for example, SpaceX): for financial management, vendor payments, and inter-company payments.
International salaries and payments (e.g., Deel, Remote): Contractors and employers will pay to stablecoin wallets.
Artemis investigated more than 30 companies engaged in the stablecoin business and found that B2B, as a category, has grown by 400% year-on-year (and is accelerating), making it the fastest-growing category. (Note: The trading volume shown in the figure below represents only a part of the overall market.)
As shown by the growth curve, this is a significant increase.
Currently, the liquidity in the last mile and the foreign exchange spread are bottlenecks, but new companies like Stablesea, OpenFX, and Velocity are entering the market to change this situation.
The cross-border stablecoin use cases for consumers include:
Remittance and P2P (e.g., Sling Money): Customers use stablecoins for cross-border remittances, which are faster and usually cheaper.
Stablecoin linked card: also known as "Dollar Card", allows consumers in the Southern Hemisphere to purchase services from Netflix, ChatGPT, or Amazon.
Artemis's investigation also revealed that P2P and stablecoin associated cards have seen a year-on-year growth of over 100%, with at least $1 billion in transaction processing volume (TPV) in their sample.
Stablecoins are becoming a feature of new banks (such as Revolut and Nubank). Although their current use cases are still relatively narrow, they may expand in the future. Applications like Revolut, which originally started with remittances and P2P, are well-positioned to leverage this new channel.
Currently, the forex spreads for local currency trading are usually high and liquidity is low. But this situation is changing.
The landscape of domestic payments is still taking shape, but it is fascinating.
4.2 Stablecoins for Domestic Payments (Future Direction)
Domestic B2B use cases include:
Stablecoins with around-the-clock yields (e.g., ONDO or BUIDL): Currently, the crypto-native financial sector is converting stablecoins into tokenized government bonds to avoid exchange into fiat currencies. If such 24/7 functionality can be implemented in Enterprise Resource Planning (ERP) systems, it could be very attractive to any CFO.
Stablecoins as an alternative to the FBO structure (e.g., Modern Treasury): A characteristic of U.S. regulation is that, as a non-bank entity, to transfer funds on behalf of clients, it typically requires a "For the Benefit Of" (FBO) structure for beneficiary accounts. These account setups are complex. Modern Treasury's stablecoin product allows finance teams to set up payment processes for clients without the need for an FBO structure.
Stablecoin native B2B accounts (e.g., Altitude): "Borderless accounts" provided by Wise or Airwallex can be native to stablecoins. These accounts primarily use USD as the main currency but offer a frontend to manage invoices, expenses, and finances.
Domestic consumer use cases are still in the early stages, including:
Native "check" accounts for stablecoins (e.g., Fuse): Similar consumer experience to Wise, Revolut, or remittance apps, but with a global default. These services are currently appearing in countries in the Southern Hemisphere, but could represent a new, low-cost model for consumer fintech projects.
Prepaid card project: Since stablecoins may have cash equivalence, the financial officer can obtain programmable currency that is recorded on the balance sheet like cash but is as liquid as digital payments, without having to manage complex prepaid debt issues.
P2P stablecoins: Zelle, Venmo, Pix, and Faster Payments dominate their domestic markets, but if stablecoins become another development model, these applications may only need to serve as a front end to support it.
4.3 Finance and Infrastructure (Hidden Layer)
The hidden layer is the infrastructure. Banking technology itself is becoming the native technology of stablecoins.
Stablecoin Issuance as a Service (e.g., Brale, M^0): Banks and non-bank institutions may want to create their own stablecoins to attract deposits or avoid fees charged by other issuers.
Stablecoins as Side Cores (e.g., Stablecore): Banks may want to create a record system that interacts with stablecoins, independent of their traditional platforms. A "Side Core" can achieve this while still reconciling with the Main Core.
Stablecoins provide infrastructure similar to BaaS (e.g., Squads Grid): offering developers simple APIs to quickly create consumer, B2B, or embedded financial products.
Most companies in the market have severely underestimated developers' love for the convenience of stablecoins. For companies like Stripe, convenience has always been the key to success.
You can imagine other possibilities. As a thought experiment, consider stablecoins as a global, programmable record system that everyone can reconcile and view.
Each wallet address can be assigned to a known frontend or wallet creator, and in the event of KYC or AML issues, these companies can collaborate immediately.
4.4 Strategic Positioning of Stablecoins
Currently, the market has aggressors, opportunists, and participants who are still observing and formulating strategies.
Currently, the vast majority of activities take place on new platforms such as cryptocurrency exchanges and wallets, but opportunists are some companies that are now positioning themselves to take advantage of stablecoins as new payment channels:
Here are my thoughts on which is which:
Attacking side:
Asset management companies such as BlackRock, Franklin Templeton, and Fidelity rely on banks for wire transfers. Since the financial crisis, they have taken market share from banks in credit and money market funds. Stablecoins connect all of this through an instant, around-the-clock settlement layer.
Payment companies like Stripe, WorldPay, and Dlocal are expanding the number of markets they can operate in and the types of payment processes they offer. "Financial accounts" are encroaching on the core business of large currency center banks, but are often aimed at a newer customer base.
Defensive side:
Large banks: JPMorgan Chase, Bank of America, Citibank, and other American banks have previously discussed launching their own stablecoins. I believe this may be to seize market share in this new domestic and cross-border payment "channel", just as banks have dominated P2P payments through Zelle, they may "inevitably" also dominate this new channel.
Small banks: have begun lobbying against stablecoins. Stablecoin issuers, asset management companies, and large banks may withdraw deposits from their lower-yielding checking accounts, leading to the largest losses for small banks.
There will be a group of opportunistic banks, just as we see in sponsored banking activities, that will gain enormous opportunities through the disruption of stablecoins.
The reality is that opportunities vary by use case. Startups are exploring new payment processes, while payment service providers (PSPs) are expanding market access through existing processes. In the future, asset management companies and banks will find their positioning in the market, potentially closer to their existing core businesses.
Criticism, Concerns, and Why Most Are Exaggerated
I will summarize the criticism as follows:
Criticism: Stablecoins will trigger a bank run scenario. Rebuttal: This assumes Terra-style algorithmic stablecoins, rather than the government bond-backed licensed payment stablecoin issuers (PPSIs) under the GENIUS Act.
Criticism: Large tech companies will form a currency oligopoly. Rebuttal: This is a reasonable concern, but the framework makes it unlikely for large tech companies to issue stablecoins directly—they will use stablecoins instead of issuing them. Becoming a PPSI presents high regulatory barriers for them.
Criticism: It will lead to a loss of deposits in community banks. Rebuttal: Money market funds are already causing this situation. Community banks that adapt to provide stablecoin services will thrive.
Criticism: "This is cryptocurrency," meaning it is full of crime and scams. Rebuttal: It is time to abandon this view. The future of finance is on-chain, and institutional capital is building the infrastructure. There are real, novel risks such as key management, custody, liquidity, integration, and credit risk that should be focused on.
Criticism: Stablecoins are merely regulatory arbitrage because "holding USDC should be as difficult as holding US dollars." Rebuttal: Fintech itself achieves regulatory arbitrage through the Durbin Amendment. Developing on stablecoins is easier, but there is also a complete licensing system.
I believe this argument will continue.
Stablecoins will drive the next era of finance, and our outlook for the future has only just begun.
Finally, why does every company need a stablecoin strategy?
Everything we do today can realize the nativeization of stablecoins, at which point finance will gain superpowers. We can build instantaneous, global, and around-the-clock finance. We can recombine financial Lego blocks and make it more developer-friendly.
The BaaS era tells us that new infrastructure has created immense opportunities and significant risks. Companies that learn from the successes and failures of this era will win in the era centered around stablecoins.
Every company needs a stablecoin strategy. Every fintech company, every bank, every finance team needs one. Because this is not just a new payment channel. It is the platform layer upon which all other things will be built.
I urge every reader to build upon the lessons of the past.
Collapse is inevitable, things will go wrong, and that is also a certainty.
This includes how you will protect yourself when things inevitably collapse.
Build cool things.
and keep it safe.
View Original
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
The Rise of Stablecoins: The Platform Revolution from Payment Channels to Financial Infrastructure
Written by: Simon Taylor
Compiled by: Block unicorn
Foreword
Every fintech company will become a stablecoin company.
Despite the hype, skepticism, hope, and concerns that stablecoins have generated, I believe we have crossed an important watershed. We are transitioning from the era of "Banking as a Service" (BaaS) to an era where stablecoins serve as infrastructure. B2C, B2B, and infrastructure companies centered around stablecoins will shape the industry in the next decade.
This transformation will be ten times more intense than the fintech boom of the past decade.
Because we are moving towards a new layer of infrastructure. People still see stablecoins as a new payment channel, and when they regard it as a platform that supersedes all other layers, we will eventually fully transition to native stablecoins. Stablecoins are a platform.
Key points of this article:
Previous Era: Banking as a Service (BaaS) and Its Implications for Stablecoins
Why stablecoins are an infrastructure layer (rather than just a new channel)
The Gold Rush of Stablecoins and Regulatory Unlocking
Full-stack application scenarios
Strategic positioning and future outlook
As the saying goes, fools are always impulsive.
We have just witnessed this in BaaS.
The financial services era of the 2010s was characterized by companies adopting mobile-first distribution and cloud-first infrastructure.
We have seen a new generation of infrastructure providers specifically designed for financial services. Every department and IT system of banks can now be accessed via APIs. This includes customer onboarding, anti-fraud, anti-money laundering (AML), credit card services, and in some cases even customer service. This enables new companies to launch mobile applications, wallets, and 'accounts', thus acquiring and servicing customers at a cost far lower than existing enterprises.
By combining API, mobile, and cloud technologies, fintech companies also benefit from the assistance of a few "sponsoring banks," which see the opportunity to provide banking channels, store funds, and transfer funds for this new sector. Some banks have achieved great success due to their "ease of cooperation."
Image source: Klaros Partners
For fintech companies, their initial business model is:
Revenue generated through interchange fees
Reduce customer acquisition costs through frictionless digital onboarding (CAC)
There's a saying: Show me the incentive mechanism, and I'll show you the results?
Some (but not all) fintech companies have optimized conversion rates, and when you do this, many of the norms of financial services appear to be friction. For example, requiring customers to provide multi-page documents for "Know Your Customer" (KYC) checks, or monitoring transactions for international terrorism risks, when the vast majority of customers are domestic.
When I wrote "BaaS is dead" in March 2023, we had already seen ominous signs.
The opening of the account is a crucial moment for both sides to catch the criminals. If you think of account opening as a tick box process that must be done with minimal friction, a minimalist interpretation of the BSA/AML rules will result in a high-converting opening process. Over the past two years, this has allowed fraud and money laundering to be carried out remotely on a large scale, attacking the weakest parts of the system. ——— excerpt from "BaaS is dead"
If you are a bad person, attacking small new banks and digital banks is an easy task.
But the result is not good.
On April 22, 2024, when the Blockchain as a Service (BaaS) provider Synapse went bankrupt, tens of thousands of customers lost their life savings. Fintech applications were unable to access these funds, and the underlying banks could neither track nor verify the whereabouts of the funds.
This event has made headlines in mainstream media, and within the banking industry, regulators have issued a series of consent orders, finding deficiencies in banks in the following areas:
Third-party risk management (i.e., API providers and fintech companies)
Anti-money laundering (i.e., the control measures of these companies may be inconsistent)
Board governance (i.e., whether to hold management accountable)
Image source: Klaros Partners
The consequences of these failures are immense.
If you cannot stop the flow of funds to bad actors, criminals will be rewarded, thus providing funding for human suffering.
However, the lesson here is not that BaaS or fintech is bad; far from it.
Today we have:
The ability for immigrants and low-income individuals to open free accounts.
The ability to use cash flow (the funds you have) for loan approval means that more people can avoid bankruptcy.
Good spending management card
Provide embedded loans for the market, small and medium-sized enterprises, and vertical SaaS.
Successful large financial brands have reshaped the industry. Cash App, Venmo, Chime, Affirm, Revolut, Monzo, Nubank, Stripe, Adyen, and your favorite brands have become household names in their markets and industries. Financial technology has fundamentally changed the way finance is distributed and raised the standards of user experience.
We just learned some lessons along the way.
The scale of investment in stablecoins and cross-border activities could lead to any collapse having epic consequences.
Although I know it is impossible to completely prevent bad things from happening, I hope that companies centered around stablecoins can learn from the mistakes and successes of the BaaS era and not be blinded by the upcoming gold rush.
2.1 Regulatory Unlock
The current draft of the "GENIUS Act" could change everything. According to the draft, if you are an approved stablecoin issuer, you can treat stablecoins as cash equivalents on your balance sheet. This is a significant matter.
Take prepaid cards as an example. They require funds transfer permissions, repayment rules, and consumer protection requirements. Cash is like the money in your pocket. It is much simpler to hold and manage. Stablecoins can inherit this simplicity.
2.2 The Gold Rush of Stablecoins
The funding for stablecoin-related businesses is expected to grow 10 times year-on-year.
Funding situation of stablecoin-related businesses
If the "GENIUS Act" is passed, a new regulated stablecoin channel and a new category of narrow banks, called licensed payment stablecoin issuers (PPSIs), will emerge.
This means that every entrepreneur, venture capitalist, payment company, shadow bank, and even large banks will take action to defend or seize this new opportunity.
Nowadays, stablecoins are used as an alternative cross-border payment channel, and in the future, they may become a domestic payment channel.
But if you only see these, you are missing the bigger picture. Stablecoins are also a platform that transcends channels such as SWIFT, ACH, PIX, and UPI, becoming the infrastructure that connects all these channels. This will unlock new use cases and opportunities.
Eventually, stablecoins will create an abstraction layer on top of existing payment channels, much like the internet has done for telecom operators. Similarly, the industry as a whole will become "stablecoined", just like we see with video, messaging, and e-commerce. This network layer will ultimately eliminate middlemen and reduce costs. ——— excerpt from "Stablecoins Aren't Cheaper; They're better."
I envision it as follows:
Stablecoins as a platform
This is what platform disruption looks like. Telecom traffic has increased by 60% year-on-year, and revenue has increased by 1% year-on-year. In 15 years, traffic has grown more than 1000 times faster than revenue.
Existing enterprises that cannot adapt to the new platform layer will be commoditized.
The impact of stablecoins on payments is like the impact of the internet on telecommunications — it creates a platform layer that commoditizes the underlying infrastructure into a pipeline.
We can see this infrastructure layer gradually emerging in every payment process and business model. Here is how it works.
4 How Stablecoins Work in the Entire System
Yes, stablecoins operate today as an alternative payment channel. But this is just the foundation. Most people see it as a payment channel in the image below, rather than a platform:
Stablecoins as a payment channel - they are not only that, but they also have more functions.
The real opportunity lies in the functions they can achieve as infrastructure.
4.1 Stablecoins for International Payments - Starting Point
There is no doubt that the main use case of stablecoins is cross-border payments. The primary currency route is from Asian countries, followed by the route from the United States to Latin American countries (Mexico, Brazil, Argentina).
G20 passes Tron and Tether to lead payment activities for global south countries
There are various types of cross-border payments. Let's take a deep dive into each payment process.
B2B Early Adoption Use Cases:
Large-scale enterprises expand their market (for example, SpaceX): for financial management, vendor payments, and inter-company payments.
International salaries and payments (e.g., Deel, Remote): Contractors and employers will pay to stablecoin wallets.
Artemis investigated more than 30 companies engaged in the stablecoin business and found that B2B, as a category, has grown by 400% year-on-year (and is accelerating), making it the fastest-growing category. (Note: The trading volume shown in the figure below represents only a part of the overall market.)
As shown by the growth curve, this is a significant increase.
Currently, the liquidity in the last mile and the foreign exchange spread are bottlenecks, but new companies like Stablesea, OpenFX, and Velocity are entering the market to change this situation.
The cross-border stablecoin use cases for consumers include:
Remittance and P2P (e.g., Sling Money): Customers use stablecoins for cross-border remittances, which are faster and usually cheaper.
Stablecoin linked card: also known as "Dollar Card", allows consumers in the Southern Hemisphere to purchase services from Netflix, ChatGPT, or Amazon.
Artemis's investigation also revealed that P2P and stablecoin associated cards have seen a year-on-year growth of over 100%, with at least $1 billion in transaction processing volume (TPV) in their sample.
Stablecoins are becoming a feature of new banks (such as Revolut and Nubank). Although their current use cases are still relatively narrow, they may expand in the future. Applications like Revolut, which originally started with remittances and P2P, are well-positioned to leverage this new channel.
Currently, the forex spreads for local currency trading are usually high and liquidity is low. But this situation is changing.
The landscape of domestic payments is still taking shape, but it is fascinating.
4.2 Stablecoins for Domestic Payments (Future Direction)
Domestic B2B use cases include:
Stablecoins with around-the-clock yields (e.g., ONDO or BUIDL): Currently, the crypto-native financial sector is converting stablecoins into tokenized government bonds to avoid exchange into fiat currencies. If such 24/7 functionality can be implemented in Enterprise Resource Planning (ERP) systems, it could be very attractive to any CFO.
Stablecoins as an alternative to the FBO structure (e.g., Modern Treasury): A characteristic of U.S. regulation is that, as a non-bank entity, to transfer funds on behalf of clients, it typically requires a "For the Benefit Of" (FBO) structure for beneficiary accounts. These account setups are complex. Modern Treasury's stablecoin product allows finance teams to set up payment processes for clients without the need for an FBO structure.
Stablecoin native B2B accounts (e.g., Altitude): "Borderless accounts" provided by Wise or Airwallex can be native to stablecoins. These accounts primarily use USD as the main currency but offer a frontend to manage invoices, expenses, and finances.
Domestic consumer use cases are still in the early stages, including:
Native "check" accounts for stablecoins (e.g., Fuse): Similar consumer experience to Wise, Revolut, or remittance apps, but with a global default. These services are currently appearing in countries in the Southern Hemisphere, but could represent a new, low-cost model for consumer fintech projects.
Prepaid card project: Since stablecoins may have cash equivalence, the financial officer can obtain programmable currency that is recorded on the balance sheet like cash but is as liquid as digital payments, without having to manage complex prepaid debt issues.
P2P stablecoins: Zelle, Venmo, Pix, and Faster Payments dominate their domestic markets, but if stablecoins become another development model, these applications may only need to serve as a front end to support it.
4.3 Finance and Infrastructure (Hidden Layer)
The hidden layer is the infrastructure. Banking technology itself is becoming the native technology of stablecoins.
Stablecoin Issuance as a Service (e.g., Brale, M^0): Banks and non-bank institutions may want to create their own stablecoins to attract deposits or avoid fees charged by other issuers.
Stablecoins as Side Cores (e.g., Stablecore): Banks may want to create a record system that interacts with stablecoins, independent of their traditional platforms. A "Side Core" can achieve this while still reconciling with the Main Core.
Stablecoins provide infrastructure similar to BaaS (e.g., Squads Grid): offering developers simple APIs to quickly create consumer, B2B, or embedded financial products.
Most companies in the market have severely underestimated developers' love for the convenience of stablecoins. For companies like Stripe, convenience has always been the key to success.
You can imagine other possibilities. As a thought experiment, consider stablecoins as a global, programmable record system that everyone can reconcile and view.
Each wallet address can be assigned to a known frontend or wallet creator, and in the event of KYC or AML issues, these companies can collaborate immediately.
4.4 Strategic Positioning of Stablecoins
Currently, the market has aggressors, opportunists, and participants who are still observing and formulating strategies.
Currently, the vast majority of activities take place on new platforms such as cryptocurrency exchanges and wallets, but opportunists are some companies that are now positioning themselves to take advantage of stablecoins as new payment channels:
Here are my thoughts on which is which:
Attacking side:
Asset management companies such as BlackRock, Franklin Templeton, and Fidelity rely on banks for wire transfers. Since the financial crisis, they have taken market share from banks in credit and money market funds. Stablecoins connect all of this through an instant, around-the-clock settlement layer.
Payment companies like Stripe, WorldPay, and Dlocal are expanding the number of markets they can operate in and the types of payment processes they offer. "Financial accounts" are encroaching on the core business of large currency center banks, but are often aimed at a newer customer base.
Defensive side:
Large banks: JPMorgan Chase, Bank of America, Citibank, and other American banks have previously discussed launching their own stablecoins. I believe this may be to seize market share in this new domestic and cross-border payment "channel", just as banks have dominated P2P payments through Zelle, they may "inevitably" also dominate this new channel.
Small banks: have begun lobbying against stablecoins. Stablecoin issuers, asset management companies, and large banks may withdraw deposits from their lower-yielding checking accounts, leading to the largest losses for small banks.
There will be a group of opportunistic banks, just as we see in sponsored banking activities, that will gain enormous opportunities through the disruption of stablecoins.
The reality is that opportunities vary by use case. Startups are exploring new payment processes, while payment service providers (PSPs) are expanding market access through existing processes. In the future, asset management companies and banks will find their positioning in the market, potentially closer to their existing core businesses.
I will summarize the criticism as follows:
Criticism: Stablecoins will trigger a bank run scenario. Rebuttal: This assumes Terra-style algorithmic stablecoins, rather than the government bond-backed licensed payment stablecoin issuers (PPSIs) under the GENIUS Act.
Criticism: Large tech companies will form a currency oligopoly. Rebuttal: This is a reasonable concern, but the framework makes it unlikely for large tech companies to issue stablecoins directly—they will use stablecoins instead of issuing them. Becoming a PPSI presents high regulatory barriers for them.
Criticism: It will lead to a loss of deposits in community banks. Rebuttal: Money market funds are already causing this situation. Community banks that adapt to provide stablecoin services will thrive.
Criticism: "This is cryptocurrency," meaning it is full of crime and scams. Rebuttal: It is time to abandon this view. The future of finance is on-chain, and institutional capital is building the infrastructure. There are real, novel risks such as key management, custody, liquidity, integration, and credit risk that should be focused on.
Criticism: Stablecoins are merely regulatory arbitrage because "holding USDC should be as difficult as holding US dollars." Rebuttal: Fintech itself achieves regulatory arbitrage through the Durbin Amendment. Developing on stablecoins is easier, but there is also a complete licensing system.
I believe this argument will continue.
Stablecoins will drive the next era of finance, and our outlook for the future has only just begun.
Everything we do today can realize the nativeization of stablecoins, at which point finance will gain superpowers. We can build instantaneous, global, and around-the-clock finance. We can recombine financial Lego blocks and make it more developer-friendly.
The BaaS era tells us that new infrastructure has created immense opportunities and significant risks. Companies that learn from the successes and failures of this era will win in the era centered around stablecoins.
Every company needs a stablecoin strategy. Every fintech company, every bank, every finance team needs one. Because this is not just a new payment channel. It is the platform layer upon which all other things will be built.
I urge every reader to build upon the lessons of the past.
Collapse is inevitable, things will go wrong, and that is also a certainty.
This includes how you will protect yourself when things inevitably collapse.
Build cool things.
and keep it safe.