Industry news:
— Visa announces stablecoin prefunding pilot at Sibos.
Key graf: “For decades, moving money across borders has depended on slow, costly systems that tie up capital in advance. With this pilot, Visa Direct is testing stablecoins as a new funding source. The goal: reduce friction, unlock faster access to liquidity, and give financial institutions more flexibility in how they manage global payouts.”
Cash Equivalence take: Prefunding everything is usually very expensive.
— SWIFT announced a blockchain ledger initiative with 30+ banks, targeting instant 24/7 cross-border payments.
Key graf: “The blockchain-based shared ledger – a secure, real-time log of transactions between financial institutions – will start with a conceptual prototype with Consensys. It will record, sequence and validate transactions and enforce rules through smart contracts. The ledger will be built for interoperability, both with existing and emerging networks, while maintaining the trust, resilience and compliance synonymous with Swift and critical to the secure functioning of global finance.”
Cash Equivalence take: This seems mostly a defensive, strategic move to keep banks from wandering onto alternative rails while signaling that “real” finance will adopt crypto tech on its own terms. Cynics would say SWIFT is doing this to ensure banks will wait for SWIFT’s system rather than experiment elsewhere — just like the 1990s, when the banking industry floated SET until Digicash faded, then quietly shelved it.
The move clashes with SWIFT’s previous position that on-chain settlement is impractical for privacy, or that it solves few problems beyond upgrading messaging that banks already get from RTGS and correspondent banks.
Central bankers:
— Fed governor Christopher Waller told Sibos 2025 that stablecoins are key to America’s payment future (via Crypto Slate)
Key graf: “Waller urged regulators and industry participants to view stablecoins as a continuation of America’s long tradition of payment innovation. He argued that stablecoins should be recognized as another legitimate payment option, as consumers once gained choices through banks, card networks, and fintech firms. According to Wallerm, these digital assets represent “a new form of private money” that can coexist with existing payment instruments if supported by robust safeguards. By positioning stablecoins this way, Waller tied their adoption to the US culture of choice and competition.”
— ECB President Christine Lagarde testified to the EU Parliament on Monday and claimed there was room for all in the payments space.
Key points: Lagarde rejected the idea that supporting a digital euro meant hostility towards European stablecoins. She clarified that if European banks were to issue stablecoins, this would not be mutually exclusive with the digital euro. Rather, she saw compatibility between these instruments, provided they operated under appropriate regulation and safeguards. The digital euro, however, remains the core project because “cash is the remit of the central bank,” and in a digital age, central bank money must also go digital.
On fungibility: She said: “I have to confess that I looked carefully at MiCAR, and I’m at pain to find actually reference to multi-issuance in the regulation, and I’m at pain to understand exactly where is the issue of fungibility, which is often referred to in order to expect equivalence safeguards and level playing field, as well as international cooperation.”
She linked the digital euro project with Europe’s broader ambition to strengthen the euro’s global role. She mentioned that the ECB is also exploring distributed ledger technology for settlement in central bank money and cross-border euro payments. These initiatives, including the digital euro, are meant to reinforce the euro’s standing internationally and to ensure Europe is not left behind in a rapidly digitizing monetary landscape
— The BoE’s Andrew Bailey argued that an innovative technology like stablecoins must still answer old central banking questions, like whether narrow banking is really desirable (in the FT.)
Key grafs: “The [fractional reserve] system does not have to be organised like this. It is possible, at least partially, to separate money from credit provision, with banks and stablecoins coexisting and non-banks carrying out more of the credit provision role. But it is important to consider the implications of such a change thoroughly before going ahead. Only then can we formulate a regime that both supports this coexistence throughout the economic cycle and carefully manages the transition to a future financial system.”
“In the coming months, the Bank of England will publish a consultation paper on the UK’s systemic stablecoin regime, which will apply to those used in scale as money (ie for everyday payments or for settling tokenised core financial markets) and consider what standards they would need to meet. In doing so, we will set out that widely used UK stablecoins should have access to accounts at the BoE in order to reinforce their status as money. This will be a critical part of creating an advanced regime for stablecoins, one that ensures the UK can reap the benefits while maintaining a stable financial system.”
Cash Equivalence take: If the BoE insists on stablecoins being fully collateralized with bank reserves held directly at the central bank rather than gilts, it will kill the growth of the sterling stablecoin market before it has even begun. That’s because the model will replicate the current NetConnect system that the PBOC operates in China (a system that upset Alipay’s Jack Ma so much when it was forced upon him, that he felt compelled to publicly criticize the Chinese government, risking reprisals).
The move would also stop the BoE from ceding control of the money supply to the Treasury. Gilts would also miss out on some much needed demand.
— OpenEden announces USDO, which is a tokenized Treasury provided to the public in the form of a stablecoin.
— Circle says it’s “evolving” into a full-stack offering.
— Stablecoin market cap tops $300 billion amid crypto rebound, writes the Block.
Multi-issuance:
— ESRB weighs ban of “multi-issuance” stablecoins (via Bloomberg).
Key grafs: “The ESRB guidance, which was approved by a high-powered board of central bank governors and EU officials, is not legally binding. But it will pressure the region’s authorities to implement the restrictions or explain how financial stability can be preserved in their absence.”
“The debate on multi-issuance stablecoins in the EU exposes a deeper challenge for MiCA’s credibility as a global benchmark,” Judith Arnal, a board member at the Bank of Spain and associate senior research fellow at the Centre for European Policy Studies, wrote in a paper on the issue earlier this month. “A regulatory framework that is disputed” between the ECB, the Commission and the European Parliament “risks sending the wrong signal internationally, namely that MiCA is fragile and subject to diverging interpretations.”
Fallout: As Bloomberg notes this could cause havoc with the business models of comapnies like Paxos and Circle which are already licensed to operate in this way.
Branded stables:
— John deVadoss, co-founder of the InterWork AllianceZ argued in CryptoSlate that the end game for stablecoins would be “brand-name stables and fintech L1s”
Key graf: “The stablecoin market is converging on two power centers: brand-name stables issued by firms consumers already trust, and “fintech L1s” — base layers purpose‑built or tightly controlled by regulated fintechs. Everything else will orbit these because they maximize profits, defensibility, and distribution while fitting comfortably inside the policy perimeter.”
— The stablecoin duopoly is ending, argues crypto VC Nic Carter.
Key graf: “A few pieces have come together to poke holes in the Tether/Circle duopoly. Cross chain swapping has become a lot better and cheaper. Same-chain swaps for stablecoins specifically has become almost free. There are now clearinghouses to facilitate stable-stable transactions regardless of originating and destination stablecoin or blockchain. GENIUS is homogenizing (US-domiciled) stablecoins so infrastructure providers are taking less risk by holding them on their balance sheet. We are experiencing a fungibilization of stablecoins. The incumbents do not benefit from this.”
— Stripe announces a new platform that will help anyone launch their own stablecoins.
Key grafs: “The market is currently dominated by a small group of issuers, and their scale, liquidity, and brand recognition have made their stablecoins easy to use. But building atop these stablecoins means businesses don’t get to participate in the economics, face unpredictable fees, and are ultimately beholden to the issuers’ roadmaps. Today, we’re fixing that. Open Issuance is a new platform that allows any business to launch and manage its own stablecoin. With its own stablecoin, a business can control its product experience, mint and burn without limits or unnecessary fees, and earn rewards from reserves.”
Cash Equivalence take: For years, fintech expert David Birch has been telling anyone who will listen about Edward de Bono’s IBM dollar idea, first proposed in the 1990s. The general gist of the concept was that corporations could issue their own special currencies (or vouchers) redeemable for their products in the future. But critics always argued that the non-fungibility of such dollars would prevent widespread circulation as actual money.
In the end, IBM dollars just became gift vouchers.
But branded stablecoins might have more legs. Since stablecoin numeraires are pegged to a common value point, in theory, they can achieve interoperability in secondary markets in ways the IBM dollar never could. But, the real question is: why would anyone prefer to hold long-term value in a Facebook coin or Uber coin, forgoing returns, when you could put the value in an interest-bearing account at a bank that can already be used for frictionless payments?
All you are really doing with branded stablecoins is transferring your interest flows to one of your suppliers, thus allowing them to take advantage of the time value of money instead of yourself.
Deep thoughts:
— Naval Ravikant, the co-founder, chairman and former chief executive officer of AngelList, said what many are secretly thinking out loud:
— Plasma co-authors a thought piece about what could happen to money if it were as free as the information on the internet.
Key graf: “Our money has not been as connected. Even when stablecoins are involved, offramps and banking regulations add friction to how money moves. Plasma aims to fix that with an open ecosystem oriented towards aiding developers in building tooling to fix that. Their thesis is that focusing on distribution and unlocking new use-cases in niche markets is the way to “update” money rails for the 21st century.”
Cash Equivalence take: When the purpose of certain credentials is scarcity-empowered status, technological innovation is never going to be the answer to solving that problem!
Synthetic stables:
— DeFi protocol Ethena is pursuing a dual track stablecoin strategy, writes Bankless.
Summary: As well as issuing a stablecoin with a conventional structure that complies with key regulation, Ethena has also pursued more exotic stablecoins backed by assets linked to a “delta-neutral” strategy to generate yield.
Key grafs: “Inspired by Bitmex co-founder Arthur Hayes‘ 2023 piece ‘Dust on Crust,’ which envisioned a synthetic dollar using crypto collateral and derivatives, Ethena’s flagship product is USDe — a stablecoin designed to generate superior yields through what’s called a delta-neutral strategy.
Put simply, Ethena holds diverse, “blue-chip” crypto collateral (BTC, liquid staked ETH, SOL), which, as we know, can be volatile. To counteract this volatility, it takes short positions on these assets using perpetuals. Thus, if their prices rise, collateral gains offset short losses; if prices drop, short profits offset collateral losses. This keeps USDe pegged at $1 in most market conditions, as it is backed by approximately $1 worth of collateral, though temporary deviations can occur during extreme conditions.”
Cash equivalence take: This is synthetic stablecoins, meets delta-one trading, meets synthetic ETFs meets collateral-sweating meets contango trades. What can possibly go wrong?
Dollarization:
— Three prominent African fintech innovators, Flutterwave, Yellow Card, and Onafriq, officially joined the Circle Payments Network (CPN), a global platform introduced by Circle Internet Group, the issuer of the USDC stablecoin. (Via TechJournal)
— Standard Chartered estimates $1 trillion could exit emerging market bank deposits for U.S. stablecoins by 2028, (via The Block).
Key graf: “Standard Chartered’s framework also ranks Egypt, Pakistan, Colombia, Bangladesh, and Sri Lanka among the most exposed to a bank deposit exodus. Countries such as Turkey, India, China, Brazil, South Africa, and Kenya were also listed among the areas most likely to witness a rush to stablecoins.”
Big Brother Watch:
Identity crackdown: We’re late to this because of travel, but it’s worth revisiting the X post that went viral last week after it claimed that an internal BoE review had noted that disclosure of the links between CBDCs and digital ID systems would have a “chilling effect” on deliberations and risk “destabilising speculation”. The post was by Lewis Brackpool and was based on documents he obtained via FOIA.
Based on the feedback he received, Brackpool concluded, “this means that, for the second time in two years, the Bank has refused to release documents that could reveal how digital currency and identity systems may be linked in UK policy planning.”
The post coincided with the announcement by Keir Starmer that Labour would be pursuing the introduction of compulsory digital IDs to help manage illegal migration.
That news went down like a lead balloon with the historically hostile to IDs British public.
A digital petition against the move has since amassed 2.8 million signatories, and even the world’s most famous surveillance company, Palantir — unmasking as a digital rights white knight — has refused to tender for the business because it claims the deployment of digital ID lacks a democratic mandate.
Cash Equivalence take: We’ve been privy to off-the-record press briefings with top central bankers on this topic for years. Since these discussions are off the record, we usually can’t share details of who said what and when. The information is strictly for our “guidance”. But what we can say is that about 90 percent of the time, we have been lonely figures in the room, when it comes to challenging the bankers on the digital ID issue (and quite frankly, often made to feel like some overly paranoid weirdos when doing so).
Before giving more insight, it’s worth pointing out how these press briefings work:
- An institution like the BIS or the Bank of England will have worked on some report or policy.
- Ahead of publishing said report or policy framework, it will share the documentation with journalists, who will then have time to read the paperwork on the condition that they do not share it publicly. This is known as an embargo.
- Invariably, the timescale for such homework is about 48-ish hours (sometimes over a weekend).
- Invariably, the report is chunky and requires said journalist to drop everything else they are doing (rarely possible) to read the whole thing properly back-to-back.
- Invariably, said journalist is stretched for time and thus searches through the report based on their own predisposed hunches using the CTRL+F function, skipping most of the stuff that’s not relevant to them.
- To guard against this “agenda-driven” and selective cherry-picking of facts to suit a pre-conceived story outline, central banks thus also provide access to their internal bigwigs on similar embargo terms in managed off-the-record press briefings.
- During such briefings, the bankers try to get ahead of negative framing either by steering journalists to points they want emphasized or pushing back on interpretations that don’t suit their agenda.
- The game theory of a press briefing works to the advantage of the briefer because the embargo ensures the correct spin goes out at a similar time across many different networks.
- Journalists aren’t commanded what to write, and in theory remain free agents, however, the effect of having everyone reveal their line of thinking in front of each other ensures groupthink begins to prevail. One gets a sense immediately what the top line will be in tomorrow’s papers.
- Wrongthink is not policed in coercive ways. But if, say, you hypothetically ask a question like: “There is a lot of public anxiety about digital currencies being potentially abused by government, surveillance, etc. Is there a responsibility to have more public engagement? Because at the moment, there isn’t very much so these things are being pushed out and the public are kind of running away with crazy theories about it, they’re not seeing it as necessarily beneficial to them. Are you planning any public engagement?” … you might get a hypothetical answer such as: “At the end of the day, it’s a political issue. So I think they need to make the decision on how open transactions should be.”Or alternatively:
“If you do any type of payment, you need to know where the money is going and where the money is coming from … At the end of the day, you will find you will end up in a place where some mapping of an account to a name will be established. But it can be done in such a way that the privacy of individuals are the most respected. And I will say I would say that what something that is an objective for the central once is to have a technical solution where privacy can be maximised while guaranteeing a minimum certainty of the payments that need to be done. Now, how do you deviate? And when do you deviate from that? That’s not in our place, it’s a political issue.”
Or you might be directed to this episode of Yes Minister.
In other words: “it’s not up to us, it’s a political matter!”
