The Stablecoin Banker, July 7
July 7, 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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"We welcome continued innovation and competition in the space."
— Jeremy Allaire, CEO of Circle (June 30)"Welcome OUSD. Player 2 has entered the game."
— Paolo Ardoino, CEO of Tether (June 30)
In This Issue
- 140 companies back OpenUSD, a consortium-governed stablecoin that has to solve the governance problem nobody has solved yet
- Vantage and Custodia publish the only tokenized-deposit design not built by and for the big banks
- Grasshopper Bank ships stablecoin payments
- Japan adds more stablecoin options, and Korea moves to tokenize FX
Plus, tidbits you may have missed in our Coupon Clippings section.
OpenUSD Enters the Arena
More than 140 companies including Visa, Stripe, Mastercard, Coinbase, BlackRock, BNY, Ripple, Google, Shopify, and the Solana Foundation announced Open Standard, a consortium that will launch a jointly governed dollar stablecoin, OpenUSD (OUSD), this year. Businesses will be able to mint and redeem OUSD with zero fees and no volume limits, and most of the reserve income will be distributed to participating companies after a small management fee, with governance shared among partners through an independent organization rather than a single controlling issuer. Open Standard's interim CEO is Zach Abrams, who founded Bridge, the stablecoin platform Stripe acquired in 2024 for over $1 billion. Sources [Bloomberg, The Block]
My Take:
In 2022–2023 I worked on a de novo bank charter for a bank-issued stablecoin. Through that experience, I came to believe the only way for the banking industry to succeed with a stablecoin would be to form a non-profit (in principle or in fact) issuer that allocates profits to each bank based on its contribution to distribution. Since then I've written about the critical importance of distribution, how scale of customer base is easily confused with distribution potential, and the difficulty of designing governance for shared network-effect utilities. I now believe the shared-economics, industry-utility model is the only way to create a token that can compete at the scale of Circle and Tether, with meaningful global acceptance beyond an issuer's closed ecosystem.
I've seen few designs that could achieve this. Paxos' USDG never reached escape velocity because it was never seriously marketed beyond its launch partners. M0 takes a clever decentralized approach, but has found it hard to scale quickly. Now, along comes OpenUSD.
OpenUSD is closely aligned with Stripe so it's unsurprising (but still impressive) that Stripe could get 100-plus major entities to put their names on the press release. That many of them are actively involved in other stablecoin projects tells us companies are placing many bets, and that all of them want a more equitable model than Circle and Tether offer.
My biggest question is whether OpenUSD can thread the needle on governance, which requires simultaneously solving three conflicting problems: a broadly acceptable method for allocating reserve yield to distributors based on contribution that is also robust in an evolving ecosystem; oversight and management that enables nimbleness without disenfranchising users and distributors; and sustained agreement on how much revenue the issuer retains for marketing and partnerships. If Stripe tries to maintain any practical control over OpenUSD, its future is limited.
Where the banking industry has tried to balance these conflicts, the track record is mixed at best. NACHA is a non-profit with very broad representation, and cannot innovate. Early Warning Services moves much faster, but is owned by seven banks, which rankles pretty much everyone else. The Clearing House sits in between and is generally a late adopter of technology. It's hard to imagine any of these models working for a stablecoin.
For bankers, the takeaway is to keep planning for a multi-stablecoin world. New issuers are paying for distribution, which is a win-win for banks that engage by offering stablecoins as a new payments rail that makes their deposit accounts more useful. Meanwhile, if the development of OpenUSD's governance model trends positively, consider becoming an early adopter because the OUSD distributor economics will almost certainly be far superior to those of Circle or Tether.
Is It A Deposit Token? A Stablecoin? That Depends…
Vantage Bank and Custodia released a white paper detailing the Hazel Network, a deposit token network built around a dual-character token called the Avit. Inside the consortium of member banks, the token is a tokenized deposit with the issuing bank as obligor and FDIC insurance attached; outside the consortium, the same token functions as a GENIUS Act-compliant stablecoin backed 1:1 by cash and short-duration Treasuries, transforming automatically as it crosses the consortium boundary. The reference implementation has been live on Ethereum mainnet since March 2026, with Infinant as integration partner and full availability for banks targeted for Q4 2026. Separately, Anchorage Digital launched a tokenized-deposit platform that lets banks issue on-chain representations of customer deposits. Sources [PRNewswire, CoinDesk]
My Take:
If banks were hair-on-fire about stablecoins this time last year, it seems safe to call the current deposit-tokenization craze a new hair-on-fire moment. The entrants keep coming.
Anchorage's entry is the least interesting of the batch. Having built tokenization capabilities to support stablecoin issuers, pointing the toolset at deposits makes sense, but the business plan seems to end there. Where other networks at least mention specific use cases, Anchorage copy-pastes the benefits of stablecoins onto tokenized deposits: "always-on settlement," "programmability," "global interoperability." All of it applies equally to stablecoins and none of it suggests why you'd tokenize a deposit in particular.
Hazel is the exciting news, because it's the only deposit-token network not built by and for the big banks. Many elements of Hazel look the same as the others: interbank flows with net settlement, for which The Clearing House already has a well-worn design in CHIPS. This is not a criticism but rather a summary that moves us quickly to the more interesting elements that could set this network apart from its big-bank brethren and become compelling for community banks.
Hazel departs from the other projects in two ways. First, it's deployed on a public blockchain. Yes, you can read that again. Vantage and Custodia aren't afraid of public chains, and have built in the controls required to keep deposit tokens inside a permissioned perimeter within the chain. That decision enables the second departure: the network itself provides seamless conversion to and from stablecoins through smart contract logic. When a bank customer sends funds to a counterparty at a participating bank, the transfer completes using a tokenized deposit. When the counterparty wallet is outside the network, the transfer starts as a tokenized deposit but lands as a stablecoin. Funds stay in deposits when they can, and get stablecoin utility when they must.
The design trick is simple: there is one, and only one, token - the Avit. Whether it's a stablecoin or a tokenized deposit depends on the holder's address. Avits in registered addresses are treated by Custodia as a claim on the holder's bank; all others are a claim on Custodia for one dollar. This "dual life" model isn't new, but it's rarely used. Figure's YLDS did something similar in 2025, paying registered holders money-market interest while unregistered holders held a plain dollar claim. It's clever, but may get tested in court. The GENIUS Act says a payment stablecoin does not include a digital asset that is a deposit (Sec. 2(22)(B)), and it limits a permitted issuer to a specific list of stablecoin activities, not tokenized deposit activities (Sec. 4(a)(7)(A)). Custodia would argue that when the token is being called a stablecoin it isn't a deposit, and point to the on-chain logic enforcing exactly that. As the issuer, Custodia has one foot on each side of the line, and as they are no stranger to the courts, I'm sure their legal opinion is ready to go.
Beyond these two impressive differentiators, Hazel carries the same flaws I've called out in the other networks, and in Hazel's own loan-participation pilot when I covered it in April. At its core, it's a tokenized CHIPS network, with no compelling use cases named other than agentic payments. Unlike OpenUSD, the design rests on centralized authority, with Vantage and Custodia at the center of every transaction. They criticize "trust us bro" behavior in the digital asset industry, then ask banks to trust that the network will become value-accretive to participants "by design". (Perhaps the terms are in the private participation agreements, just like the economic terms for Early Warning Services are closely guarded)
The Avit-as-stablecoin faces a unique headwind to gaining external adoption. The paper says Custodia is prepared to use its freeze authority when "internal monitoring identifies a strong association between an address and criminal activity." That implies monitoring and acting on secondary-market activity well beyond binary sanctions exposure and based on subjective risk standards. This is a third rail that puts every holder under constant surveillance and risk of funds loss. Use your Avit stablecoin through a wallet that had a transaction with a mixer in the past and risk losing funds. Major issuers have avoided this precisely because of the subjective judgment it requires, and the US Treasury's April rulemaking specifically limited an issuer's compliance obligations to first-party transactions. Going ahead with that language was either an oversight or a deliberate choice, and neither reads well for adoption.
My banker takeaway remains unchanged from last edition: banks will clearly need to support stablecoins, and they probably will need tokenized deposits as well. Luckily, the technology of tokenization means that meaningfully supporting stablecoins brings technology, capabilities, and comfort with any other kind of token, including tokenized deposits. Hazel's dual-life model exemplifies this fact. Early adopter banks should join tokenized deposit networks to help discover and demonstrate use cases, but only with a stablecoin plan in mind. The rest can support stablecoins today with confidence that doing so only improves their ability to quickly adopt tokenized deposits as they are proven out.
Banks Put a Second Toe in the Water
Grasshopper Bank, a $1.5 billion digital bank serving startups, SMBs, and fintechs, launched a stablecoin-based payments capability built with banking infrastructure provider Increase. Grasshopper's fintech clients can convert fiat held in their Grasshopper accounts into USDC issued through Circle's regulated affiliates via an Increase API, enabling 24/7 on-chain settlement for international payments; transactions can begin in dollars and settle on-chain, or begin on-chain and land in a U.S. dollar account. Sources [Finextra]
My Take:
More depository institutions are moving into stablecoins. Grasshopper joins SoFi and Cross River in providing stablecoin access directly to its depositors, and it did it with off-the-shelf tooling: no core replacement, no charter gymnastics, no consortium membership. The deposit account stays at the center, and stablecoin becomes a pay-in/pay-out capability attached to it.
For those interested in the mechanics, the press release offers some hints. Stablecoin conversion is offered off-balance-sheet by "Circle's regulated affiliates." Two implications follow. First, conversions are either not instant, or someone is paying for a prefunding line of credit. Second, it's probably more expensive than it needs to be: money movement processed under Circle's money transmitter licenses instead of Grasshopper's own authority means a second compliance and operational layer that has to be funded. This arm's-length style of integration is appealing for banks because it offloads effort and risk to a third party. However, this strategy deprives the bank of the ability to build its own blockchain capabilities that would enable it to offer other tokenized products later. Plus, it creates risk by handing off compliance oversight to a third party. For a detailed comparison of the integration models available to banks, including this one, see our deep-dive paper at omnia.financial/stablecoin-paper.
APAC FX Continues to Move On-Chain
Three developments this week moved institutional stablecoin cross-border FX in APAC forward. First, Project Pangea was announced by Chainlink, Korean fintech FairSquareLab, an alliance of more than 10 Korean commercial banks, and Qivalis — the euro stablecoin consortium of 37 European banks. Pangea is building atomic payment-versus-payment FX settlement of regulated euro and won stablecoins on a dedicated settlement blockchain, with live transactions targeted within 12 months. The Europe-Korea trade corridor processes over $150 billion annually. In Japan, Circle and Nomura Holdings announced a USDC settlement and corporate payment service targeting the country's $440 billion-per-day FX market, with Nomura handling client onboarding, compliance, and banking integration ahead of a planned 2027 rollout. Japan's Financial Services Agency approved Ripple's RLUSD as an electronic payment instrument to be distributed through SBI VC Trade. Sources [PRNewswire, CoinDesk, CoinDesk]
My Take:
In the last issue, I pointed out how increased institutional engagement in the FX market would help strengthen the role of stablecoins in cross-border trade. Three more announcements deepen that trend.
Japan took two steps forward. Recall that Japan was openly hostile to crypto only a few years ago; it has since done an about-face to welcome stablecoins under one of the strictest regimes in the world. The Circle-Nomura partnership is a new on-ramp for Japanese businesses to USDC. Nomura, which presumably stands to lose in some ways from a shift to stablecoin for FX, gets an opportunity to take FX spread and payments volume from other banks as flows move onto stablecoin rails and away from the banks that don't offer native access. Ripple's RLUSD launch through SBI, which has supported USDC since 2025, gives businesses another stablecoin rail on which to move funds. Stablecoin payments in and out of Japan can now tap institutional liquidity, which should reduce pricing and increase volume capacity.
Pangea is going after a trickier corridor in Korea, and its design deserves scrutiny. The group is building a dedicated layer-1 network whose scope is narrowly focused only on atomic FX settlement. Unlike DeFi venues like Uniswap, which compute prices algorithmically and rely on arbitrageurs to stay in line with external markets, Pangea will reference external exchange rates directly. That tradeoff makes settlement far more efficient, at the cost of excluding the arbitrageurs who create liquidity in the algorithmic model in return for fee generation and spreads. Without market makers, Pangea must attract liquidity from participants willing to park capital in the pool and get paid only in trading fees. With no alternative use for capital on this dedicated chain, the settlement pool needs to turn over rapidly in order to make participants whole on their cost of capital. Don't forget that many of these stablecoins pay no yield (MiCA-regulated euro coins are prohibited from paying yield) so there's a lost-opportunity cost stacked on top.
None of this bodes well, except for the fact that the won is a restricted currency. It doesn't trade freely offshore, and won FX must be executed through authorized Korean banks under Korea's foreign exchange rules. I suspect Pangea's success will be driven by some unique access to official KRW, enabled by the participation of only Korean regulated financial institutions. Controlled-currency FX is expensive so the status quo may be costly enough that Pangea's efficiency gains offset the limitations it brings. Either way, Pangea can create evidence on whether FX without counterparty risk can make cross-border FX more efficient. For bankers, the pattern to remember is the same one I flagged in June: FX swapping is unbundling from tokenization (or, in the fiat world, funding a correspondent account), and the correspondent role keeps shrinking. This gives smaller banks more opportunities to provide international payments and FX services directly to their clients.
Coupon Clippings
Two "Money Accounts", Two Models
X Money expanded for US Premium subscribers with a USD wallet with P2P transfers to any @handle over Visa Direct, a metal Visa debit card, 6% APY on cash, and 3% cashback, with deposits held at Cross River Bank and a sweep program extending FDIC coverage to $10 million per user. MetaMask launched its Money Account: a self-custody savings-and-spend product paying up to 4% on MetaMask's own mUSD stablecoin, with yield sourced from opt-in DeFi lending, and spending through the MetaMask Card. Given Musk's embrace of crypto and prediction markets, it's surprising to see X Money launch as a totally traditional bank-backed product rather than one with stablecoin backing and deeper digital asset integration. Whether users view X as a natural place to do banking remains to be seen, but social-adjacent features like tipping, creator payments, and P2P transfers all support holding a balance on-platform. MetaMask has the more natural fit here: I've written before about crypto wallets converting into fintech apps, and MetaMask's 10 million users already hold stablecoin balances, so adding yield, cards, and payments completes the picture. Two of the largest non-bank platforms just came for the deposit relationship from opposite directions in the same week. Sources [American Banker, CoinDesk]
Cloudflare Makes the Web Pay-Per-Use With Stablecoins
Cloudflare announced its Monetization Gateway, which lets any web page, dataset, API, or MCP tool behind Cloudflare be metered and paid for per request at the network edge, settled in stablecoins over x402. No signup and no API key required. Prices below one cent are economic. Cloudflare, which fronts roughly 20% of the internet's web servers, has been building toward this for a year, and I've covered each step: pay-per-crawl, the NET Dollar, and now the full payments engine. The economic driver is the crawl-to-referral ratio Cloudflare has been publishing: publishers that rely on ads allow crawlers like Google to scrape their pages in return for site visitors (e.g. when you click the Google link). Google historically sent one visitor for every 2-3 crawls, and the internet content economics model was built around this ratio. Today, with AI search results enabled, the Google ratio has worsened by 88%, and Anthropic sends only one visitor for every 3,000 crawls! This is why I believe agentic payments are the emerging global use case for stablecoins across retail and business users. The payments that fund the next version of the web won't run on cards or ACH, and banks that can hold and move stablecoins can be the accounts those flows originate from and settle into. [Full Story]
Six Agencies, One Deadline: GENIUS Final Rules Due July 18
The GENIUS Act requires six federal agencies to finalize implementing rules by July 18, and the ABA, BPI, CBA, and ICBA jointly asked for a pause, citing a lack of coordination across the proposals and the Fed's still-missing proposed rule and the OCC separately proposing BSA/OFAC requirements for issuers in Bulletin 2026-28. The trade groups are correct that the rulemakings don't fit together perfectly (though they are very close), but this seems more like the continuation of the banking lobby's strategy to contest stablecoins at every turn. A pause is unlikely to change the direction of travel, only the timing. As we're seeing in the other stories this week, a lack of final rules doesn't seem to be slowing anyone down. Sources [Stablecoin Insider, PYMNTS]
Thanks for reading. If you don't hear from us for a bit, don't worry—we'll be back when there's something important to share.
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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