Author Archives: InsidePmts

FIncen / OFAC 303 Page Rule Squashes Stablecoin eCom Ambitions

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Exec Summary

  • New 303 Page FINCEN/OFAC Rule, aligns to the clear language of the Genius act, but IMHO will create major friction for use of USD stablecoins in eCommerce

  • Rules for tracking parties and monitoring secondary activity create a compliance regime that burdens every party with the need to understand the provenance of a coin. Can you imagine accepting $2000 for a new TV, shipping it out, then having your stablecoins burned?

  • So not only do we have KYC but we have SAR reporting requirements as PPSIs must also comply with SAR and the “Travel Rule” (31 CFR 1010.410(f)), which involves collecting and transmitting information about the originators and beneficiaries of funds transmittal.

  • Banks and Stablecoin Issuers that jumpted into Solana’s Token-2022 model saw this coming and are well placed to move forward

  • This creates substantial advantages for banks in sweeping coins into covered accounts and freshly minting new coins when required. 

  • Great news for Big Banks and V/MA. card gain signficant advantage over stablecoins with the proposed rule

  • I see this as tailwind for stablecoins in settlement, but a big headwind for stablecoin in eCommerce (with a few exceptions). 

  • My views on Stablecoin winners and losers remain unchanged except for an update to winners for x402.

  • No wonder Jamie Dimon remains confident that the banks will win, it will take years for stablecoin startups to build the regulatory muscle required to manage 303 pages of FinCEN mandates. By the time they do, the banks will already be running their own stablecoin subsidiaries under the very same rules.

The Rule

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) and OFAC issued a 303-page proposed rule implementing the GENIUS Act, reclassifying permitted payment stablecoin issuers (PPSIs) as financial institutions under the Bank Secrecy Act. Requirements include bank-grade KYC, suspicious activity reporting, transaction blocking/freezing capabilities, and appointment of a U.S.-based compliance officer. Enforcement begins January 2027. A 60-day comment period opens now.

The NPRM (Notice of Proposed Rulemaking) introduces 31 CFR Part 1033, which specifically outlines the obligations of PPSIs. The density of this document reflects the complexity of applying traditional banking rules to a distributed ledger environment.

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Wero 2026: Sovereignty at a Commercial Premium

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Just left a UBS webinar from the head of product for Wero and thought it would be a good time to update my July 2025 assessment of Wero as a “solution in search of a problem,”. The biggest change in Wero is the core infrastructure has transitioned from a voluntary service to a mandated utility. However, as the European Payments Initiative (EPI) attempts to scale, the project faces a fundamental conflict between political objectives and commercial unit economics.

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Owning Your Bot’s Actions: Target Part 2

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In my previous post, covering Target’s “Your Bot is Your Responsibility”  was the only move they could make. When you let an AI bot loose with your credit card, you are effectively handing your car keys to a teenager; you can’t act surprised when there’s a dent in the bumper. But Target’s stance isn’t just a legal shield; it is a flare gun fired over a massive Governance Gap. Today’s agentic commerce is high on technology and standards, but dangerously low on the commercial terms that actually make markets function. To be clear, it’s not for lack of effort from V/MA, nor is it technology; it is resistance to change.

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Distributed Ledger Governance

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Long Blog – Explaining Visa, Canton, and the Architecture of Super Validators

Executive Summary

  • Stablecoin Industrialization: DLT is transforming settlement and interbank networks. There is more than one approach, ranging from closed networks to open on-chain. We discuss differences between Ethereum, JPM Kinexys and Canton Network.
  • Governance as a Catalyst: Governance and operational oversight have surpassed technical specifications as the primary factors driving institutional participation in distributed ledgers.
  • Visa’s “Super Validator” Role: Visa expands their network governance role into Canton as a Super Validator, applying its established “network of networks” model and operational rigor to a privacy-preserving institutional infrastructure. Trust requires a commercial construct and Visa has it.
  • Canton’s Privacy Architecture: Unlike public chains, Canton uses a “proof-of-stakeholder” model where transaction data is encrypted and distributed only to parties with a “need-to-know”.
  • Super Validators Explained: Visa provides services to manage the “Global Synchronizer,” providing secure sequencing and atomic settlement across domains without ever decrypting sensitive transaction payloads.
  • Transition from Silos: The native deployment of JPM Coin onto the Canton Network signals a definitive shift from closed “digital silos” to an interoperable, institutional-grade ecosystem.
  • Solving the Interoperability Paradox: The Super Validator model addresses the “SWIFT challenge” by allowing banks to maintain private ledgers while enabling the universal connectivity required for global trade. Yes there will still be closed networks, but Canton is shaping up to be the best universal bank network.
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Explaining the Death of OpenAI’s Instant Checkout

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Short Blog

To my regular readers, you know the flow of data within a network is complex (see Data Games). The news that OpenAI is effectively shelving its “Instant Checkout” initiative in favor of a referral-based “conversational commerce” model shouldn’t come as a surprise. While the tech press might frame this as a strategic pivot, those of us in the eCommerce trenches know it for what it is: a collision with merchant’s role in risk, costs, CX, control and their own AI dreams.

OpenAI attempted to solve its monetization problem by trying to seize control of the top of the funnel, betting that the sheer volume of consumer demand would force merchants to bow to their interface. They were wrong. They fundamentally miscalculated the power dynamics of the transaction and the complexity of the global conversion funnel, a funnel that Google understands intimately because they serve both ends of it globally (ie merchant partners).

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MPP (and X402) – Solving the Internet’s “Original Sin”

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Yes another agentic payment acronym. This one is important enough to remember. Where AP2 and ACP address agents acting on behalf of humans, X402 and MPP are about agents paying agents. My friend Simon Taylor just put together one of his all-time best posts on MPP and The Intention Layer. Today’s blog is a follow-up with a bit more of a comparison, and why this is a big deal from a payment and economic perspective. My key takeaways from Simon’s post

  • The “Skinny Master Account”: Taylor suggests that humans will grant “intent” (a budget and a goal) to an agent. MPP’s Session model perfectly mirrors this: a human “locks” $50 into a session (the intention), and the agent autonomously spends it in sub-cent increments (the execution).

  • The Substrate of AI: Taylor points out that AI thrives on Structured Text (Markdown). Ironically, legacy finance (ISO 8583, NACHA files) is essentially structured text. MPP acts as the “translator” between the agent’s markdown-based intentions and the rigid requirements of the global banking system.

  • The Outcome: The winner won’t be the protocol that is “most decentralized,” but the one that most effectively manages Trust and Permissioning. Stripe and Visa, as the incumbent trust-layers of the internet, are better positioned to solve the “Agentic Spend” problem than a pure-crypto protocol.

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Agentic Recap – Last Week’s Big Announcements. 

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Sorry for delay.. Just had a new grandson on Wednesday, and everyone is doing fine. One quick note, if your looking for one of my old posts, or topics like AP2, try my new search. Completely rebuilt to look through my posts and all “trusted” authorities on a topic.

Exec Summary

Last week’s flurry of announcements confirmed our thesis: Agentic commerce is off to a slow start, and the “machine-to-machine” (M2M) revolution is currently a “human-in-the-loop” (HIL) reality. Despite the hype, machines aren’t autonomously settling transactions yet; they are discovery engines landing consumers on retailer checkout pages. While “lab” pilots show machine to machine transactions are technically possible – in a lab. The reality is conversational commerce, more like an enhanced search. 

Key Items covered today

  1. Agentic Hurdles are huge. Changing consumer behavior, shifting risk, economic “Gordian Knot” of value creation and pricing, Trust and Authorization, …etc. The payment piece is the “easy” party.  There will be no wholesale change in the next 2-3 years, merchants and marketplaces want to retain consumer behavior and leverage their own data, the future for most transactions will be a checkout on the merchant’s website. 

  2. Card networks are firmly established as the payment method and will retain their role as the identity infrastructure of the internet. Stablecoin is a settlement  innovation, and cards can sit on top. Visa is at least 2 yrs ahead of MA. MA’s agent pay integration to Google’s AP2 mandates is still a lab experiment that will require both Issuer and merchant approval. For example Banks will want the full intent mandate to take the risk, something neither Google nor Merchants will be keen to share. 

  3. OpenAI’s abandonment of their own wallet is very significant and a realization that merchants hold the keys in the early days of eCom, with many major merchants wanting a PAR to reference COF, not a tokenized credential where they own the risk. 

  4. Visa’s two big announcements are significant. The partnership with Bridge to issue stablecoin linked cards in 100 markets will propel a new market for cards in M2M based UCs.  “INTELLIGENT AUTHORIZATION” a universal acceptance API against different schemes and payment types, thus eliminating the need for costly infrastructure rebuilds. 

  5. When perfect authentication does happen, it will be a watershed moment for payments and every entity that provides risk services. Processors will be particularly hard hit, afterall how will processors differentiate when every payment type has 0 fraud and 100% authorization rate. Shopify and other merchant service providers (MSPs will gain significant leverage and expand their own VAS). This dynamic explains why Stripe is investing so heavily in Stablecoin, its an effort to differentiate and improve speed and a developer community in something unique.

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Stablecoin Rewards’ Last Hope – Clarity Act

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Summary

  • Clarity Act stuck in Senate on Stablecoin Rewards, 70% chance of passage this year
  • Stablecoin yield (or anything that resembles it) goes away, and rewards look more like what you have on your Visa card. Coinbase pulled out because of crypto restrictions in the bill (not stablecoin).
  • Industry will likely pivot to sweep, and Stableocin becomes just another rail, which will require consumer and merchant adoption, without the big “draw” of balance rewards. Thus, balances stay in transactional and interest-bearing accounts, and friction increases w/ stablecoin payments.
  • Politics of key players and quotes in blog today.

The Digital Asset Market Clarity Act of 2025 (H.R. 3633) is the last hope for Stablecoin issuers to save rewards. While the bill passed the House with a strong bipartisan vote on July 17, 2025, its progress has stalled in the Senate (as of Feb 2028) with intense disagreements regarding the regulation of stablecoin “rewards” and yield-like incentives.

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No more Stablecoin “rewards”

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The OCC Just Dropped the Hammer on Stablecoin Yield: Why “Rewards” Are the New Front Line Updated (Huge Impact to Tether and other non-US Stablecoin Issuers) As a payments expert who has watched the “shadow banking” sector flirt with regulatory boundaries for years, today’s draft guidance from the Office of the Comptroller of the Currency (OCC) on the GENIUS Act implementation is my “I told you so” (60 day comment period).

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