Category Archives: Stablecoin

Why Closed Chains Work Best for Banks

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a16z crypto published Banks Don’t Need Closed Blockchains (written by Rebecca Rettig of Jito Labs). The legal reading is solid. The BSA and OFAC ask for control proportionate to identified risk, not zero risk, and no rule says a bank must own or screen the infrastructure its messages travel over. I have no argument with any of that.

HOWEVER, the conclusion does not follow. Banks are not sitting in permissioned networks because a statute traps them there. They are sitting there because that is where their trust model, their commercial agreements, investments, and their competitive advantage already live. I made this case in The Realities of On Chain Finance: Why Closed Ledgers Will Lead the Way and the last 18 months have only confirmed it.

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CLARITY Act Fails — GENIUS Holds

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This post is not really about the bill, though. It is about the thing the bill was carrying and implications for Stablecoin

As expected, the Digital Asset Market Clarity Act failed to move through the Senate.

Yesterday, the Senate cloture motion on H.R. 3633 fell 49–50 — eleven votes short of the sixty required to advance, and one shy of even a bare majority. Multiple Republicans voted no. Senator Chris Coons did not vote. Senator Cynthia Lummis made the closing pitch on the floor: “Do not let this day be the day we handed our future to someone else because we were too afraid to finish what we started” and could not find the votes. Bitcoin slid from near $80,000; Coinbase closed down almost 9%.

Nobody who was reading the tape should be surprised. I have been writing this outcome down in stages since February. In Stablecoin Rewards’ Last Hope – Clarity Act I put the odds at roughly 70% and named the two things that would sink it: the rewards fight and the calendar. In The CLARITY Act Is Locked I flagged the remaining hurdles: Senate Agriculture jurisdiction, sixty floor votes, House reconciliation, …etc. and wrote that if the floor count fell short the bill slides to the next Congress. Prediction markets took until August to agree, collapsing from 82% to under 20%, and sat at 14% on the morning of the vote itself. Market structure legislation is not a 2026 story and it may not be a 2027 story either.

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Tokenization and Trust

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Tokenization is taking hold. That much is settled. It is showing up in financial market clearing and settlement, payments, and in products that did not exist three years ago. What is not settled is what “tokenization” actually means.

My read: the majority of tokenization efforts are best categorized as updating existing flows between existing parties using new DLT technology. Improving flows is not the same thing as remaking a market, and the press releases rarely distinguish between the two. I recommend you parse the hype carefully as it is at or near its apex.

Regular readers will recognize the theme, and I laid out the taxonomy in 101 Update: CBDCs, Stablecoins and Tokenized Deposits, and also argued in Stablecoins: A New Model of Trust enabled by Technology that the defining innovation is the trust architecture rather than the technology, and applied it most recently to SWIFT’s blockchain announcement in Parsing the Hype.

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Visa Stablecoin Platform

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Exec Summary

  • Consumers never wanted stablecoins, they wanted 5% yield or a crypto off ramp, BIS data confirms retail use is under 1% of volume
  • Stablecoins are a settlement innovation, networks did not hijack them, incumbents always adopt new tech to compete
  • Visa’s value is governance, operations, and distribution, VSP is just the next network in the network of networks
  • VSP = single Visa managed environment to mint, burn, move, and manage OUSD, with wallet as a service, passkeys, maker/checker controls
  • OUSD first because compliance and trust win, banks trust banks, not Circle, 63% of corporates want stablecoin access via their bank (EY Parthenon)
  • Use cases anchor on ramps and off ramps, treasury funding, global payouts, merchant settlement, stablecoin linked cards ($7B settlement run rate, 160+ programs)
  • VSP is to stablecoin what Visa DPS is to debit, same playbook, different rails and connection points
  • Visa enables Bank Issuers without picking winners, Mastercard bought BVNK and owns a single roadmap, overlap is real but philosophies differ
  • Enablement models win, every member becomes an investor in the network’s growth
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SWIFT – Tokenized Payments/Deposits – Parsing the Hype

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Last week SWIFT announced that 17 of its member banks tested its new blockchain ledger, positioning the network for “tokenized cross border payments” (SWIFT press release). Cue the headlines. My view: this is a me too announcement from an incumbent that is meaningfully behind, and it does not change the trajectory of where tokenized money is actually settling.

The real story is that the big banks are not waiting for SWIFT. They are building their own tokenized deposit networks, joining Canton, integrating with commercial customer platforms like Fireblocks, and quietly redrawing the settlement map. SWIFT gets to be one option among many, useful when a correspondent bank leg or a customer requirement forces its inclusion. It is no longer the default.

Regular readers will recognize this thesis from prior posts. See JPMorgan, Citi and TCH: Tokenized Deposits ON Chain, Augustus Protocol and Emerging Settlement Standards, and the 101 Update on CBDCs, Stablecoins and Tokenized Deposits for the underlying architecture and taxonomy. This post extends the thesis by explaining what the SWIFT announcement actually tells us and what it does not.

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Mastercard Explores Vocalink Sale

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The Financial Times reports that Mastercard is exploring a sale of Vocalink, and is also considering a divestiture of the real-time payments unit it built from its 2019 acquisition of the Nets Group’s account-to-account assets. Taken together with April’s $1.8 billion acquisition of stablecoin infrastructure provider BVNK, this is a clean strategic pivot: Mastercard is walking away from a decade-long attempt to build a services layer on top of bank-owned A2A rails, and redirecting that capital toward digital asset infrastructure. It is the right call. It also raises a question Mastercard should be asking itself very carefully before the BVNK integration gets too far along.

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Open USD – Stablecoin’s New Gold Standard for Trust, Compliance, Governance and Economics

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July 1, 2026

Executive Summary

  • 140+ institutions — Visa, Mastercard, Stripe, BlackRock, Google, Coinbase, and major global banks form the largest stablecoin consortium ever assembled

  • Shares reserve economics — Partners receive yield from underlying reserves, not the issuer; flips the Circle/Tether model

  • Zero-fee minting at scale — No volume limits, no enterprise penalties

  • Pre-transaction compliance — Transfer hooks block sanctioned transactions before settlement, not after

  • Burn and clawback authority — Architectural ability to freeze/burn for OFAC compliance built into Token-2022 implementation

  • Confidential transfers with regulatory visibility — ZK-encrypted balances for corporate privacy; viewing keys for auditors

  • Neutral governance — Independent board of ecosystem partners; no single corporate controller

  • Stripe default — “The default stablecoin for businesses running on Stripe”

Yesterday, we witnessed the launch of what may become the most consequential stablecoin ever: Open USD (OUSD). With over 140 financial, technology, and crypto institutions signing on—from Visa and Mastercard to Stripe, BlackRock, and Google. This isn’t merely another stablecoin entering a crowded market. This is the emergence of a new trust network architecture that I’ve been writing about for years.

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ZelleUSD — A Private Coin

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Builds on: Stablecoins: A New Model of Trust | JPMorgan, Citi and TCH: Tokenized Deposits ON Chain | Open Banking, Open Payments and Trust Networks

Early Warning announced this week that Zelle is going international, starting with India — the world’s largest remittance destination. Alongside this, they unveiled ZelleUSD (ZLUSD), which they’re calling a “proprietary U.S. dollar-backed stablecoin.” Cue the analyst notes about banks “finally getting into stablecoin.”

I’m already laughing… this is Banks BEATING Stableocin and Remittance Providers at their own game with a closed network. This Is Not a competitor to USDC, and you can’t buy it on Coinbase, so Don’t Get Confused.

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Proposed Stablecoin KYC Rule

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The Fed/FinCEN and OFAC just revealed their proposed Stablecoin KYC rule and consistent with the GENIUS Act it entails bank-level KYC requirements for Stablecoin Issuers (see blog: No more Stablecoin “rewards”). This combined with the 303-page FinCEN/OFAC rule on transaction monitoring and secondary uses places substantial compliance burdens on Stablecoin issuers. So much that it is said the hottest job in Fintech is in Stablecoin compliance.

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Augustus Protocol & Emerging Settlement Standards: The Crypto Clearing Bank Arrives

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In May 2026, Augustus (formerly Ivy) received conditional OCC approval to establish the first “AI-era clearing bank” a federally chartered national bank built on a stablecoin-native core designed for 24/7 programmable clearing. The announcement has drawn attention for its ambition: replacing legacy correspondent banking infrastructure with always-on, machine-initiated settlement. But beneath the compelling narrative lies a more nuanced reality about the structure of U.S. financial settlement and the commercial dynamics that govern it.

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