January 6, 2026

3 stablecoin developments bankers should know about

🎉 Welcome to 2026 - the year of the stablecoin bank.

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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"Blockchain is a technology super cycle that will fundamentally change finance, not just in payments, but across every area of money." — Anthony Noto, CEO of SoFi (Dec 18)

In This Issue

• Three fintechs apply for bank charters in one week
• SoFi becomes first national bank to issue a public stablecoin
• Coinbase launches "Custom Stablecoins" backed by USDC

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

More Fintechs Convert to Banks

Three significant fintech banking applications emerged in a single week. PayPal submitted its application for a Utah industrial loan charter, citing a desire to reduce reliance on partner banks and gain direct card network membership for its $30 billion small business lending operation. Mercury, reporting GAAP profitability and $650 million in annualized revenue, applied for a full OCC national bank charter after hiring SoFi's former CFO who led that company's charter process. Separately, Erebor—a crypto-focused de novo bank backed by Peter Thiel's Founders Fund—secured FDIC deposit insurance approval and raised $350 million at a $4.35 billion valuation, targeting technology companies in virtual currencies, AI, defense, and manufacturing.  [Sources: PayPal, Banking Dive, Mercury, FDIC, Bloomberg]

My Take:

Fintechs have always flirted with becoming banks but largely held off due to the perceived cost and difficulty (recall SoFi’s attempt to de novo a bank in 2020 only to “accelerate” the charting process by buying Golden Pacific). Things have clearly changed and they are no longer content to be BaaS customers. PayPal explicitly cited "reducing reliance on third parties." Mercury framed its application as building "a financial institution designed to last for generations." These companies are ready to own their destiny, and will shift their business away from their incumbent sponsor banks.

Meanwhile, Erebor is shaping up to be an ambitious initiative. Having raised $575 million in two post-seed funding rounds, and with a 12% Tier 1 requirement, they have a path to becoming a $4.8 billion bank. Clearly, someone thinks there’s substantial untapped potential in the segments they’re serving.

The larger fintechs have reached a scale where owning their own charter makes economic sense: they can absorb regulatory overhead in exchange for flexibility and control. For sponsor banks, these departures are a warning. The largest BaaS clients are becoming too sophisticated—and too well-capitalized—to remain tenants forever. The fintechs that do stay will demand more: faster approvals, broader product menus, and partners who understand digital assets. Sponsor banks that can't deliver will watch their best clients follow PayPal and Mercury out the door

SoFi Becomes First National Bank to Issue a Stablecoin

SoFi Technologies launched SoFiUSD, becoming the first OCC-regulated national bank to issue a stablecoin on a public, permissionless blockchain (Ethereum). The stablecoin is backed 1:1 by cash held at the Federal Reserve with immediate redemption capability, and SoFi is positioning itself as stablecoin infrastructure for other institutions—allowing banks and fintechs to issue white-label stablecoins or integrate SoFiUSD directly into their settlement flows. Beyond internal settlement, SoFi plans to deploy the stablecoin across card network settlement, international remittances through SoFi Pay, and as an alternative payment method for its Galileo platform's 160 million accounts. SoFi also signaled that it can generate yield on reserves "to be shared with partners and holders". [Sources: SoFi, Banking Dive, CoinDesk]

My Take:

With this announcement, SoFi is planting its flag in the stablecoin landscape. They are not waiting for GENIUS licensing to set up their bank-issued stablecoin, and have come to market with the best product they can. But, in so doing, they have created a Frankenstein model which will undoubtedly change once licensing is available and issuance is moved into a separately capitalized subsidiary, as GENIUS requires.

SoFi explicitly states that the token is issued by SoFi Bank, fully reserved with cash for “immediate redemption capability”. It sounds more like a tokenized deposit to me than a stablecoin, particularly since it’s issued by the bank itself and is therefore theoretically subject to bank run risk alongside all the depositors. They made no mention of FDIC coverage in the press release, probably because the answer to that question is unknown at this time. Since it is only available for “internal settlement activity” right now, it is functioning as an accounting tool, and the answer is irrelevant.

Still, being early matters. With regulators signaling openness to innovation, SoFi can afford to launch a product that will need to evolve. The alternative—waiting to be one of dozens racing for GENIUS licenses—means competing from behind.

I also note their emphasis on “incentive” sharing, which reinforces my view that stablecoin yield sharing is inevitable. That a bank is planning for this model should inspire bankers to imagine a future where users can hold a balance that is both yield-bearing and fully liquid with access to all of the payment rails. This rethinks the fundamental business architecture of traditional depository banking.

Coinbase Turns Brands Into Stablecoin Issuers

Coinbase launched Custom Stablecoins, a "stablecoin-as-a-service" platform that enables businesses to create branded stablecoins backed 1:1 by USDC and other USD-denominated stablecoins, all custodied by Coinbase. The product handles issuance, compliance, and smart contract management while offering partners zero-fee interoperability with USDC's global liquidity network and revenue through rewards based on circulating supply. The launch is part of Coinbase's broader "Everything Exchange" strategy—announced alongside stock trading, prediction markets, and tokenized equities plans—positioning the company as a comprehensive financial platform with ambitions to become the world's top financial services app within a decade. [Sources: Coinbase, CNBC, PYMNTS]

My Take:

Ironically, Coinbase's Custom Stablecoins tells us that issuing a stablecoin is not good business.

The critical detail here is what Coinbase didn't do: become an issuer itself. Though they are applying for an OCC trust charter, that application is for custody, not issuance. Custom Stablecoins are backed by USDC collateral, not issued directly by Coinbase. This is a deliberate choice with significant strategic implications.

But there's a deeper insight. Coinbase appears to recognize that issuer economics will commoditize under the GENIUS Act framework. With yield-sharing deals already running north of 90% in favor of distributors, the economics of being a standalone issuer are deteriorating fast. So rather than compete with Circle for issuer margins, Coinbase is positioning itself as the infrastructure layer that sits above issuers—capturing value from custody, compliance, and distribution while letting Circle bear the regulatory burden.

If you’re looking to issue a stablecoin, there are now three models. First, become a regulated issuer like Circle and Tether. Second, leverage issuer-as-a-service providers like Stripe/Bridge and Brale. And now, create a synthetic branded stablecoins backed by existing stablecoins. The friction to launch a branded stablecoin is approaching zero.

The Coinbase model confirms either their Circle relationship is too good to give up, or that they see very limited value in the issuance layer. Banks appear to agree with the latter. Very few have announced plans to issue their own stablecoins, and those exploring it are mostly joining consortia—letting someone else manage the issuer while they focus on distribution and customer relationships. The market is converging on a view: distribution is king, not issuance.

Coupon Clippings

FDIC Proposes GENIUS Act Application Rules

The FDIC released the first proposed rulemaking under the GENIUS Act, defining application procedures for supervised banks seeking Payment Stablecoin issuer licenses. The proposal is largely procedural: it establishes how to apply but defers the harder questions—capital requirements, liquidity buffers, operational risk standards—to future guidance. Banks now know the application window opens mid-2026, but they'll be taking shots in the dark on the metrics that actually matter. [Full Story]

JPMorgan Launches Tokenized Money Market Fund

JPMorgan launched MONY, a tokenized US Government money market fund on Ethereum, with investors able to subscribe and redeem using cash or USDC. The significance isn't that JPMorgan is tokenizing—they've done that internally for years—but that they're doing it on a public blockchain with stablecoin settlement. When the most conservative institution in finance treats USDC as a legitimate redemption rail, it's hard to argue stablecoins are still experimental. Tokenized government funds hit $9 billion at year end, up 125% from 2024. [Full Story]