August 22nd, 2025

Three stablecoin developments bankers should know about

Welcome to the latest edition of The Stablecoin Banker, a periodic newsletter to help the banking community stay on top of the most relevant stories in the stablecoin industry. We highlight top stories that are relevant to banks, with our insights and commentary to draw out the most important conclusions.

If you find this content useful, please feel free to forward it to your friends and colleagues. They can also subscribe directly. If you’re interested in stablecoin services for your bank, feel free to reach out to us at Omnia.

In This Issue

• Wall Street completes first 24/7 U.S. Treasury financing, with implications for bank liquidity and stablecoin reserve management
• Stripe and Circle are building stablecoin-dedicated blockchains
• Ripple acquires Rail for $200M to accelerate RLUSD adoption through integrated payments

Plus, tidbits you may have missed in our Coupon Clippings section.

📈 The Rise of Stablecoin Payments Networks?

News broke last week that both Circle and Stripe are working on purpose-built stablecoin payment networks. Circle announced Arc, a USDC-focused Layer 1 blockchain while Fortune reported that Stripe is developing Tempo, its own chain, in partnership with Paradigm, a notable crypto VC. Both projects target the same fundamental challenge: creating blockchain infrastructure optimized for stablecoin commerce rather than general-purpose applications. Circle's Arc positions itself as a network where institutions can conduct financial activities using predictable, stablecoin-denominated fees, complete with optional privacy features for enterprise users. Less is known about Stripe's network. The timing indicates that both companies independently reached the same strategic conclusion: existing blockchain infrastructure isn't purpose-built for the institutional payment flows they're trying to capture, necessitating proprietary solutions designed specifically for stablecoin-powered commerce. [Full Stories: Circle, Fortune]

Our Take:

This announcement represents a material development with multiple implications for the industry. As such, it is worth examining the details more closely.

First, we need to ask whether chains like these are needed. The problems cited by both companies are real - unpredictable fees, slow confirmation times, lack of privacy, poor enterprise support. However, these problems have already been solved many times over on existing chains with operational history and broader adoption. Even qualms about crypto-token gas fees are widely addressed by third-party fee payer features built into most institutional wallet software. Just as most banks don't write their own Fed or SWIFT messaging implementations, most enterprises work with expert vendors to that abstract these challenges. Plus, there have already been multiple attempts at stablecoin-specific chains, including Plasma and 1Money. From our experience, the lack of a purpose-built stablecoin blockchain is not what holds back adoption.

Whether more chains are needed is orthogonal to whether these two chains can be successful. It's pretty obvious that distribution and adoption is the biggest hurdle in building a new multi-sided network, and both Stripe and Circle have the scale and resources to drive adoption better than most. However, Circle is walking straight into a thicket of conflicts of interest that could hinder their project, including:

1. How will Arc compete with Coinbase's Base network? (Recall that Coinbase holds 21% of all USDC and is a critical distribution partner)

2. Will other stablecoins want to use a chain sponsored by a major competitor, in which gas is paid in USDC? (Recall that enterprise-oriented chains typically have some centralization, and it's possible that Circle will earn the gas fees from Arc just as Coinbase generates revenue from Base)

3. How will the chains that Circle extracted value from over the past few years react? (It has been reported that Circle historically has charged up to $20M in order to issue USDC natively on a new blockchain)

It seems remarkable that Circle is going the direction of building a native blockchain instead of using the programmability of all the other USDC-enabled chains to address the gaps they've identified.

Stripe, on the other hand, has a much clearer incentive and opportunity. They are outspoken in their opinion that the future of finance is tokenized, and have put their money behind this thesis. They already offer Stablecoin Financial Accounts, scaling to over 100 countries. Compared to Circle, they already control large fiat payments volumes that they can incentivize to move on-chain. And, they have far fewer conflicts of interest and a widely respected merchant-friendly brand. Whether Tempo will succeed is almost unimportant. By getting in front of the (digital asset) tokenization of payments, Stripe is building the tools, products, and expertise to succeed on their own chain - or any other.

Stripe's blockchain transformation over the past year is a prime example of the threat banks face. They've built a strong portfolio of fiat payments access, have added on a layer of stablecoin tooling via Bridge and Privvy, and now are moving to connect an entire blockchain with the fiat world. Blockchains today already offer a range of financial primitives mimicking fiat counterparts typically offered across disparate providers (think investments via a broker-dealer, CDs at a bank, etc). With the right combination of services, which Stripe is assembling, users or merchants can access all of these services in one spot, with instant cross-product liquidity, and full fiat access. That is the kind of advancement in user experience that drives people to switch services.

📈 Ripple Buys Rail to Compete in Payments

Ripple is acquiring stablecoin payments platform Rail for $200 million to integrate Rail's cross-border payment infrastructure, which incudes virtual IBANs, automated back-office systems, and fiat-to-stablecoin bridging capabilities across 11 countries plus Europe. The deal, expected to close in Q4 2025, represents Ripple's strategy to vertically integrate successful payment providers into its ecosystem while boosting adoption of its RLUSD stablecoin. Rail claims it will process over 10% of the $36 billion global B2B stablecoin payments market in 2025, positioning the combined entity to handle diverse payment types through a single integrated platform without requiring specialized crypto banking relationships. [Full Stories: CoinDesk]

Our Take:

Ripple is continuing its strategic shift away from its original goal of building an inter-bank settlement network, towards becoming a more general purpose blockchain. Thankfully, they’ve been able to maintain a strong narrative around XRP and enjoy a $100 billion token valuation (only in crypto!), a portion of which they’re now using to drive distribution through acquisition in lieu of organic network effects.

It seems to me that the class of "stablecoin orchestrators" are all solving the same problem: that it's hard to convert fiat to stablecoin in various places around the world. Whereas Visa and Mastercard addressed a similar problem by intermediating trust between banks, blockchains eliminated this problem using bearer assets. The problem for on-chain payments remains that there aren’t enough access points. Enter Bridge, Rail, Conduit, and many others, all of whom are doing the same thing: securing fiat-stablecoin conversion points around the world and connecting them with a proprietary compliance layer.

Success for these providers may ironically accelerate their own obsolescence. As they prove that the stablecoin cross-border model works, two disintermediating forces emerge. First, meta-aggregators will arise to provide unified access across all providers (see Metcalf’s Law), commoditizing individual networks and driving fees toward zero through direct competition. Second, as on-chain compliance standards mature, banks and corporates sending payments can connect directly to local fiat access points without needing intermediary orchestrators at all.

The strategic question for banks isn't which cross-border provider to partner with, but whether they can build direct stablecoin capabilities before these intermediaries either consolidate into monopolistic aggregators and take control of pricing, or get disintermediated entirely. Banks with native stablecoin infrastructure will be positioned to capture this flow directly rather than paying tolls to companies like Ripple that are essentially renting access to fragmented payment networks.

Stepping back: Stripe now owns Bridge, Ripple will own Rail, and Circle is pushing the Circle Payments Network. The orchestrator teams are now joining or being incubated by companies with substantial resources and complementary business lines that can capture the benefits of owning a payment network.

With the benefit of hindsight, we have a sense of the cost it takes to build these kinds of networks, and so I bet that these companies will need to crank open the cash spigot to win business and build their distribution access points. Today, a key piece in this strategy is access to fiat networks, which is afforded only through banks in the US. Those that can cooperate with these players stand to benefit from access to large volume flows and potentially innovative deals that would deploy banking services across the provider's network. The beauty of the tokenized version of payments networks is that since the underlying technology is open - not controlled by any of these companies - banks that participate don't need to lock themselves into one network.

🎯 Reshaping Bank Liquidity With 24/7 Treasury Financing

Major finance players including Bank of America, Citadel Securities and Société General completed an on-chain repo transaction, utilizing stablecoins and tokenized US Treasuries. The transaction was completed over the weekend with instant settlement on the Canton network. [Full Stories: CoinDesk]

Our Take:

For banking outsiders, this news might feel overstated - how hard can it be to trade two assets on-chain when decentralized liquidity pools are trading tokenized dollars and treasuries everyday? Those who understand the complexity of banking and capital markets infrastructure understand how many hurdles these companies had to clear to execute on-chain what would otherwise look like a simple trade. This is significant because we now have real-world proof that tokenized assets can be used by banks in production on an open blockchain.

Being able to repo balance sheet assets 24/7 will make it easier for regional and community banks to offer 24/7 payments by providing the liquidity necessary to confidently allow  withdrawals outside of banking hours. The big banks are building their own inter-bank networks for these purposes (e.g. JPMorgan's Kinexys). With this tokenized repo taking place on an open chain, we can imagine smaller banks getting all of the same benefits as the Top 10 without having to support another big bank-owned financial network.

Taking this a step further, banks that can transact tokenized treasuries will be attractive partners for modern stablecoin issuers because these banks can support in-kind transactions. And issuer that needs redemption liquidity could simply send their tokenized t-bills to the bank, receiving deposit credit they can use to fund redemptions. Likewise, they can easily rebalance liquidity across banks. Banks supporting custody can easily custody the issuer’s full reserve portfolio, further streamlining reserve management.

Bigger picture, I think this development is a step towards the meshing of the tokenized and non-tokenized financial systems, a process that will critically require - and reward - banks because they are unique in their ability to efficiently transform assets at scale. This is what they've been doing since their invention, and it's a superpower that can be applied to the emerging financial system.

Coupon Clippings

The pace of change in our industry is accelerating, and many important developments don't always require a full analysis. To ensure you don't miss these valuable signals, we publish Coupon Clippings.

Think of our main articles as the bond itself; this section is for the interest payments—smaller, valuable tidbits of news worth 'clipping' to stay ahead.

⚖️ Regulatory Moats: Not Guaranteed

A North Dakota judge vacated the Federal Reserve’s 2011 debit card swipe fee cap, setting up a major legal battle that could reset U.S. debit economics for the first time since the Durbin Amendment. If upheld, the decision would slash interchange revenue for banks, forcing them to rethink pricing strategies and lean harder on new revenue sources. For banks, this raises the urgency of adopting technologies and developing customer-paid products that can offset lost swipe fee income — making this a pivotal moment for both payments regulation and financial innovation. [Full Story]

⚖️ Patent Risks for Bank-Issued Stablecoins

Custodia was granted a patent on fiat-related tokens issued by banks back in 2022 when there was little industry interest. It remains unclear whether the patent would withstand legal scrutiny , but combined with Custodia’s willingness to litigate against anyone - including the Federal Reserve - it could create a roadblock for banks who are considering becoming a stablecoin issuer. Whether they litigate or license, the costs to issue could be higher for banks than for non-banks. [Full Story]

🎯 Big Banks Rush to Support Issuers

Citi announced it’s exploring cryptocurrency custody and payment services, with an initial focus on high-quality assets backing stablecoins. At first glance, Citi’s move into custody for stablecoin reserves looks like catch-up with JPMorgan, BNY Mellon, and others already serving issuers. But the real significance lies in what comes next: if multiple big banks start competing for issuer business, stablecoin reserves will likely be split across institutions. That sets up demand for 24/7 inter-bank settlement of stablecoin reserve assets — a role tokenized assets and deposit tokens could fill. In this model, stablecoin issuers gain diversification of banking constituents, and more banks could participate in mint-and-redeem networks. For banks not issuing their own coins, custody and tokenized settlement could still be a strategic wedge into the stablecoin economy, with fee-sharing opportunities from issuers accelerating adoption. [Full Story]

📈 FIS Joins Core Provider Race to Adopt Stablecoins

FIS became the second core provider to announce plans to support stablecoins for banks. FIS is integrating USDC into its Money Movement Hub, offering banks a way to move stablecoins without holding them on their balance sheets, fully outsourcing implementation partners like Circle. This simplifies adoption by sidestepping some of the hard questions about how banks should integrate stablecoins into their balance sheets and operations, and how a company like FIS - not known for it's agility - would even build that into their core. However, when we see these bolt-on strategies, they typically come with messy tradeoffs like pre-funding, painful settlement delays, and lack of interoperability which ultimately result in a brittle solution that doesn't actually deliver on the purported benefits of the technology. I strongly believe that the big opportunity for banks is the next step after supporting stable coins for payments. This is a world in which we unlock new products like tokenized lending. Bolt-on payments products offer no roadmap or flexibility to deliver on this promise. [Full Story]

Thanks for reading.

We focus only on the most relevant news for bankers, and so we only send updates when the news is material and relevant. If you don't hear from us, don't worry, we'll be back when there is something important to read!

Best, Davis

Omnia is a provider of stablecoin infrastructure for banks that want to capture growing demand for stablecoins. If you’re interested in learning more about us, please get in touch.

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