Industry news:
➡️ Deutsche Börse to integrate Société Générale’s EUR and USD stablecoins into settlement infrastructure”
Summary: Deutsche Börse Group announced it will bring the EUR- and USD-backed stablecoins from Société Générale — FORGE (SG-FORGE) into its Clearstream post-trade and settlement network. These tokens will be made available for custody, collateral management, and settlement workflows, marking the first time these regulated stablecoins are embedded in mainstream European infrastructure.
Deep thoughts:
➡️ Pro gold advocate Luke Gromen poured cold water on the rate of stablecoin growth since the passing of the Genius Act.
Summary: Gromen highlighted the following chart, noting that “Stablecoins have only grown $10 per month since the passage of the Genesis Act. At this pace, it will take 23 years for stablecoin market cap to hit Bessent’s $3T stablecoin market cap goal.”
Deep thoughts:
➡️ Economists Armstrong and Snower argue stablecoins create shadow central banks that shift seigniorage from governments to private firms (via Project Syndicate)
Summary: The economists highlight how stablecoins’ explosive growth — from $138 billion in early 2024 to $308 billion by October 2025 — threatens central bank authority. Issuers profit by creating liquidity backed by U.S. Treasuries, which effectively monetizes debt without oversight, they say. They also warn that the sums could swell to $2 trillion by 2030, eroding monetary policy transmission as stablecoins displace bank deposits, weakening interest-rate tools, and shifting seigniorage from governments to private firms, complicating fiscal coordination. They note the BIS warns of their influence on short-term rates and Treasury liquidity, urging regulators to monitor these unregulated entities before they fully supplant public money creation.
❗Killer quote: “The government’s seigniorage (its profit from creating money) is slipping away. The interest earned on Treasury assets backing stablecoins now flows to private issuers — such as Circle and Tether — instead of to the public purse. Over time, this pattern could reduce fiscal revenues and weaken coordination between monetary and fiscal policy.”
🤔 The Peg’s take: Stealth seigniorage transfers away from governments and over to shadow banks and technology firms have been a sore point for regulators and lawmakers for a long time. Lawmakers shut down Facebook’s bid to launch its own digital currency in 2019 precisely because they knew it could undermine Federal Reserve control over the monetary system. But they were also acutely aware that Safaricom had captured seigniorage profits in Kenya with M-Pesa in the name of technological progress.
What the authors neglect, however, is that large-dollar-surplus countries, especially those operating dollar pegs like Saudi Arabia, have been undermining government and central bank control in similar ways for decades.
When a country like Saudi Arabia issues a pegged local currency backed by U.S. Treasuries, it benefits directly from seigniorage revenue. The greater the exorbitant privilege, the greater the transfer of interest away from domestic beneficiaries and toward foreign beneficiaries. Moreover, even domestically, the state is engaged in a de facto revenue-sharing agreement with the domestic banking sector over seigniorage profits.
So none of this seigniorage slippage is really all that new.
At least when U.S.-domiciled entities issue stablecoins, seigniorage windfalls will be subjected to U.S. taxes. In theory, this could allow America to have its cake and eat it with respect to keeping the world on a dollar platform for trade and commerce, but shedding the destabilizing side effects of losing vast amounts of seigniorage revenue to countries that draw on the dollar’s attributes without adhering to the principles of the American system.
There’s another story here related to how China is now planning to usurp that, but we will revert to that another time.
➡️ Stablecoins will evolve into a regulated digital narrow banks, Reichlin argues (via Project Syndicate)
Summary: Economist Lucrezia Reichlin posits that stablecoins, mirroring historical innovations like eurodollars, will inevitably integrate into the banking system due to their scale and utility. Emerging on the periphery to evade regulation, she says these money-like claims will seek central-bank backing as they scale. The outcome will be U.S. issuers like Circle pushing for depository-like status under the Genius Act — complete with liquidity rules and potential Fed reserve access. The EU’s MiCA will, on the other hand, create a tiered system with non-bank “Electronic Money Institutions” with full reserves and no lending, or banks issuing tokenized deposits under existing licenses, as seen in Société Générale-FORGE’s EUR CoinVertible.
Reichlin warns, however, that the EU’s hierarchy may stifle blockchain adoption due to legacy tech inertia, and U.S. deposit-lending separations could squeeze banks, blurring lines toward hybrid full-reserve digital banks. Ultimately, run risks demand central-bank protections, ensuring stablecoins’ systemic role with public credibility as the backstop.
❗Killer quote: “As markets mature, moreover, the line between stablecoins and deposits will blur. If stablecoin issuers and banks are competing for the same pool of retail or institutional funds, regulators will face pressure to subject them to the same rules. But some large stablecoin issuers will push in the opposite direction, seeking greater flexibility to invest reserves, extend credit, or access central-bank accounts directly. Over time, these competing pressures could yield a new hybrid category: digital full-reserve or narrow banks.”
➡️ “A highly speculative” take arguing that the Trump admin is using stablecoins to displace JP Morgan goes viral on X
Summary: An X post by HodlMaryland — an anonymous, pseudonymous Bitcoin enthusiast with 15,000–20,000 followers, renowned for speculative threads on U.S. monetary shifts — outlines a shadowy power struggle in global finance. The self-described “highly speculative take” casts the Trump administration as champions of a Treasury-led paradigm, blending stablecoins and Bitcoin reserves to challenge the Federal Reserve-JPMorgan “regime.”
The author alleges the White House is covertly stockpiling Bitcoin to evade price surges, while JPMorgan retaliates with suppression tools like derivatives trading and custodial bottlenecks — nodding to the bank’s recent flags on MicroStrategy’s index delisting risks amid Bitcoin’s 40 percent crash. MicroStrategy, per the post, serves as an essential “conversion bridge” for institutional crypto entry, meriting strategic U.S. investment to overhaul money systems before pivotal 2025 Fed board elections.
In short, the author says stablecoins are being positioned as a “Trojan horse” or flanking maneuver against the current Fed/JPMorgan-dominated fractional-reserve banking system.
🤔 The Peg’s take: Claims of “stealth accumulation” and deliberate suppression hinge on unproven inferences, mistaking correlation (e.g., Epstein probes) for causation without documents, leaks, or data. The argument is more crypto-fantasy than substantive critique — intriguing but not to be taken seriously.
There’s no doubt there’s a power struggle going on, but anyone can come up with a “highly speculative take” linking stablecoins to Epstein, as this piece does.
For the fun of it, here’s our go:
🕵️♂️ Trump is quietly offering Russia and China full normalization and dollarized access to global finance in return for their help in crushing Europe’s desperate plan to build an independent dollar liquidity pool and permanently breaking the Fed-JPMorgan deep-state monopoly on money creation. The battlefield is tokenized dollars and frozen assets. JPMorgan’s tokenized deposit system, launched just last week, was the old guard’s (Larry Summers, the Exchange Stabilization Fund, Jamie Dimon) last attempt to retain control of programmable dollar liquidity. But “the plan” is to flip it against them: fresh Epstein revelations and DOJ leverage are about to shatter JPMorgan, giving Treasury the opening to freeze the ECB’s dollar accounts custodied there. Europe would be unbanked overnight.
The question is, will China, sitting on $3 trillion of unusable Treasuries, counter by extending its Argentina-style swap-line trick to Europe: lend yuan against locked dollar collateral, creating a shadow yuan-backed dollar stablecoin that recycles Beijing’s reserves without ever moving the dollars or crashing the peg?
➡️ What if we funded a public broadcaster for the Western world with seignorage derived from G7 private sector stablecoins?
Summary: I floated some non-invasive public funding models for a truly impartial global press system.
Regulation:
➡️ The case for stablecoins rests on “Möbius strip” logic, Fed official says (via Financial Times)
Summary: In a letter to the FT, former Federal Reserve Board special assistant Brian James Gross backed Olaf Sleijpen’s caution over stablecoins and dismantled the claim that stablecoins are an unalloyed boon for public finance. He called the argument that stablecoins deepen demand for U.S. Treasuries and lower borrowing costs a “dangerous Möbius strip”: if stablecoins grow as much as boosters hope, yields could fall, compressing issuer margins and encouraging traditional institutions to issue rival tokens, increasing concentration risk. Gross also noted that stablecoins are “not intrinsically stable”, citing the TerraUSD/Luna collapse and warning that a similar event involving Treasury-backed tokens could force rapid liquidation of reserves and propagate stress across markets.
❗Killer quote: “Stablecoins may yet have constructive uses, but until their liabilities and oversight match their ambitions, they remain a potential source of instability, not salvation.”
➡️ Basel chief urges rethink of harsh bank capital charges on stablecoin exposures (via Financial Times)
Summary: Basel Committee chair Erik Thedéen told the Financial Times that the committee may need to revisit its crypto-asset capital rules after the U.S. and U.K. declined to implement them as drafted. He highlighted that rapidly growing stablecoin markets — now around $300 billion, supported by the US “Genius” stablecoin law — are being swept into the strictest Basel bucket, forcing banks to hold capital equal to 100 percent of their exposure. That treatment, originally designed for volatile, permissionless crypto, now applies to stablecoins like USDT and USDC, and banks argue it makes participation in the market uneconomic. Thedéen says diverging national approaches complicate global standards and acknowledges industry calls to differentiate tokenised assets and systemically important stablecoins from speculative crypto holdings.
➡️ Genius Act leaves key consumer protections on stablecoins to regulators, panel warns (via Payments Drive)
Summary: A panel at the Philadelphia Fed’s annual fintech conference argued that the U.S. Genius Act, while turbo-charging institutional interest in stablecoins, leaves crucial consumer-protection details unresolved. Former FDIC official Alexandra Steinberg Barrage and Anchorage Digital COO Rachel Anderika flagged gaps around fraud mitigation, redemption rights, seizure and freeze policies, complaint handling, and treatment of secondary-market holders. They warned that without clear rules, stablecoins used as retail payment rails and in AI-driven “agentic commerce” could expose consumers to risks not present with cards or bank deposits. The panel also noted that stablecoins trading below par due to weak redemption mechanisms remain a live concern, and contrasted the state of Wyoming’s tightly controlled Frontier token with more lightly governed private issuers.
➡️ The U.S. Office of the Comptroller of the Currency said it will allow banks to hold crypto to pay network ‘gas’ fees” (via The Block)
Summary: The OCC issued an interpretive letter formally confirming that nationally-chartered U.S. banks may hold crypto-assets as principal when necessary to pay blockchain network fees (“gas fees”) for otherwise permissible activities — for example, to settle token transfers, custody arrangements, or run blockchain-based platforms. The guidance stipulates that the holdings must be limited to amounts reasonably anticipated for operational needs and cannot be used for speculative investment. This clears a longstanding operational barrier for banks eager to handle tokenized payments or stablecoins on public ledgers, although it does not explicitly expand banks’ ability to hold stablecoins for investment or deposit-taking.
➡️ Financial Stability Board sets stablecoins as a key 2026 work-stream.
❗Killer quote: “Stablecoins may improve payment speed and efficiency, but they raise a number of vulnerabilities, including run risk and regulatory challenges associated with multi-jurisdiction issuers of stablecoins.”
Statecraft:
➡️ Reserve managers say de-dollarization talk is real, but they’re still wary of using stablecoins as direct reserve assets (via Central Banking)
Summary: A reserves-focused panel at the Central Banking Autumn Meetings discussed de-dollarization and alternatives to the U.S. currency, including digital assets and gold. The article noted that while reserve managers recognize the dollar’s gradual loss of prominence, they are not materially shifting holdings yet. Participants also remained unconvinced by stablecoins as reserve assets, implying that — despite political debate and market hype — central bank reserve managers still see tokenized private liabilities as too risky or untested to hold alongside traditional FX and gold.
🤔 The Peg’s take: Back to our original point above. Small wonder reserve managers aren’t keen on stablecoins, there are no seigniorage benefits!
➡️ UAE and China deepen ties via launch of mBridge cross-border digital-currency platform” (via DIG Watch)
Summary: The UAE and China formally launched a node of the mBridge CBDC platform, signalling a real-world cross-border payment capability between their digital-currency and instant-payments systems. The move links the UAE’s “Jaywan” payment scheme and China’s UnionPay network and ties the UAE’s instant-payments rail to China’s internet banking infrastructure. Officials project further roll-out in 2026. While this is not a stablecoin story per se, it raises the geopolitical stakes around tokenized money, rails, and alternatives to the dollar-centric global payments infrastructure.
➡️ An IMF country report on Turkey found Ankara has stablecoin gaps.
❗Killer quote: “Finally, continued efforts to close crypto data gaps; monitor emergent risks, particularly from stablecoins; and integrate them into macroprudential frameworks are important to safeguard stability.”
🤔 The Peg’s take: Turkey is one of the biggest markets for Tether’s stablecoin, largely due to the instability of the domestic currency.
Sources say:
➡️ “The Tether booth in Hong Kong has got bigger and now sells cigars”
🤔 The Peg’s take: We’ve heard it said before that people frequently show up at such booths with large sums of cash. Sometimes, even bags of cash. What we really want to know is who operates this intrepid booth and how did they get the permission to do so?
For reminiscences’ sake, here’s a snapshot commemorating the Kantor explosion of the 1980s in communist Poland when every man and his dog was a hard currency dealer (sadly, no Fitzgeralds in sight back then):
