The Stablecoin Banker, May 12

May 12, 2026

Three 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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"Mark it up" (Re: stablecoin yield language for CLARITY Act)
— Brian Armstrong, CEO, Coinbase (May 3)

In This Issue

• Congress tries to ban stablecoin yield. Yield finds a way.
• Three tokenization announcements, zero new products.
• Meta and Ramp make dollars and stablecoins interchangeable.

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

Yield Carveout Swallows the Rule

On May 2, Senators Tillis and Alsobrooks released compromise language for the stablecoin yield provisions of the CLARITY Act, prohibiting compensation that is "economically or functionally equivalent" to interest on a bank deposit while carving out an exception for rewards tied to "bona fide" platform activity, including "use of platform services that involve measurable activity beyond simply holding a stablecoin balance." Coinbase and Circle endorsed the text immediately. The American Bankers Association, Bank Policy Institute, and the Independent Community Bankers of America issued a joint statement arguing that the activity carve-out is broad enough to preserve most existing yield-bearing stablecoin products, and presents a direct threat to community bank deposits. Senate Banking Committee markup is scheduled for May 14. Three days after the compromise dropped, State Street and Galaxy launched SWEEP, a tokenized cash-management fund on Solana that allows users to sweep idle stablecoin into the fund 24x7. Sources [CoinDesk, TheStreet, The Block]

My Take:

Jeff Goldblum said it best in Jurassic Park: "Yield finds a way." Ok, maybe he didn't say exactly that, but nonetheless, it's practically impossible to surgically stop stablecoin rewards programs without prohibiting large swaths of normal B2B marketing arrangements. We've landed with language permissive enough to allow most existing programs to continue with some modification. The scope of requisite change is unknown because the statutory language leaves plenty of room for interpretation. If this language stands, expect lawsuits over the intention of the phrase "bona fide."

Even if markup tightens the activity standard, capital routes around the rule entirely. The SWEEP fund is an example of multiple products that allow customers to seamlessly move between idle stablecoin (yield-bearing or not) and tokenized money market funds. It's one step removed from direct stablecoin holder yield payments, but software can automate the transactions to minimize user impact and effort.

Once again we return to the question of how much yield competes with deposits. Once again, I remind banks that money market funds amassed $8.2 trillion in assets without preventing US bank deposits from growing every single year save 2022-2023. This happened while MMFs consistently paid more than bank deposits. The argument against stablecoin yield should take this history seriously.

But the analogy only goes so far, and this is where the new risk lives. Banks coexisted with MMFs because there was friction between yield assets and transactions. Stablecoins erase the friction either with built-in yield-as-rewards or rapid sweeps in and out of tokenized yield instruments. The yield fight was always going to end here. Now, banks will increasingly need to compete on product, not on lock-in.

Tokenization Theater: Faster, Not Different

Three institutional tokenization announcements landed in the same week. Ondo, JPMorgan, Mastercard, and Ripple completed a cross-border redemption of Ondo's tokenized US Treasury fund OUSG to a Ripple account in Singapore. The DTCC announced a July 2026 pilot and October launch for its DTC tokenization service, with more than 50 firms in the working group including BlackRock, Goldman Sachs, JPMorgan, Citi, Bank of America, Morgan Stanley, Wells Fargo, Circle, Anchorage, and Kraken. The service will tokenize Russell 1000 equities, major ETFs, and US Treasuries, all settling through existing DTC infrastructure under a December 2025 SEC No-Action Letter. Finally, FIS launched Project Keystone, a bank-administered private network for tokenized regulated deposits with five US banks — Citizens, Fifth Third, Huntington, KeyBank, and M&T — alongside Lyriq, a platform letting banks issue, manage, and settle their own "digital money" on-balance-sheet with atomic settlement. Sources [Disruption Banking, BusinessWire, The Block, FIS]

My Take:

Three big announcements in the same week, all describing tokenization as a way to make existing things run a little faster. None describes a new product, a new market participant, or a new market structure. This is institutional innovation theater. Two weeks ago I argued that domestic tokenized deposit networks were heading down a centralized path that wouldn't scale.

Start with FIS, because it's the most head-scratching. Five banks have signed onto a private, permissioned, FIS-administered network for tokenized deposits without a single specific use case named. The most detail offered in the press release is a tangential reference to "settling." Bank-to-bank settlement already exists in instant form (FedNow/RTP) and in delayed net-settlement (CHIPS on The Clearing House). Furthermore, three of the five founding Keystone banks - Huntington, KeyBank, and M&T - are simultaneously committed to Cari, a competing tokenized deposit network announced earlier this year with substantially the same pitch. All five named Keystone banks are also owners of The Clearing House. Either there is some serious four-dimensional chess going on here, or three of the largest regional banks in the country are double-booked on overlapping private-chain tokenized deposit projects hoping that something magical will materialize.

The DTCC announcement is similar in shape and larger in scope. Fifty-plus firms in the working group, but the participant list is the existing DTC ecosystem plus a handful of crypto-native firms cleared to participate. Settlement still happens at DTC. Membership rules don't change. Asset coverage is limited to what DTC custodies today. The tokens cannot be used to satisfy DTC margin requirements. Bottom line: DTC is making its settlement process run faster.

The Ondo, JPM, Mastercard, Ripple transaction sounds groundbreaking until you read the mechanics. A foreign investor redeemed shares in a money market fund and received cash in a bank account. Institutional MMF redemption settled in USD at JPMorgan happens millions of times in a normal week. The novel element is that the asset leg moved on a public chain in five seconds between two existing institutional counterparties, through the same companies, accounts, and services, just with a token wrapper. And, it's faster!

I'm not against incumbents doing novel things. When NYSE chose to bypass the DTCC with Securitize and settle on-chain with stablecoin funding, I called that structurally interesting because it changes who can participate. These three announcements do the opposite: tokenization is being deployed precisely where it changes nothing in the market structure that benefits incumbents. Participants unchanged. Settlement venue unchanged. Product on offer is a faster version of what the customer already has. It's the version of tokenization the institutional layer can build without disrupting itself, which is why it's the version the institutional layer is building.

What's actually working is on the public-chain side, and I've covered most of it. Monument is the first bank tokenizing retail deposits on a public chain, with regulator approval. BlackRock put BUIDL on Uniswap. NYSE picked Securitize. Cross River, SoFi, and Erebor are taking stablecoin deposits onto their balance sheets and crediting customers natively. None of these required a private FIS chain or a turn in the DTC queue. They required a willingness to build outside the perimeter. The community and regional banks that follow that path instead of just taking what's on offer from institutional behemoths get a deposit experience that rivals anything available today, at a fraction of the cost. It's the Innovator's Dilemma in plain view — and the institutional defense playbook is on the wrong side of it.

One Stack, Every Channel

Two announcements show stablecoins being treated as a default dollar at scale. Meta began paying select creators in USDC, starting with pilots in Colombia and the Philippines. Partner Polygon Labs stated a goal to reach 160-plus countries by year-end. Ramp, the enterprise spend-management platform last valued at $32 billion, rolled out 1:1 zero-fee USD/USDT conversion across its entire product suite — corporate cards, bill pay, vendor payments, employee reimbursements — alongside a 3.96% rewards rate on stablecoin balances held inside the platform. Sources [CoinDesk, The Block]

My Take:

Two companies, two different applications, one underlying pattern: stablecoins are being engineered to be functionally identical to dollars from the user's perspective. Meta is paying creators in USDC the way it would pay them in fiat. Ramp is letting corporate treasuries hold balances in USD or stablecoin interchangeably with no conversion penalty. None of these are crypto products marketed to crypto users. They are payment products that happen to use stablecoins as the unit of account, presented to users who do not need to know.

Notably, neither of these companies is issuing its own stablecoin. Meta said so explicitly, four years after killing Libra. Ramp uses a backend stablecoin called USDB to hold balances at rest, but the user-facing tokens are USDC and USDT. The strategic conclusion in each case is the same: distribution beats issuance, and existing tokens have already won the distribution race for now (though, if the companies successfully move millions of payments on stablecoin rails, they might be in a better position to deploy their own coin).

The Ramp economics are instructive for the value in offering stablecoin services. Fintechs typically earn one to three percent annually on the deposits they bring to a sponsor bank. Ramp is now offering 3.96% rewards on stablecoin balances held inside its platform. That means Ramp is converting dollars that earn Ramp something like 2% as sponsor-bank deposits to paying out close to the full stablecoin reserve yield to its customers. They are walking away from the deposit margin to keep the customer relationship inside Ramp. That is a strategic statement about what an enterprise treasury product is worth when stablecoins make balances portable and yield-pass-through becomes the competitive baseline.

The product geometry on display is also new. Before stablecoins, Meta would have had to build a creator-payout product per country, with a distinct payment processor, banking partner, and fiat rail in each jurisdiction. With stablecoins, Meta builds one creator-payout product and turns it on country by country with local, specialized off-ramp providers. This dramatically simplifies Meta's payments stack. Ramp's enterprise treasury historically required sponsor banks. Now, stablecoin makes it easier for the company to enter new markets. The international dimension is real, but "international" is the wrong framing. The pattern is "any channel, any geography, same product" — and stablecoins are the primitive that lets one stack work everywhere.

For community and regional banks, the implication is concrete. The conversion layer between dollars and stablecoins is becoming the product, and right now it is being built by the institutions that are most rapidly acquiring traditional commercial customers (Mercury announced in its 2025 annual letter that 73% of new customers came from outside AI and tech-startup segments). Banks have a structural advantage they have not yet leveraged: the deposit account is already where the customer keeps and moves dollars. A deposit account that converts seamlessly to and from stablecoins, in addition to offering all the existing banking and payments services, keeps the customer inside the bank regardless of how they move money with stablecoins.

Coupon Clippings

Brazil Pulls the Emergency Brake on Stablecoin Cross-Border Rails

Brazil's central bank published BCB Resolution 561, barring regulated electronic FX (eFX) providers from using stablecoins, bitcoin, or other crypto to settle the offshore leg of cross-border payments. The rule does not touch crypto trading itself; the target is firms like Wise, Nomad, and Braza Bank that had built stablecoin settlement directly into the rails of regulated international flows. This is the first major economy carving stablecoins out of regulated cross-border payments on sovereignty grounds, and emerging markets where stablecoins represent a meaningful share of cross-border volume have reason to follow (note that Brazil now runs roughly $6–8 billion a month in crypto activity with stablecoins representing about 90%). The counter-trajectory is US policy, where Treasury officials have publicly framed USD stablecoin adoption abroad as a tool to deepen Treasury demand and extend dollar reserve dominance. Those two policy directions will collide, with stablecoin-using corridors caught in the middle. [Full Story]

Mercury Gets a Charter

The OCC granted conditional approval for Mercury Bank, N.A., four months after Mercury filed. It's another data point in the OCC's accelerated chartering pace, with Mercury joining Erebor and Nubank in the roster of digital-first banks approved this year. Mercury currently serves over 300,000 business customers, generates more than $650M in ARR, and has been GAAP-profitable for four years. CEO Immad Akhund framed the charter as the fix for capabilities Mercury could not get through sponsor banks, including Zelle, lending, and other payments, even though they already partner with Choice Bank and Column, two of the more progressive sponsor banks in the country. If those relationships couldn't deliver what Mercury needed at scale, that is a structural ceiling on the sponsor-banking model for any fintech reaching real size. As mentioned earlier, 73% of new customers in 2025 came from outside the AI or tech-startup categories. This means that Mercury is coming for the SMB and commercial customers that community and regional banks have historically owned, and now it will have a national charter to do it with. [Full Story]

OpenReserve Files the First GENIUS-Native OCC Charter

OpenReserve Bank, N.A. filed an OCC charter application in early April (sorry, I missed it!). The application is the first that is explicitly structured around the GENIUS Act, including a planned wholly-owned subsidiary called ReserveUSD for stablecoin issuance and explicit operational scope covering tokenized deposits and on-chain settlement. The proposed business model closely mirrors Erebor's original plan focusing on digital-asset-native commercial, high-net-worth, and institutional clients. The principals are also notable: Dee Choubey, the founder of MoneyLion (which Gen Digital acquired for roughly $1 billion in 2024), and former MoneyLion executive Richard Correia. While digital asset customers have historically struggled to get banking relationships, and were willing to pay premium prices for them, the competitive landscape is shifting. Existing banks that are expanding coverage of digital asset customers should consider how the feature set they'll be compared against is evolving with these new entrants. [Full Story]

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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