Top US Banks to Issue their own Stablecoin

Executive Summary

  1. As a former Banker running payments for 2 of the largest US banks I have a perspective on how this will play out. I may be wrong, but it is an informed perspective.
  2. As outlined 2 weeks ago banks in the EU are planning their own stablecoins.
  3. The GENIUS ACT forces stablecoin issuers to obtain bank licenses, thus this morning’s WSJ report that Bank of America, Wells Fargo and Chase are now in the mix is only logical
  4. As outlined in Stablecoin predictions, this will not impact cards as they retain their role in the last mile and banks protect the card model. 
  5. As outlined in Power of Bank Networks, Payments are where the power of banking is unlocked. The major US banks are payment hubs that connect to all networks, from TCH, RTP, Swift, Card, …etc.  These banks are leaders in innovation and in managing operations that consistently clear trillions of dollars PER DAY. 
  6. The stablecoin settlement model is much simpler than an RTP network where each participating party has to register as a sender or receiver of payments. Senders must have settlement funds which restrict their ability to clear payments. In a Stablecoin model, originators only have to have valid stablecoins to transact, and can also create programmable rules around them (see Programmable Money)
  7. The business drivers are remittance, cross border, B2B, and the prospect of growing the global deposit base as international consumers and businesses buy stablecoins. Italy’s finance minister is quoted as saying USD stablecoin adoption (ie dollarization) represents a greater threat to the EU than Tarriffs. 
  8. In my view this is a 3 yr effort. Banks don’t move quickly in isolation, and even more slowly in consortium. I do think that this will first move with commercial use cases and remittances, with banks as stablecoin issuers. Within retail consumer UCs, P2P and Zelle are the area that would be impacted first.  
  9. US Banks should consider the slippery slope of Stablecoin. Once issued, their transfer can’t be restricted, and will operate without friction. Every movement of money becomes instant. This is why I don’t think we will see consumer interfaces within US bank domains in near term. Priority 1 is creating the stablecoin issuing platform and legal structure. Priority 2 is focusing on UCs like cross border and B2B. 

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The Realities of On-Chain Finance: Why Closed Ledgers Will Lead the Way

Short Blog.

New technology rarely disrupts industries overnight. Instead, it is first used by existing players in established markets to gain a competitive edge. On-chain finance is no different. While decentralized finance (DeFi) and public blockchains promise a future of open financial networks, the immediate growth will come from closed, permissioned ledgers operated by financial institutions.

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Identity, Authentication and Risk

Bridging Domains – Short Blog – Random Thoughts

This is a “Random Thoughts” blog, which means there are many points that I’ve left hanging (not finished cleanly). The blog’s objective is to stimulate discussion, so please don’t hesitate to comment.  Identity is a hot topic for me with 15+ years of previous bosts. Here are a few updates … as well as my evolving perspective. 

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Random Thoughts – Modularity and Trust

Trust in a transaction. In another one of my favorite books  (Design Rules: modularity) there exists the concept of trust between physical components of an integrated system. This book stands in contrast to Nobel Economists’ work in defining the “Firm” and organizational boundaries in Transaction Cost Economics (TCE). But the technical theory of modularity is amazingly consistent with the concepts of “boundaries” in TCE. In modularity, there are 4 core rules for separating technical components:

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Near Term Impacts of Distributed Ledger Technology to Financial Services – Chain of Trust

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Continuation of last week’s blog on “binding” and minting of tokens

I’m currently immersed in DeFi, DAOs, Blockchain, …etc. Selected readings are at the end of this blog. Keeping Current in DeFi/DLT is almost impossible. I certainly invite comments and corrections to anything I’ve written below. While I have teams building services in this area, my perspective is biased. My purpose in writing is to stimulate discussion so don’t be shy in the comments, I welcome disagreement and discussion. 

Topic today: What impacts will the $50B invested in FinTech/DLT/Crypto have on existing financial services in next 5-10 yrs? What is the summary CEO/Investor View?

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