August 8th, 2025

Five stablecoin developments bankers should know about

Welcome to the latest edition of The Stablecoin Banker, a periodic newsletter from the team at Omnia 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.

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In This Issue

• The White House releases a complete roadmap for modernizing digital asset regulation
• Visa, Western Union continue their build out of stablecoins as settlement infrastructure
• Major banks accelerate their embrace of crypto and stablecoins
• PayPal dives into cross-border with two product announcements
• New insights on the myth of the singleness of money

… and a new section, Coupon Clippings, with further tidbits you may have missed.

⚖️ White House and SEC Launch Crypto Regulation Modernization

The White House released a milestone report “Strengthening American Leadership in Digital Financial Technology” which lays out a substantial roadmap cutting across the entire federal legislative and regulatory bureaucracy. At over 160 pages, the report covers the full beachfront of issues including substantial sections on banking and stablecoins. Its recommendations include clarity from banking regulators for how banks can engage with digital asset activities, access to charters and Federal Reserve Master Accounts, capital treatment based on risk rather than technology, and simplifications to the Basel recommendations for asset groupings. Just a day after the report’s release, SEC Chairman Atkins launched "Project Crypto" to begin implementing some of the report’s recommendations that are within the SEC’s purview. [Full Stories: White House Report, SEC Speech]

Our Take:

First, it’s important to recognize the dramatic depth and breadth of the report. Industry experts have lauded it’s accuracy and detail, and it truly is the first document to lay out a comprehensive roadmap for modernizing digital assets regulation. Atkins’ swift followup reflects the speed at which the White House wants regulators to move.

For banking institutions, several developments merit attention. The emphasis on technology-neutral regulation, separating the actual risk of the activity from conceptions or opinions about the underlying technology, addresses long-standing industry concerns about inconsistent treatment of blockchain-based versus traditional financial activities. Effective banking regulation only comes from a focus on actual risks rather than perceptions, as many banks affected by Operation Chokepoint 1 and 2 can evidence.

Though Atkins oversees the SEC, and not banks, he is prioritizing changes that will increase competition with banks. Notably, he specifically cited a goal of allowing participants to innovate with super-apps - bundles of financial services offered through single interfaces. Given the ability for tokens to represent a wide range of assets, well beyond securities, and the multitude of ways that tokens can be used on chain, this push will enable non-banks to compete more directly with the banking system. Staking and defi allow tokens to offer relatively safe yield, and with Atkins’ goal in mind, non-banks could offer these capabilities through a streamlined “token abstracted” UI that looks a lot more like a savings account than a crypto wallet. In turn, this means that fintechs, previously wholly dependent on banks, could find new life as broker-dealers and decouple themselves from banking.

Moving forward, banks would do well to proactively engage their regulators to build out core digital asset capabilities that will enable them to compete effectively in a world in which lines will be blurred, capital will be more mobile than ever before, and a strong user experience will be the primary way to attract and retain customers.

📈 Payments Giants Embrace Stablecoins as Settlement Infrastructure Backbone

Major payments companies are rapidly integrating stablecoins into their core infrastructure following regulatory clarity from the GENIUS Act. Western Union announced a fundamental strategic pivot from cryptocurrency skepticism to active stablecoin adoption, launching pilot programs for treasury operations and testing on-ramp/off-ramp services across Latin America and Africa. The company identified specific opportunities to reduce correspondent banking dependencies and improve capital efficiency through blockchain settlement rails. Meanwhile, Visa expanded its stablecoin capabilities by adding euro-backed EURC and regulated tokens USDG and PYUSD, while supporting four blockchains (Stellar and Avalanche additions). Visa has processed over $25 billion in crypto spending since 2020 and is actively testing stablecoin corridors for cross-border payments. Both companies emphasized the treasury and B2B settlement advantages, with Western Union providing concrete examples of how stablecoins could solve weekend liquidity challenges with banking partners in emerging markets. [Full Stories: Visa Call, Western Union Call, Visa Expansion]

Our Take:

These stories demonstrate growing use cases for stablecoins that often go unnoticed, in internal treasury management and payment settlement. Visa and Western Union see opportunity to improve liquidity and increase the velocity of money. Western Union's candid example about weekend liquidity shortfalls in India perfectly illustrates how treasury operations drive institutional stablecoin adoption. Banks that support direct stablecoin settlements will be favored by payments networks and corporates seeking more efficient financial operations.

Visa’s broad adoption of multiple stablecoins and blockchains simultaneously reflects the nascency of the market, in which there is limited consensus on the preferred tokens and chains, and the potential that this state may persist even at scale. Unlike with fiat systems that require broad consensus and standards consolidation, blockchains function well in a heterogenous environment by decoupling an item of value from the record-keeping of ownership. Tokenization of any asset allows the claim of ownership to move and be used separately from the underlying item of value. This means that as long as there are technical guarantees of the veracity of ownership represented by a token as it is wrapped, bridged, or used in defi, the systems can evolve very rapidly and without over-the-top coordination. The organic evolutionary model looks chaotic and destined to fail to most tradfi people, but they will be surprised as blockchain-based financial products continue to scale.

With increasing standardization of underlying value (e.g., via the GENIUS Act), and greater market understanding of blockchain mechanics, companies - and banks - will need to consider how they can maintain technology optionality today, and build substantial interoperability in the long term. The market will need more trusted providers that connect different tokens and blockchains, which creates opportunity for banks to offer cross-chain and cross-token services.

📈 From Crypto Skeptics to Strategic Partners: Major Banks Rush to Digital Asset Services

Major U.S. financial institutions are rapidly embracing crypto integration following the GENIUS Act. Despite CEO Jamie Dimon's historic crypto skepticism, JPMorgan is now exploring Bitcoin and Ethereum-backed loans, and announced a Coinbase partnership that allows users to more seamlessly fund their Coinbase accounts from their Chase bank accounts and credit cards. PNC Bank announced direct crypto trading for its customers through a partnership with Coinbase. Interactive Brokers is separately considering launching its own stablecoin for 24/7 account funding, viewing digital assets as operational infrastructure rather than speculative investments. These moves represent a fundamental shift from crypto-hostile to crypto-adjacent strategies, with traditional finance recognizing customer demand for digital asset access. [Full Stories: JPM Lending, PNC Coinbase, JPM Coinbase, IBKR]

Our Take:

This wave of institutional crypto adoption reveals a critical competitive divide emerging in banking. While JPMorgan and PNC can leverage their scale to secure flashy partnerships with Coinbase, the real strategic lesson lies in their implementation. The reality is that these banks are still approaching crypto with an arms-length design mentality. Behind the scenes, the products are typically reliant on standard banking services like lines of credit and prefunding guarantees, third party custodians, and wire and ACH payments (to wit: the ability to fund your Coinbase account with a Chase credit card is just a cash advance loan - an advancement over the fraught experience of purchasing crypto on a credit card, but hardly financial innovation). Products built this way will feel painfully antiquated to modern users.

Building eye-catching and relevant products will require banks to build more native digital assets capabilities. The banks that do build these capabilities won’t envy these mega-bank partnerships because their customers will be able to instantly fund any exchange account by simply transferring bank funds via stablecoin 24x7. They will also be able to offer instant collateralized loans, funded in minutes because the bank supports both token custody and stablecoin disbursement.

📈 PayPal's Cross-Border Obsession: Multi-Rail Strategy to Take On International Payment Pain

PayPal is executing a payments strategy to address cross-border friction through both traditional fiat infrastructure and cryptocurrency solutions. The company announced PayPal World, a platform that connects domestic digital wallets in multiple countries using traditional rails, with initial engagement from India’s UPI, Mercado Pago in Brazil and Tenpay from Tencent in China. It also announced an expansion of the Pay with Crypto feature to enable merchants to accept 100+ cryptocurrencies with automatic conversion to PYUSD or fiat. Both initiatives target the same fundamental problem—high costs and complexity in international commerce—but offer different technological approaches to serve diverse customer preferences. PayPal estimates it can reduce cross-border transaction costs by up to 90% compared to traditional international card processing. [Full Stories: World, Crypto Payments]

Our Take:

The chronological adjacency of these announcements gives us a sense of the strategic priorities over at PayPal. They see such significant painpoints in cross-border transactions that they are throwing multiple products at it. The fact that PayPal World is not using stablecoins reminds us that despite the excitement around stablecoins, they may not always be the right tool for the problem.

However, there might be some clever strategic planning here. They can leverage their existing banking relationships to connect with geographies in which USD stablecoins are hard to use (India and China), gaining access to billions of potential users. The beauty of stablecoins is their modularity: as PayPal stands up PYUSD-to-fiat ramps, they can progressively move transactions onto PYUSD and off of the correspondent network, shifting their large network access onto stablecoin rails. This would unlock liquidity and fee benefits over time.

This echos the sentiment above related to maintaining optionality. We’re moving into a world with far greater disaggregation of financial services, where users will have multiple banks, wallets, and other fintech providers, all running on a mix of underlying financial infrastructure. Builders in this space ought to plan for flexibility in the assets and payment methods they support to maintain seamless connectivity to the financial products that customers bring with them.

🎯 On The Singleness of Money

Two great writers, Nic Carter and Omid Malekan, recently put out articles that challenge one of the central banking establishment's core argument against stablecoins—that private money issuance inevitably leads to the chaos of America's "wildcat banking" era. Omid points to the ways that money today is not truly singular and how the system has adapted to this truth. Nic gives us an excellent summary of the how America’s free banking era was a poor experiment to test the viability of privately issued money because of the ways it was, ironically, not free and inconsistent across the country, compared to the encouraging results in Scotland and Canada. He also shows how the advent of digital messaging and digital money eliminates the frictions that caused the challenges of the US free banking era. Modern stablecoins operating under GENIUS regulations systematically the structural vulnerabilities that plagued 19th-century American free banks, suggesting that the "singleness of money" principle may be more flexible than traditional monetary theory assumes. [Full Stories: Free Banking, Singleness]

Our Take:

This historical analysis directly supports a more nuanced understanding of monetary singleness that has me rethinking my prior work on deposit tokens. In that article, I argued that tradeable bank-issued tokens would inevitably develop market pricing that breaks the singleness of money—and that argument remains correct. However, Nic and Omid’s analysis suggest that market-based pricing doesn't necessarily create the systemic instability that monetary authorities fear.

Provided that the monetary assets in question - be them stablecoins or deposit tokens - are backed by similar quality assets with comparable liquidity, maybe there’s less to worry about than we thought. The evidence is compelling: stablecoins like USDC and USDT rarely trade at exactly $1.00, yet their adoption continues accelerating because users trust the redemption guarantee. The GENIUS Act reinforces this dynamic by mandating same-day redemption at par.

This points toward a two-tier conception of monetary singleness—a "slow path" where redemption rights preserve ultimate value parity, and a "fast path" via counterparties where users effectively pay convenience fees for immediate liquidity in the form of trading spreads. This framework isn't revolutionary; we already accept tiered pricing for payment speed throughout our financial system. What's significant is how this historical perspective dismantles the most common regulatory objection to stablecoins as inherently destabilizing. For banks evaluating stablecoin partnerships, this analysis provides intellectual ammunition against internal skeptics who invoke monetary orthodoxy to resist digital asset integration.

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're introducing a new section: 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.

🏛️ A Yield-Bearing Stablecoin in the US?

Wyoming is preparing to launch the first state-issued stablecoin (WYST) with potential yield-bearing capabilities, directly challenging federal restrictions in the GENIUS Act. State Senator Chris Rothfuss confirmed Wyoming's confidence in its ability to offer yield on WYST, noting "we are confident that we can issue yield on our stable token" despite the Act's prohibition on yield-bearing payment stablecoins. I think the loophole has to do with the Act’s definition of “persons” that cannot issue payment stablecoins, which fails to list state governments, thus theoretically putting them outside the scope of the bill. Oops?

I doubt that Wyoming will move to offer yield any time soon for more practical reasons: Wyoming's stated goal of funding schools through stablecoin profits actually requires not paying yield in order to maximize revenue. [Full Story]

⚖️ Stablecoins As Cash Under GAAP?

Bloomberg reported that the SEC is preparing a staff bulletin that would outline criteria for treating certain stablecoins as cash. Currently, stablecoins must be listed as a separate asset from cash. This change - if fully implemented in GAAP - would significantly improve the viability for corporates to hold stablecoins. It would also flow through to bank financial reporting, though not for regulatory reporting which determines things like capital treatment, in turn driving the cost of providing stablecoin services. Aligning the financial and regulatory reporting would further development from banking regulators. [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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