February 16, 2026

Four stablecoin developments bankers should know about

The Stablecoin Banker is a periodic newsletter keeping bankers on top of the stablecoin industry. I highlight top stories that are relevant to banks, with my insights and commentary to draw out the most important conclusions.

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"Banking is necessary, banks are not.”

— Bill Gates (1994)

In This Issue

• Banks and Crypto Square Off at the White House
• The New Banks Are Here
• BlackRock Brings $2.4 Billion Treasury Fund to DeFi
• The Banking Lobby's Playbook for Keeping Crypto Off Fed Rails

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

Banks and Crypto Square Off at the White House

The White House Crypto Policy Council convened the biggest names in banking (JPMorgan et al) and crypto (Coinbase et al) to resolve the stablecoin yield standoff blocking the CLARITY Act. Banks arrived with a "principles" document demanding a total ban on stablecoin yield. Crypto firms called the proposal anti-competitive. No deal was reached. A March 1 deadline was set for a compromise. Crypto firms floated the idea of community banks serving as reserve holders for stablecoin issuers as a potential compromise. [Sources: The Block, Yahoo Finance]

My Take:

The White House is lining up with federal regulators — the OCC, FDIC, and Federal Reserve — to push innovation in the banking segment by demanding a compromise on stablecoin yield. The banking lobby's defensive posture — ban yield entirely, block Fed payment access — is not going to hold under that kind of pressure.

The idea of community banks as stablecoin reserve holders is intriguing but not a panacea. The plumbing for this isn't hypothetical (see Fiserv’s StoneCastle acquisition, or look at existing deposit sweep networks). But there are real questions about whether community banks are operationally equipped to support liquidity needs, 24/7 payment capabilities issuers want, and whether issuers — who still prefer GSIBs after watching SVB nearly break USDC in 2023 — will actually commit to distributing reserves downstream. Even if all of that gets figured out, the math is sobering: issuers typically hold only 10–20% of their reserves in bank deposits, with the rest in Treasuries and money market funds. If $100 billion shifts from bank deposits into stablecoins, only $10–20 billion flows back to banks as reserve deposits. The reserve holder role is a consolation prize, not a strategy.

Banks can compete for the deposit slice of stablecoin reserves, but it’s more important for them to compete in a world where fully-reserved, digital-first institutions are coming for their simplest, most profitable products — starting with payments and deposits. Community banks in particular need to decide what they're going to specialize in over the next five years. The ones that figure out how to be an active bridge between stablecoins and traditional finance — providing seamless on-ramps, off-ramps, and integrated digital asset services — will thrive. The ones waiting for the lobby to hold back the tide are going to get caught in an innovation J-curve they didn't plan for and can't afford to fund. As I discuss in the next story, the new competitors are already here, and they're not waiting.

The New Banks Are Here

Two new bank charters have been approved. Erebor Bank received its full national bank charter from the OCC - the first de novo charter under the current administration. The digital-only bank is capitalized with $635 million, and valued at $4.35 billion. Separately, Brazil's Nu Holdings received conditional OCC approval to form Nubank, N.A. — completing its application in just 121 days. The parent company already serves 127 million customers and generated $2.5 billion of net income in the year ending Sept 30, 2025. [Sources: Banking Dive, NuBank]

My Take:

Once again we're reminded of how the landscape for de novo chartering has changed. Erebor went from company formation and initial fundraise to operational bank in less than a year. Nu Holdings received conditional approval in roughly the same timeframe. These aren't tentative experiments — they're institutions ready to scale aggressively. Erebor can take on $5.2 billion in deposits with its current capitalization, which would make it the 238th largest bank in the US, in the 94th percentile. Nu Holdings has not only the resources to heavily capitalize their new US bank, but a technology and go-to-market platform that operates at a 28% efficiency ratio — half that of the average US bank (a lower efficiency ratio is better). These aren't fly-by-night startups. They're armed to compete.

What should existing banks take from this? Both Erebor and Nubank have proprietary tech stacks that don't utilize a traditional banking core. They are digital-first, focused on online experiences, without legacy branches or legacy systems to drag behind them. Historically, banks have been able to stave off competition because the customer ROI for switching has been high — the differences between banks aren't meaningful enough to justify the hassle except during a promotional period. That's about to change. These new banks will offer persistently better rates, digital interfaces that feel like consumer tech products, and modern lending and payments capabilities. The promotional period never ends because the cost advantage is structural.

Incumbent banks that rely on digital experiences bolted onto traditional technology and customer service models are going to face stiff competition. As banking evolves over the coming years, I believe customers will bifurcate into a digital-only contingent and a branch-based contingent, and banks will need to specialize accordingly. It will become increasingly difficult to succeed in both digital and physical domains as a sub-$100 billion bank. All banks should be looking at this landscape and deciding where they want to be in five years. That's a hard transition — it means changing the customer mix, losing revenue, and investing through an innovation J-curve. Making it through this process will require proactive planning and a capital buffer to weather the lean years of reorienting the business.

BlackRock Brings $2.4 Billion Treasury Fund to DeFi

BlackRock's tokenized Treasury fund BUIDL became available for trading on Uniswap, one of the largest on-chain decentralized exchanges. Uniswap provides request-for-quote and order routing that allows buyers and sellers to match with an institutional counterparty, and for the trade to be settled atomically and bilaterally, BUIDL for stablecoin. Robert Mitchnick, BlackRock's head of digital assets, described the move as a step in "the convergence of tokenized assets with DeFi infrastructure." BlackRock also purchased Uniswap governance tokens - the on-chain equivalent of corporate equity - which allows them to participate in governance of the protocol. [Sources: Uniswap, Fortune]

My Take:

This is the clearest signal yet that institutional tokenized assets will trade on decentralized infrastructure, not on permissioned bank networks. BlackRock didn't build a private blockchain. They didn't join a permissioned consortium. They put their flagship tokenized fund on Uniswap — the same public rails used by DeFi traders processing billions in daily volume. And they bought governance tokens to participate in the protocol's decision-making, the on-chain equivalent of taking a board seat. That's not a toe in the water. That's a strategic commitment.

The key insight is what BlackRock did instead of building private infrastructure: they used permissioning at the protocol level. Early participants like Wintermute, Flowdesk, and Tokka Labs don't need to bridge liquidity to and from a private chain. They simply move it between protocols on the same public chain — faster, cheaper, and with far less counterparty risk. In trading, liquidity is king. The proponents of private, permissioned blockchains are going to struggle to compete with the deep pools available on public infrastructure, and BlackRock has just validated that thesis at scale. This hybrid model — public rails, permissioned participants, stablecoin settlement — is likely what most institutional tokenized asset trading will look like.

For bankers, the practical takeaway is instant liquidity. BUIDL holders can now trade in and out of a tokenized money market fund position 24/7 with near-instant settlement. That's not a roadmap — it's live today. Banks can build real-time commercial treasury liquidity products on this infrastructure right now.

The Banking Lobby's Playbook for Keeping Crypto Off Fed Rails

The Federal Reserve proposed a "Payment Account" prototype in December — a limited-purpose account that would give non-bank payments firms (including stablecoin issuers) direct access to Fedwire and FedNow. The design is deliberately restrictive: fully prefunded, no overdrafts, no discount window, no interest, and overnight balance caps. The Bank Policy Institute, The Clearing House, and the Financial Services Forum filed a joint comment affirming the proposed restrictions and requesting more. The ABA filed separately, endorsing the prototype as a "measured pathway" but with similar guardrails. Fed Governor Waller, targeting Q4 2026 availability, summarized the feedback: "Everyone is yelling at me.” [Sources: Fed RFI, BPI Letter, ABA Letter, American Banker]

My Take:

The banking lobby is walking a tightrope. Flat-out opposing a Fed initiative to broaden payment access would be politically toxic under an administration that's explicitly pro-crypto. So the strategy is to wrap opposition in the language of prudence. Both the BPI and ABA letters open with enthusiastic support for "innovation that upholds trust, security, and resiliency" before spending 15+ pages proposing conditions so burdensome that the product may never be usable. This is a well-worn playbook: don't kill the initiative — smother it in guardrails.

BPI's central argument is that applicants will be "less regulated" than banks, and therefore inherently riskier. The “less regulated” part is true, but not the riskier part. The potential applicants will all be fully-reserved, thus necessitating less regulation than an institution practicing fractional-reserve banking. The Payment Account itself reflects this: it's pre-funded only, no overdrafts, no credit, no discount window. If your balance is zero, no payments go through. The Fed's financial exposure is zero. Yet BPI wants a 12-month seasoning requirement before an institution can even apply, a 180-day review (double the Fed's proposed 90), and a one-year trial period after approval. A stablecoin issuer launching under the GENIUS Act in mid-2026 could not realistically get a fully functional Payment Account until 2029.

The letters also telegraph how the industry will stymie the product in practice. The nesting prohibition is the clearest example. BPI supports a prohibition on "correspondent" services, with affiliate or third-party volume capped at 10%. In the stablecoin world, this will be weaponized against on-ramp and off-ramp activity. If Circle gets a Payment Account and a MTL-licensed wallet provider integrates with Circle's API to offer users a bridge between stablecoin balances and their bank account via Fedwire, BPI will argue that Circle is acting as a correspondent — that the wallet provider's users are indirectly accessing Fed rails through Circle's account. The practical effect: stablecoin issuers get a Payment Account in theory but can't build the fiat infrastructure that would make stablecoins genuinely competitive with bank deposits.

Fundamentally, the banking lobby is conflating two regulatory philosophies. The old model lets risky institutions do risky things — fractional reserve lending, maturity transformation, leveraged balance sheets — but wraps them in comprehensive oversight. The emerging model builds institutions that offer narrower services in a fundamentally safer way — fully reserved, no leverage, no credit risk — with appropriately lighter oversight. The lobby wants to force both into the same framework. The question I wish they would answer: why can't consumers have the safer option?

Coupon Clippings

What Stablecoin Run Risk?

Bitcoin has fallen roughly 47% from its October peak, and the crypto asset class has fallen 45% overall, a $2 trillion loss. But stablecoin outflows have been comparatively modest — roughly $14B, or about 4.5%. This is surprising because stablecoins are primarily used for crypto trading, and safe on-chain yields today are comparable or worse than money market funds (USDC loaned on Aave currently earns 2.4%). That's a signal: even in a crash, stablecoins are proving sticky, calling into question the “run potential” of stablecoin issuers. In addition, the lack of movement despite low on-chain yields reflects the friction of moving between on-chain and off-chain. Banks that provide seamless on- and off-ramps could profit from these periods of market volatility by bringing stablecoin assets back onto their balance sheet as deposits, allowing holders to access higher safe yields off-chain.

USBC / Uphold / Vast Bank Tokenized Deposit Partnership

USBC finalized a definitive agreement with crypto exchange Uphold and Vast Bank to develop tokenized US dollar deposits. Uphold's 10M+ users will be able to open deposit accounts and hold/transfer digital representations of deposits at Vast Bank via USBC's blockchain infrastructure. The common thread among all three companies is Greg Kidd, an early Ripple executive who is a major investor in the trifecta. Nothing further has been released as to the utility of the deposit token outside of these affiliated entities. Nonetheless, initiatives like this, and those from Vantage/Custodia and SouthState Bank, are necessary for the organic discovery process of figuring out how deposit tokens should work. Keep in mind: it took 10 years for stablecoins to go through this same process. [Full Story]

FDIC Extends GENIUS Act Comment Period to May 2026

The FDIC extended its comment period on proposed stablecoin issuance application rules from February 17 to May 18 — a 90-day extension requested by the ABA and four other trade groups. This pushes the rulemaking timeline back, increasing the risk that the FDIC misses the GENIUS Act July 2026 statutory deadline for final rules. Banks considering stablecoin issuance now have more time to shape the rules, but also face continued uncertainty about final requirements. [Full Story]

NCUA Releases GENIUS Application Framework for Credit Unions

The NCUA released its own proposed rulemaking under the GENIUS Act, defining how credit union subsidiaries can apply to become licensed payment stablecoin issuers. Like the FDIC's December proposal for banks, this is largely procedural: it establishes how to apply but defers the harder questions — reserve requirements, capital standards, liquidity buffers, operational risk, IT risk management — to a future rulemaking. Chairman Kyle Hauptman says the agency is on track to meet the GENIUS Act's July 18 deadline for final implementing regulations. Every time I meet a bank that is hesitant about stablecoins because of regulation, I remind them that it is the law of this land that Payment Stablecoins will exist no later than Jan 2027. The regulators are marching forward in accordance with that law. [Full Story]