Stablecoins enter the payments universe

Six of the largest U.S. banks are among 21 financial institutions that announced Tuesday their backing of a company, to be established by the end of this year, “to support the issuance of a stablecoin solution.”

Bank of America, Citi, Capital One Financial, Goldman Sachs, PNC Financial Services Group and Wells Fargo are backing the solution, expected to go to market in the first half of 2027.

Other banks committed to the project include TD, Scotiabank, UBS, Santander, BBVA, Deutsche Bank, Commerzbank, Lloyds, Crédit Agricole, Rabobank and MUFG, according to a Tuesday press release posted on Wells Fargo’s website.

The initiative will first focus on a U.S. dollar‑denominated stablecoin before expanding into stablecoins denominated in other G7 currencies, with emphasis on the euro, according to the announcement, which added that the new company’s name will be announced “in due course.”

The initiative aims “to offer a safe, robust and trusted solution that combines bank‑grade compliance, strong governance, distribution and institutional risk management,” according to the announcement.

Use cases will include “wholesale, institutional and retail markets where client benefits can be achieved by utilizing a trusted form of digital money, including cross-border payments and digital asset settlements,” the release indicated.

A year-end launch would put the company in place just ahead of the Jan. 18 expected effective date of the Genius Act, which provides the framework for digital-asset regulation.

Bank CEOs have closely watched the rise of stablecoins. Bank of America CEO Brian Moynihan warned in a January earnings call that roughly 30% to 35% of U.S. commercial bank deposits – as much as $6 trillion – could migrate into stablecoins.

That prospect is just one factor prompting banks to get in on stablecoins.

Tuesday’s announcement comes two months after more than 140 businesses, including card networks Visa, Mastercard and American Express, fintechs Chime and Stripe, and cryptocurrency firms Coinbase and Ripple signaled their backing of a separate stablecoin, Open USD.

There appears to be little crossover between backers of Open USD and the initiative announced Tuesday. The only partner on both is Spanish lender BBVA.

BNY, U.S. Bank, Huntington and Citizens were announced among Open USD’s backers.

Notably, JPMorgan Chase appears on neither list. The largest U.S. bank has evaluated whether it could launch its own stablecoin, people familiar with the matter told The Wall Street Journal last month.

“While we have no plans to issue a stablecoin, depending on customer demand and the evolution of the regulatory landscape, we would of course evaluate all options in the future,” a JPMorgan spokeswoman told the publication.

JPMorgan is not immune to going its own way, though: It has a tokenized deposit, JPM Coin, and its own blockchain. There is no active stablecoin product underway at the bank, an anonymous source told the Journal.

Meanwhile, a consortium of state bankers associations last week unveiled plans to launch a blockchain platform built for, owned and governed by banks.

BankChain Alliance, as it is called, would be used for treasury management, supply-chain finance and cash management. It is expected to launch in the first half of 2027.

Treasury Secretary Scott Bessent has called stablecoins ​a digital revolution that could help cement the dollar's position as the ⁠world's top reserve currency and create demand for trillions of dollars' worth of Treasuries.

Pablo Hernandez de Cos, ​general manager of the Bank for International Settlements, argued that tokenized deposits should account for the bulk of day‑to‑day payments and stablecoins should serve more specialized roles.

Hernandez de Cos, speaking last week at the Federal Reserve’s Jackson Hole symposium, said stablecoins could lower borrowing costs, but noted that bank ‌funding ⁠costs could rise as funds migrate, according to Reuters.

When bankers, economists and other financial professionals gathered late last week for the annual Jackson Hole Economic Policy Symposium, the focus was on payments this year.

Specifically “Financial Innovation — Implications for Payments and Policy” was the theme, and a new payments play took center stage: “tokenized deposits.” That reference to digital assets that banks can transfer through a financial institution network is fast catching on as a safer and more cost-efficient alternative to stablecoins.

One speaker in particular at the event, Bank for International Settlements General Manager Pablo Hernández de Cos, underscored the point in a speech on Friday at the conference.

“Unlike stablecoins, tokenised deposits operate within the two-tier system. They preserve the tight link between deposit‑taking and credit provision,” Hernández de Cos said, according to the text of his speech. “This ensures that funds remain within the banking system, reducing the risk of disintermediation and supporting resilience.”

Stablecoins have been gaining ground in recent years as the most trustworthy type of cryptocurrency because, unlike cryptos like bitcoin or ethereum, stablecoins theoretically are tied to a more stable asset, such as the U.S. dollar. The Genius Act, signed last year by President Donald Trump, gave credence to that notion by creating a regulatory framework for stablecoins and their use.

Still, Hernández de Cos emphasized the interoperability advantage of tokenized deposits over stablecoins because financial institutions can more easily pass the former over a shared network.

“Even the ‘same’ stablecoin on different chains is not interoperable without risky or costly workarounds,” Hernández de Cos said. “Tokenised deposits, by comparison, typically circulate on permissioned platforms.”

A key aim for bankers and other financial services providers is to develop currencies and tools that allow them to transfer money and assets more easily across borders. International money transfers have been slow, inefficient and expensive for decades.

The U.S. real-time payments systems are now trying to bridge the gap by extending their instant payments across borders. The Clearing House bank owners are preparing to extend the RTP Network in that way in the first half of next year while the Federal Reserve has proposed the same for its FedNow system at some point. The Bank of International Settlements has also experimented on that front with the cross-border Project Agorá payments project.

Tokenized deposits could play into those new international payments strategies. In June, a group of banks working through The Clearing House said they would create a new tokenized deposit network that would link “on-chain activity with traditional payment rails and enable clearing and settlement of tokenized commercial bank money at scale.”

“We're looking forward to advance a lot of the traditional payment rails that exist today to be more fully operational, 24/7, expanding the capabilities of the instant networks while in parallel really double-clicking and focusing on building a tokenized strategy for accounts, deposits, [and] the interoperability” of all that, Carl Slabicki, BNY’s head of commercial global payments, said in an interview last month.

Hernández de Cos drew a comparison between the digital assets of today and commodities traded in the frontier days in Wyoming around the turn of the 19th century, when fur dealers and native people in America used pelts as their currency. And he noted that the state now has issued its own stablecoin.

“Today, Wyoming is again exploring the monetary frontier, with the state government having moved to issue a public stablecoin – the Frontier Stable Token,” he said. “The symbolism is apt: we meet where the past and future meet to discuss how money should evolve without losing what makes it trustworthy.”

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By Lithic

Stablecoin payments volume, defined as real-world payment activity utilizing stablecoins, surged to $320 billion in 2025, according to Visa Onchain Analytics.

That growth isn't just crypto enthusiasm resurfacing in a fresh form. It's businesses solving practical problems: moving money across borders in minutes, minimizing FX exposure and holding value in a format that stays stable and usable. In markets where local currencies swing hard, stablecoins—digital currencies pegged to a stable asset like the U.S. dollar—have become a reliable, low-cost store of value. In remittance corridors, they deliver faster and with more control.

That there’s demand for this type of payment medium isn’t new; but how to spend the stablecoin value once received? That’s where cards come into play.

The last mile is still the hard part

A stablecoin balance only matters if someone can use it. Today that typically warrants a conversion step, like an exchange, withdrawal, or wallet the recipient has to learn. Every one of those steps marks potential user drop off where platforms lose the engagement they just worked to earn.

Cards close that gap without asking anyone to change behavior.

Practically every merchant accepts card payments. Consumers and small businesses already tap, swipe, or input 16 digits without second thought. This learned behavior won't change overnight, nor does it need to. For platforms holding stablecoin balances, cards turn stored value into effortless and instant spendable value at millions of merchants, with no crypto literacy required of the cardholder.

Three properties make cards the natural off-ramp:

• They work virtually everywhere. Anyone with a card can spend a stablecoin-backed dollar, regardless of local merchant or exchange infrastructure.
• They're invisible. Any required conversion happens on the provider's side; the cardholder sees a normal purchase.
• They're already habit. Neither users nor merchants need to learn anything new. They transact the way they always have.

What the processing layer has to handle

This seamless experience of issuing cards against a stablecoin balance depends on infrastructure most legacy processors weren't built for. Stablecoins move 24/7. Wire-based settlement pauses on weekends and holidays, which forces higher pre-funding and ties up capital. Authorization must validate against an external ledger in real time, not a batch file. And reconciliation has to be clear enough to satisfy auditors and risk teams.

At Lithic, we built our issuer processing platform to eliminate those constraints from day one. We maintain direct physical connections to major global networks like Visa, Mastercard, and American Express, as well as the Federal Reserve, which means fewer points of failure and more control. For stablecoin-powered programs specifically, we deliver:

• Real-time authorization decisioning through Authorization Stream Access, giving platforms up to five seconds to evaluate each transaction against any external ledger, in any format
• Native USDC settlement, so you can directly fund your programs on-chain if you prefer to use Lithic’s ledger
• Like-for-like settlement reporting, so USDC is treated like CAD, GBP, or any other supported currency
• Comprehensive reconciliation and reporting webhooks that show how much money moved, where it went and when
• Native fraud, compliance and dispute controls, the same ones already protecting fiat card programs

Lithic's infrastructure enables stable-native companies to delegate critical auth, network and reconciliation steps while still owning key program management, licensing and user experience components.

Who's building today

The beauty of cards as an off-ramp is that it’s immediately material, rather than a theoretical solution. Wallet-native platforms want to issue cards to users holding stablecoins without building card infrastructure from scratch. Remittance platforms want to settle in stablecoin across borders and give recipients a simple way to spend. Payroll platforms want to pay global contractors in stables and make that value usable without a wallet or an exchange.

These programs are live in production with Lithic today, not stuck in pilots. Companies plug into our processing rails, apply their own ledger logic and deploy globally in weeks rather than the six to twelve months a legacy certification cycle demands. Oversight and compliance stay where they belong, with the platform holding the value.

Stablecoins are new. The expectations aren't.

Stablecoins may be a new funding source, but the expectations for reliability, compliance and control haven’t changed. Any program built to last has to meet both, which makes this a processing problem before it's a crypto problem.

Whether you're building a wallet, launching a remittance product, or exploring tokenized payments, Lithic can help you make it work.

Read the ebook: From Promise to Proven: How Stablecoins Are Reshaping Global Payments

While stablecoin ventures race to roll out digital currencies to consumers and businesses, Visa and Mastercard are adding up opportunities to collaborate.

The ascent of digital currencies, particularly the steadier stablecoin variety, has raised concerns among some backers of the traditional card networks that their businesses were threatened by the new age alternatives. But that’s not how it’s playing out, at least at the moment.

Visa, the largest U.S. card network, and its smaller rival Mastercard have become eager to join in the evolving stablecoin enterprises. 

On Wednesday, the companies said in a joint release with cryptocurrency company Circle Internet Group that they would support its new blockchain effort, Arc, aimed at creating a stablecoin system for financial markets, real-time payments and agentic commerce.

For Mastercard, the move showed how its strategy revolves around taking advantage of multiple emerging stablecoin prospects. 

“The future of money movement will not be defined by a single rail, network or form of value,” Mastercard Chief Product Officer Jorn Lambert said in the release. “As stablecoins and other digital assets move into real-world payments, settlement, and treasury flows, Mastercard is focused on helping customers operate across an increasingly diverse payments ecosystem.”

Visa CEO Ryan McInerney said something similar about stablecoin strategy last week when he was asked about who was winning the stablecoin race, as a barrage of companies announce stablecoin launches.

“Visa, going forward, will remain multi-coin, multi-chain,” McInerney told analysts on the company’s July 28 earnings webcast. “Our role is not to pick winners. Our role is to help clients connect to the stablecoin ecosystem securely and at scale, regardless of which stablecoin, which network, which infrastructure ultimately gain adoption.”

Passage of the Genius Act last year was the first move by the U.S. government to create an infrastructure for use of stablecoins, which are cryptocurrencies designed to be more stable than others, like bitcoin, by being tied to a more stable asset, like the U.S. dollar. The new law, for which regulations are still being implemented, unleashed a wave of activity in the sector and egged on the arrival of more stablecoins.

Circle already operates one of the world’s largest stablecoin networks, with the digital asset called USDC, but the new Arc offering appears to target other uses, specifically the advancing world of agentic commerce where bots will shop and pay on behalf of consumers. 

The stablecoin company described Arc in the release as “an enterprise-grade blockchain designed to become the Economic (operating system) for the internet.”

Also taking part in the Arc project are other payments companies, including digital payments services provider Global Payments and cross-border money transfer company MoneyGram, according to the release.

Visa and Mastercard teamed up with a pack of other companies in a separate stablecoin venture in June, locking arms with payments upstart Stripe, Circle crypto exchange partner Coinbase and other big-name financial companies, including BlackRock, to create Open USD. 

The backers billed that new stablecoin as “open, low-cost, high-throughput, broadly accessible, and aligned to [partners’] interests,” with it being run by the company Open Standard, and governed by a board made up of Open USD partners. The Coinbase collective jolted Circle’s stock at the time because of the competitive threat to its stablecoin network. 

That was another development that suggests the card networks are carving out a spot for themselves that sits above the stablecoin fray, or maybe more specifically between the stablecoin networks.

A financial analyst who follows Visa recently described the San Francisco-based company’s position this way: “We view Visa as the ‘stablecoin of stablecoins,’ being at the center of the global stablecoin ecosystem,” Mizuho Securities analyst Dan Dolev said in a report to clients last October. “Visa's stablecoin strategy reinforces its goal of becoming an integral infrastructure player for blockchain-based payments.”

Dolev said “Visa could be one of the biggest stablecoin winners” for two key reasons, including its cross-border network Visa Direct’s ability to carry stablecoins internationally and the card network’s central position amid a proliferating number of stablecoins.

The latest announcement describing Visa and Mastercard’s ties to Circle would seem to be evidence that the card networks are becoming an integral part of the stablecoin community.

Dive Brief:

• The Conference of State Bank Supervisors urged the Treasury Department this week to amend its guidelines for regulating stablecoin issuers to ensure states continue to have the “discretion” and “flexibility” to regulate stablecoins issuers beyond federal guidelines, according to a press release.
• The group filed a comment letter with the department on Tuesday, recommending that Treasury allow states to treat federal stablecoin regulations as “a safe harbor for provisions where the statutory floor may be ambiguous” and clarify that states are not prevented from seeking certification for a stablecoin issuer more than a year after implementation of the Genius Act.
• The CSBS also recommended the Treasury Department review federal regulations that may create an “unworkable national regime” to include the Office of the Comptroller of the Currency’s proposed regulations which would allow national trust charters to engage in a broader set of activities not authorized by the Genius Act or the National Bank Act. National trust charters are business licenses issued by the OCC that allow licensees to operate nationally as a fiduciary without accepting deposits or making commercial loans.

Dive Insight:

The CSBS move, which is part of a broader push to keep federal agencies from passing regulations that would preempt states’ authority over stablecoin issuers, reflect the emerging friction between state and federal regulators over stablecoin regulation.

The state supervisors’ comment letter to Treasury officials was in response to the department’s call for comments on its implementation of regulations per the Genius Act.

State regulators, which license and supervise money transmitters, including stablecoin issuers, desire to maintain a say in stablecoin regulation, while federal regulators push for national guidelines.

In May, the CSBS, along with the Money Transmitter Regulators Association, sent a letter to the OCC urging the agency to amend the Genius Act, which regulates stablecoins, to include the application of state consumer protection laws to all stablecoin issuers and digital asset providers. The CSBS also called for the OCC to scale the capital requirements for stablecoin issuers, based on their size, business model, and risk levels.

Signed into law last July, the law (which stands for Guiding and Establishing National Innovation for U.S. Stablecoins) is scheduled to go into effect in January 2027.

“Stablecoins are a developing market, why lock everything into a one-size-fits-all model?” said Brandon Milhorn, president and chief executive officer for the CSBS. “Preserving the flexibility for states to innovate with stablecoins as mandated by the Genius Act is a key component of the dual banking system and is part of the framework Congress mandated in the Genius Act.”

Having the Treasury Department amend its framework for regulating stablecoin issuers “is an important step in ensuring states have the discretion to implement stablecoin regimes that exceed federal guidelines,” Milhorn added in an interview this week. 

Washington D.C.-based CSBS represents financial regulators in all 50 states, the District of Columbia, and U.S. territories, and promotes state-level banking authority and preventing federal regulations from preempting state laws.

Part of the friction between states and federal agencies over stablecoin regulation is the perception the OCC is pushing policies that preempt state regulations, says Eric Grover, a payments industry consultant and owner of Minden, Nevada-based Intrepid Ventures.

“The Trump administration is pro-stablecoin and some states see this as leading to federal regulation that is more favorable to stablecoin issuers,” Grover says. “States are pushing for flexibility in setting stablecoin regulations to enforce stricter rules, not looser ones. Otherwise, what’s the point?”

Despite the friction between state and federal regulators over stablecoins, some payments experts argue that enabling states to have the option to enforce stricter rules on top of federal regulations is a positive.

“It’s worthwhile to have state flexibility because the states can serve as an incubator for laws and regulations that eventually get adopted at the federal level,” says Aaron McPherson, a consultant and principal at Newton, Massachusetts-based AFM Consulting LLC. “State regulators have direct experience regulating money transmitters and they don’t want to lose that power [over stablecoins].”

Dive Brief:

• Stablecoin use in cross-border transactions is gaining momentum, although it remains early days for stablecoins in overall business payments, according to two analyst reports issued last week on the digital assets.
• Industry adoption will “rely heavily on a combination of greater regulatory clarity and partnerships that can help alleviate the complexity of launching, using and managing stablecoins,” S&P Global Market Intelligence wrote in a May 11 report.
• Stablecoins offer “core technical advantages” in their “near-instant 24/7 settlement and the ability to support programmable payments,” Moody’s Ratings said in a May 13 report. In terms of cross-border payments, stablecoins can settle for 0.1% to 0.5% of a transaction value, compared to an average remittance cost above 6%, Moody’s said.

Dive Insight:

About $269 billion in stablecoins are in circulation, with that figure expected to increase to $434 billion by 2028, according to estimates from S&P Global Market Intelligence.  

About 99% of the “fiat-backed stablecoin supply” is tied to the U.S. dollar, Moody’s analysts said. “This dominance reflects the dollar’s existing role as the principal currency for global trade, cross-border finance and crypto trading, and the depth of the U.S. T-bill market in which most issuers hold their reserves,” Moody’s wrote. 

Stablecoins are tied to the value of fiat currency such as the dollar or euro, with their value considered less volatile than other cryptocurrencies such as bitcoin and Dogecoin.  

Cross-border payments adoption has been “concentrated in specific markets,” the Moody’s report said. Argentina processed about $34 billion in stablecoin transactions in 2024, and Nigerian volumes of USDC — the stablecoin issued by Circle Internet Group — exceeded $3 billion per month last year, according to the report.

“Consumer use cases, by contrast, remain at the margin, accounting for roughly 0.2% of global e-commerce transaction value,” Moody’s analysts wrote.

Beyond stablecoins’ appeal for cross-border transactions, S&P Global Market Intelligence highlighted two other use cases where the digital asset is finding a niche: payroll and contractor payments and intercompany payments.

U.S. companies that pay employees in other countries with dollars can encounter delays and other issues with traditional payment methods, according to the report by analyst McKayla Wooldridge.

“When the earnings are converted into local fiat, changing currency values and FX fees can obscure visibility into the true value of (employees) earnings,” the report noted.

Numerous payment players, including Visa, Mastercard, Stripe and Worldpay, are among those with stablecoin payment options. Last week, Corpay announced a partnership with stablecoin infrastructure firm BVNK, which Mastercard is acquiring, to enable stablecoin wallets and settlement capabilities.

Stablecoins can also become a new rail “to help streamline intercompany settlement,” the S&P report said. 

“Treasury teams can move funds across regions and departments, bypass intermediaries, and settle in minutes on the blockchain,” the report said, noting that exchange rates, different tax regulations and multiple accounting systems can delay intercompany transactions.