Stablecoins and Monetary Policy: The ECB Confirms What Italy Said Last Year

The ECB published a study today warning that stablecoins could erode retail deposits across the eurozone and undermine the effectiveness of monetary policy. The finding is notable — not because it’s new, but because it’s taken this long for the institution to officially say it.

As I related last May, Italy’s Finance Minister Giancarlo Giorgetti made exactly this argument, warning that the displacement of traditional bank deposits by dollar-denominated stablecoins represented a direct threat to European monetary sovereignty. His remarks were largely dismissed at the time as political protectionism. The ECB’s study vindicates the concern. The mechanism is straightforward: if depositors move funds from bank accounts into stablecoins, banks lose the deposit base that anchors their lending capacity — and the ECB loses its primary transmission channel for monetary policy. Rate changes simply don’t land the same way when the money isn’t sitting in a regulated deposit account.

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Stablecoin Rewards’ Last Hope – Clarity Act

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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2025: The Great Decoupling

Year-End Payments Recap

Summary: B2B Stablecoin and The End of the Interface Era

As we close the books on 2025, the payments industry finds itself at  a moment that future historians will likely designate as the end of the “Interface Era” and the dawn of the “Agentic Era.” For the past three decades, the digitization of payments has been defined by the migration of human intent from POS to digital screens. From the first e-commerce transaction to the ubiquity of mobile wallets, the fundamental atomic unit of the economy remained the same: a human being, interacting with a graphical user interface (GUI), making a conscious decision to exchange value for goods or services.

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Stablecoin Scenarios

Summary

The digital asset ecosystem has graduated from a decade of speculative experimentation to a decisive phase of infrastructure modernization. For fifteen years, the discourse surrounding blockchain technology has been dominated by the volatility of crypto-assets, effectively obscuring the underlying utility of the technology. That era has concluded. We are now witnessing the industrialization of the sector, where stablecoins have emerged not as a new form of money, but as a fundamental settlement innovation (see blog).

The GENIUS Act has provided the regulatory clarity required to transition stablecoins from the periphery of finance to its very core. This legislative milestone has catalyzed a geopolitical shockwave, prompting European finance ministers to declare U.S. stablecoins a greater threat to monetary sovereignty than trade tariffs. But while the Genius act codified “trust” in an instrument (reducing settlement risk to stablecoin issuer balance sheet), it does not address disputes and broader governance issues associated with managing participants across diverse processes and regulatory regimes.

The maturation of stablecoins is not a revolution that overthrows established banks and payments system; it is an evolution that upgrades it. The rails are being replaced while the train is moving, and those who understand the mechanics of the new tracks will determine the destination of global capital.

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101 Update: CBDCs, Stablecoins and Tokenized Deposits

Very short update on the basic differences for the non-payment geeks

The three core constructs of digital value —CBDCs, Stablecoins, and Tokenized Deposits—represent have various degrees of support from banks, central banks, businesses and regulators. Each has different risk and control points.

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Updates from Money 2020

It was truly fantastic catching up with so many of you in person at Money 2020! It’s clear that payments, AI, and digital assets are accelerating at an unbelievable pace. If you didn’t manage to make it, or if you were too busy grabbing coffee to focus on the news flow, here are my top takeaways from the floor. I hope to see some of you in Miami at Simon’s Fintech Nerdcon!

The core theme I kept hearing is that the future of commerce is moving rapidly toward machine-to-machine (M2M) interactions. As this happens, the role of V/MA networks (governance, economics, trust, identity, and authorization) becomes even more crucial. The technology is the easy part; the governance is the real competitive moat.

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X402 Foundation

Short Blog

The x402 Foundation was publicly announced last week on September 23, 2025, as a joint initiative between Coinbase and Cloudflare. This effort aims to solve the governance issue in agentic. The design COULD SOLVE the governance issues outlined in Governance in Payments as well as last month’s Agentic Commerce Economics and Governance. As a refresh, my position is that monetization/governance is the Gordian knot preventing AI from moving to next stage of growth. 

While Google’s AP2 suffers from a dependency on settlement governance and the inability to expand trust beyond their own domain (see AP2 blog), x402 is just a standard that handles payment terms negotiations between two APIs (both price and method). The foundation turns x402 into a “network) with an operational model, active governance and economics. My example is that an existing customer would have payment managed with a current card on file and the merchant owning risk, whereas a new customer (or new machine request) could agree on a non-refundable stablecoin payment.  

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Stablecoins Will Drive Network Growth

Drivers, Current Efforts and My View of the Big Picture Opportunity. Do Stablecoins represent the greatest network expansion opportunity of the next decade? I think so…

PODCAST of this Blog on Spotify

Everyone knows I’m a big fan of Visa and Mastercard. Why not? They are the most successful commercial networks in the history of man. The power of banking is unlocked within the networks that connect them (see Power of Bank Networks) and V/MA are the largest “connectors” in the world (banks, consumers, businesses). While many pundits see stablecoin as a threat to cards, I don’t see it that way at all. In fact, I think Stablecoin-based innovation will help drive a new phase of growth in the networks (as well as dollarization). 

Today’s blog provides background on the current network efforts in stablecoin settlement. I’m also attempting to outline the “why” and business case for card networks expanding their role, the number of nodes on the network, and the political dynamics at work behind the scenes. Why read this? In my view this subject is the core of a bull case for network expansion.  IMHO Investors should not look at stablecoins as a threat to V/MA, but rather as another network where V/MA can deliver value and grow the network at a massive scale.. A once-in-a-generation opportunity.

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Genius Law – What to Expect?

Yesterday President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law, clearing the path for dollar-backed stablecoins. As I’ve argued before, the future of money is a new model of trust, and this legislation provides the regulatory certainty needed for that trust. 

The GENIUS Act is a landmark piece of legislation. It establishes a dual charter system, enabling both federal and state-regulated stablecoin issuers. The key provisions are precisely what the industry needed: a mandate for 1:1 reserves with high-quality liquid assets like cash and short-term treasuries, a prohibition on reusing those reserves, and the designation of issuers as financial institutions under the Bank Secrecy Act. This isn’t just about compliance; it’s about building a foundation of trust that can be exported globally.

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