13 posts tagged with "stablecoins"

perspectives from Paolo Ardoino, Charles Cascarilla and Rob Hadick

Background: Stablecoins are maturing into a payments rail​

• Rapid growth: Stablecoins began as collateral for trading on crypto exchanges, but by mid‑2025 they had become an important part of global payments. The market cap of dollar‑denominated stablecoins exceeded US$210 billion by the end of 2024 and transaction volume reached US$26.1 trillion, growing 57 % year‑on‑year. McKinsey estimated that stablecoins settle roughly US$30 billion of transactions each day and their yearly transaction volume reached US$27 trillion – still less than 1 % of all money flows but rising quickly.
• Real payments, not just trading: The Boston Consulting Group estimates that 5–10 % (≈US$1.3 trillion) of stablecoin volumes at the end of 2024 were genuine payments such as cross‑border remittances and corporate treasury operations. Cross‑border remittances account for roughly 10 % of the transaction count. By early 2025 stablecoins were used for ≈3 % of the US$200 trillion cross‑border payments market, with capital‑markets use still less than 1 %.
• Drivers of adoption: Emerging markets: In countries where local currencies depreciate by 50–60 % per year, stablecoins provide a digital dollar for savers and businesses. Adoption is particularly strong in Turkey, Argentina, Vietnam, Nigeria and parts of Africa. Technology and infrastructure: New orchestration layers and payment service providers (e.g., Bridge, Conduit, MoneyGram/USDC via MoneyGram) link blockchains with bank rails, reducing friction and improving compliance. Regulation: The GENIUS Act (2025) established a U.S. federal framework for payment stablecoins. The law sets strict reserve, transparency and AML requirements and creates a Stablecoin Certification Review Committee to decide whether state regimes are "substantially similar". It allows state‑qualified issuers with less than US$10 billion in circulation to operate under state oversight when standards meet federal levels. This clarity encouraged legacy institutions such as Visa to test stablecoin‑funded international transfers, with Visa's Mark Nelsen noting that the GENIUS Act "changed everything" by legitimising stablecoins

Paolo Ardoino (CEO, Tether)​

Vision: a “digital dollar for the unbanked”​

• Scale and usage: Ardoino says USDT serves 500 million users across emerging markets; about 35 % use it as a savings account, and 60–70 % of transactions involve only stablecoins (not crypto trading). He emphasises that USDT is now “the most used digital dollar in the world” and acts as “the dollar for the last mile, for the unbanked”. Tether estimates that 60 % of its market‑cap growth comes from grassroots use in Asia, Africa and Latin America.
• Emerging‑market focus: Ardoino notes that in the U.S. the payment system already works well, so stablecoins offer only incremental benefits. In emerging economies, however, stablecoins improve payment efficiency by 30–40 % and protect savings from high inflation. He describes USDT as a financial lifeline in Turkey, Argentina and Vietnam where local currencies are volatile.
• Compliance and regulation: Ardoino publicly supports the GENIUS Act. In a 2025 Bankless interview he said the Act sets “a strong framework for domestic and foreign stablecoins” and that Tether, as a foreign issuer, intends to comply. He highlighted Tether’s monitoring systems and cooperation with over 250 law‑enforcement agencies, emphasising that high compliance standards help the industry mature. Ardoino expects the U.S. framework to become a template for other countries and predicted that reciprocal recognition would allow Tether’s offshore USDT to circulate widely.
• Reserves and profitability: Ardoino underscores that Tether’s tokens are fully backed by cash and equivalents. He said the company holds about US$125 billion in U.S. Treasuries and has US$176 billion of total equity, making Tether one of the largest holders of U.S. government debt. In 2024 Tether generated US$13.7 billion profit and he expects this to grow. He positions Tether as a decentralised buyer of U.S. debt, diversifying global holders.
• Infrastructure initiatives: Ardoino announced an ambitious African energy project: Tether plans to build 100 000–150 000 solar‑powered micro‑stations, each serving villages with rechargeable batteries. The subscription model (~US$3 per month) allows villagers to swap batteries and use USDT for payments, supporting a decentralised economy. Tether also invests in peer‑to‑peer AI, telecoms and social media platforms to expand its ecosystem.
• Perspective on the payment shift: Ardoino views stablecoins as transformational for financial inclusion, enabling billions without bank accounts to access a digital dollar. He argues that stablecoins complement rather than replace banks; they provide an on‑ramp into the U.S. financial system for people in high‑inflation economies. He also claims the growth of USDT diversifies demand for U.S. Treasuries, benefiting the U.S. government.

Charles Cascarilla (Co‑Founder & CEO, Paxos)​

Vision: modernising the U.S. dollar and preserving its leadership​

• National imperative: In testimony before the U.S. House Financial Services Committee (March 2025), Cascarilla argued that “stablecoins are a national imperative” for the United States. He warned that failure to modernise could erode dollar dominance as other countries deploy digital currencies. He compared the shift to moving from physical mail to email; programmable money will enable instantaneous, near‑zero‑cost transfers accessible via smartphones.
• Regulatory blueprint: Cascarilla praised the GENIUS Act as a good baseline but urged Congress to add cross‑jurisdictional reciprocity. He recommended that the Treasury set deadlines to recognise foreign regulatory regimes so that U.S.‑issued stablecoins (and Singapore‑issued USDG) can be used abroad. Without reciprocity, he warned that U.S. firms might be locked out of global markets. He also advocated an equivalence regime where issuers choose either state or federal oversight, provided state standards meet or exceed federal rules.
• Private sector vs. CBDCs: Cascarilla believes the private sector should lead innovation in digital dollars, arguing that a central bank digital currency (CBDC) would compete with regulated stablecoins and stifle innovation. During congressional testimony he said there is no immediate need for a U.S. CBDC, because stablecoins already deliver programmable digital money. He emphasised that stablecoin issuers must hold 1:1 cash reserves, offer daily attestations, restrict asset rehypothecation, and comply with AML/KYC/BSA standards.
• Cross‑border focus: Cascarilla stressed that the U.S. must set global standards to enable interoperable cross‑border payments. He noted that high inflation in 2023–24 pushed stablecoins into mainstream remittances and the U.S. government’s attitude shifted from resistance to acceptance. He told lawmakers that only New York currently issues regulated stablecoins but a federal floor would raise standards across states.
• Business model and partnerships: Paxos positions itself as a regulated infrastructure provider. It issues the white‑label stablecoins used by PayPal (PYUSD) and Mercado Libre and provides tokenisation services for Mastercard, Robinhood and others. Cascarilla notes that eight years ago people asked how stablecoins could make money; today every institution that moves dollars across borders is exploring them.
• Perspective on the payment shift: For Cascarilla, stablecoins are the next evolution of money movement. They will not replace traditional banks but will provide a programmable layer on top of the existing banking system. He believes the U.S. must lead by creating robust regulations that encourage innovation while protecting consumers and ensuring the dollar remains the world’s reserve currency. Failure to do so could allow other jurisdictions to set the standards and threaten U.S. monetary primacy.

Rob Hadick (General Partner, Dragonfly)​

Vision: stablecoins as a disruptive payment infrastructure​

• Stablecoins as a disruptor: In a June 2025 article (translated by Foresight News), Hadick wrote that stablecoins are not meant to improve existing payment networks but to completely disrupt them. Stablecoins allow businesses to bypass traditional payment rails; when payment networks are built on stablecoins, all transactions are simply ledger updates rather than messages between banks. He warned that merely connecting legacy payment channels underestimates stablecoins’ potential; instead, the industry should reimagine payment channels from the ground up.
• Cross‑border remittances and market size: At the TOKEN2049 panel, Hadick disclosed that ≈10 % of remittances from the U.S. to India and Mexico already use stablecoins, illustrating the shift from traditional remittance rails. He estimated that the cross‑border payments market is about US$200 trillion, roughly eight times the entire crypto market. He emphasised that small and medium‑sized enterprises (SMEs) are underserved by banks and need frictionless capital flows. Dragonfly invests in “last‑mile” companies that handle compliance and consumer interaction rather than mere API aggregators.
• Stablecoin market segmentation: In a Blockworks interview, Hadick referenced data showing that business‑to‑business (B2B) stablecoin payments were annualising US$36 billion, surpassing person‑to‑person volumes of US$18 billion. He noted that USDT dominates 80–90 % of B2B payments, while USDC captures roughly 30 % of monthly volume. He was surprised that Circle (USDC) had not gained more share, though he observed signs of growth on the B2B side. Hadick interprets this data as evidence that stablecoins are shifting from retail speculation to institutional usage.
• Orchestration layers and compliance: Hadick emphasises the importance of orchestration layers—platforms that bridge public blockchains with traditional bank rails. He notes that the biggest value will accrue to settlement rails and issuers with deep liquidity and compliance capabilities. API aggregators and consumer apps face increasing competition from fintech players and commoditisation. Dragonfly invests in startups that offer direct bank partnerships, global coverage and high‑level compliance, rather than simple API wrappers.
• Perspective on the payment shift: Hadick views the shift to stablecoin payments as a “gold rush”. He believes we are only at the beginning: cross‑border volumes are growing 20–30 % month‑over‑month and new regulations in the U.S. and abroad have legitimised stablecoins. He argues that stablecoins will eventually replace legacy payment rails, enabling instant, low‑cost, programmable transfers for SMEs, contractors and global trade. He cautions that winners will be those who navigate regulation, build deep integrations with banks and abstract away blockchain complexity.

Conclusion: Alignments and differences​

• Shared belief in stablecoins’ potential: Ardoino, Cascarilla and Hadick agree that stablecoins will drive a trillion‑dollar shift in payments. All three highlight growing adoption in cross‑border remittances and B2B transactions and see emerging markets as early adopters.
• Different emphases: Ardoino focuses on financial inclusion and grassroots adoption, portraying USDT as a dollar substitute for the unbanked and emphasising Tether’s reserves and infrastructure projects. Cascarilla frames stablecoins as a national strategic imperative and stresses the need for robust regulation, reciprocity and private‑sector leadership to preserve the dollar’s dominance. Hadick takes the venture investor’s view, emphasising disruption of legacy payment rails, the growth of B2B transactions, and the importance of orchestration layers and last‑mile compliance.
• Regulation as catalyst: All three consider clear regulation—especially the GENIUS Act—essential for scaling stablecoins. Ardoino and Cascarilla advocate reciprocal recognition to allow offshore stablecoins to circulate internationally, while Hadick sees regulation enabling a wave of startups.
• Outlook: The stablecoin market is still in its early phases. With transaction volumes already in the trillions and use cases expanding beyond trading into remittances, treasury management and retail payments, the “book is just beginning to be written.” The perspectives of Ardoino, Cascarilla and Hadick illustrate how stablecoins could transform payments—from providing a digital dollar for billions of unbanked people to enabling businesses to bypass legacy rails—if regulators, issuers and innovators can build trust, scalability and interoperability.

Introduction​

The U.S. dollar’s decoupling from gold in August 1971 (the Nixon Shock) marked a watershed moment in monetary history. By closing the Treasury’s “gold window” the United States transformed the dollar into a free‑floating fiat currency. A Harvard thesis describes how the dollar’s value stopped tracking gold and instead derived its worth from government decree; this change allowed the U.S. to print money without having to maintain gold reserves. The post‑1971 regime made international currencies “floating,” created a debt‑based monetary system and facilitated a surge in government borrowing. This move helped spur rapid credit creation and the petrodollar arrangement—oil producers priced their product in dollars and reinvested surplus dollars in U.S. debt. While fiat money facilitated economic growth, it also introduced vulnerabilities: currency values became functions of institutional credibility rather than physical backing, creating the potential for inflation, political manipulation and debt accumulation.

More than five decades later, a new monetary transition is underway. Digital assets—particularly cryptocurrencies and stablecoins—are challenging the dominance of fiat money and transforming the plumbing of global finance. A 2025 white‑paper from researchers McNamara and Marpu calls stablecoins “the most significant evolution in banking since the abandonment of the gold standard,” arguing that they could enable a Banking 2.0 system that seamlessly integrates cryptocurrency innovation with traditional finance. Fundstrat’s Tom Lee has popularised the idea that Wall Street is experiencing its “biggest macro shift since the gold standard”; he likens the current moment to 1971 because digital assets are catalysing structural changes in capital markets, payment systems and monetary policy. The following sections examine how crypto’s rise parallels and diverges from the 1971 shift, why it constitutes a macro pivot, and what it means for Wall Street.

From Gold‑Backed Money to Fiat and Debt‑Based Money​

Under the Bretton Woods system (1944‑1971) the dollar was convertible to gold at $35 per ounce, anchoring global exchange rates. Pressures from inflation, the Vietnam War and growing U.S. deficits caused gold outflows and speculative attacks. By 1971 the dollar started to devalue against European currencies, and President Nixon suspended gold convertibility. After the “gold window” closed, the dollar became a floating currency whose supply could expand without metal backing. Economist J. Robinson notes that fiat currencies do not derive value from anything tangible; their worth depends on scarcity maintained by the issuing government. With no commodity constraint, the U.S. could print money to fund wars and domestic programs, fuelling credit booms and persistent fiscal deficits.

This shift had profound macro implications:

1. Debt‑based monetary system: fiat currency allowed governments, businesses and consumers to spend more than they had, fostering a credit‑driven economy.
2. Petrodollar arrangement: the U.S. convinced oil‑producing nations to price oil in dollars and invest surplus dollars in U.S. Treasury securities, creating permanent demand for dollars and U.S. debt. The arrangement strengthened dollar hegemony but tethered global finance to energy markets.
3. Currency floating and volatility: with the gold anchor removed, exchange rates floated and became subject to market forces. Currency instability made reserve management a critical function for central banks. The Cato Institute explains that by mid‑2024 monetary authorities held roughly $12.3 trillion in foreign exchange and 29,030 metric tons of gold (≈$2.2 trillion); gold still comprised about 15 % of global reserves because it hedges currency risk and political risk.

Macro Conditions Driving the New Shift​

Several structural forces in the 2020s–2025s have set the stage for another monetary pivot:

1. Inflation–productivity imbalance: the Banking 2.0 white‑paper notes that unlimited monetary expansion has created money supplies that grow faster than productivity. The U.S. money supply expanded dramatically after the 2008 crisis and the COVID‑19 response while productivity growth stagnated. This divergence produces persistent inflation that erodes purchasing power and savings, especially for middle‑ and lower‑income households.
2. Loss of trust in fiat systems: fiat money depends on institutional credibility. Unlimited money creation and rising public debt have undermined confidence in some currencies. Countries like Switzerland, Singapore, the United Arab Emirates and Saudi Arabia now maintain significant gold reserves and increasingly explore crypto reserves as hedges.
3. De‑dollarization: a 2025 news report notes that central banks are diversifying reserves away from the U.S. dollar amid inflation, U.S. debt and geopolitical tensions, shifting into gold and considering Bitcoin. BlackRock highlighted this trend, observing that non‑dollar reserves are rising while dollar reserves decline. The report emphasises that Bitcoin, due to its limited supply and blockchain transparency, is gaining attention as “digital gold”.
4. Technological maturation: blockchain infrastructure matured after 2019, enabling decentralized networks that can process payments 24/7. The COVID‑19 pandemic exposed the fragility of traditional payment systems and accelerated the adoption of crypto for remittances and commerce.
5. Regulatory clarity and institutional adoption: the U.S. Securities and Exchange Commission approved spot Bitcoin exchange‑traded funds (ETFs) in early 2024 (not directly quoted in sources but widely reported), and the GENIUS Act of 2025 created a regulatory framework for stablecoins. Institutional investors such as PayPal, JPMorgan and major asset managers have integrated crypto payment services and tokenized assets, signalling mainstream acceptance.

Stablecoins: Bridging Crypto and Traditional Finance​

Stablecoins are digital tokens designed to maintain a stable value, typically pegged to a fiat currency. The 2025 Banking 2.0 white‑paper argues that stablecoins are poised to become the foundational infrastructure of future banking systems. The authors assert that this transformation is “the most significant evolution in banking since the abandonment of the gold standard” because stablecoins integrate cryptocurrency innovation with traditional finance, offering a stable alternative that unifies global transactions, reduces fees and settlement times and delivers superior value to end‑users. Several developments illustrate this shift:

Institutional adoption and regulatory frameworks​

• GENIUS Act (2025): The Futurist Speaker’s 2025 article notes that President Trump signed the GENIUS Act on 18 July 2025, the first comprehensive federal framework for stablecoin regulation. The law gives the Federal Reserve oversight of large stablecoin issuers and provides them access to master accounts, legitimising stablecoins as components of the U.S. monetary system and positioning the Fed as the infrastructure provider for private stablecoin operations.
• Explosive growth and payment volume: By 2024 stablecoin transfer volume reached $27.6 trillion, surpassing the combined throughput of Visa and Mastercard, and the market capitalisation of stablecoins reached $260 billion. Tether accounted for $154 billion and became the third‑largest cryptocurrency. Such volumes demonstrate that stablecoins have evolved from niche trading tools into critical payment infrastructure processing more value than the world’s largest card networks.
• Impact on dollar dominance: A senior U.S. Treasury official stated that stablecoin growth would have “significant impact on the dominance of the US dollar and demand for US debt”. By providing programmable alternatives to bank deposits and Treasury securities, large‑scale stablecoin adoption could reduce reliance on the existing dollar‑based financial system.
• Corporate stablecoins: The Futurist Speaker article predicts that by 2027 Amazon and Walmart will issue branded stablecoins, transforming shopping into closed‑loop financial ecosystems that bypass banks. Large merchants are drawn by near‑zero payment costs; credit‑card fees typically amount to 2–4 % per transaction, whereas stablecoins offer instant settlement with negligible fees.

Advantages over traditional fiat systems​

Stablecoins address vulnerabilities inherent in fiat money. Modern fiat currencies derive value entirely from institutional trust rather than physical backing. Unlimited creation of fiat money creates inflation risk and makes currencies vulnerable to political manipulation. Stablecoins mitigate these vulnerabilities by using diversified reserves (cash, government bonds, commodities or even crypto collateral) and transparent on‑chain accounting. The Banking 2.0 paper argues that stablecoins provide enhanced stability, reduced fraud risk and unified global transactions that transcend national boundaries. They also reduce transaction costs and settlement times, enabling cross‑border payments without intermediaries.

Addressing macroeconomic imbalances​

The white‑paper highlights that stablecoins can help resolve the inflation‑productivity imbalance by using more robust backing mechanisms. Because stablecoins can be backed by diversified assets (including commodities and digital collateral), they may provide a counterweight to fiat supply expansion. By facilitating deregulation and efficiency gains, stablecoins pave the way for a more interconnected international financial system.

Emerging reserve asset​

Countries are beginning to view stablecoins and other crypto assets as potential reserve assets alongside gold. The white‑paper notes that nations like the UAE and Saudi Arabia preserve substantial physical gold reserves while exploring crypto reserves as additional backing. The UAE, for instance, facilitated over $300 billion in regional crypto transactions and boosted its gold reserves by 19.3 % in Q1 2025, adopting a dual strategy of traditional safe‑haven assets and digital alternatives. This dual approach reflects a hedging strategy against monetary instability.

Bitcoin and “Digital Gold”​

Bitcoin, the first cryptocurrency, is often compared to gold because of its finite supply and independence from central banks. A research paper on safe‑haven assets observes that while physical gold and stable fiat currencies have traditionally been preferred safe‑havens, Bitcoin’s decentralisation and limited supply have attracted investors seeking to hedge against currency devaluation, inflation and stock‑market fluctuations. Some scholars consider Bitcoin a digital counterpart to gold. However, the same study highlights Bitcoin’s extreme volatility; its price fluctuates more than eight times the volatility of conventional stock markets. During the COVID‑19 period Bitcoin’s price ranged from $5,000 to $60,000 and then back to $20,000, underscoring its risk. As a result, investors often look to stablecoins or fiat currencies to hedge Bitcoin volatility.

The Cato Institute adds perspective by explaining why governments hold reserves of foreign currencies and gold. As of mid‑2024, global monetary authorities held $12.3 trillion in foreign exchange assets and 29,030 metric tons of gold (~$2.2 trillion). Gold makes up roughly 15 % of global reserves because it hedges currency and political risk. Bitcoin proponents argue that a strategic Bitcoin reserve could play a similar role. However, Cato notes that building a Bitcoin reserve would not strengthen the U.S. dollar or address the reasons for diversification, implying that Bitcoin’s role as a reserve asset is still speculative.

De‑dollarization and Reserves Diversification​

The macro environment is increasingly characterised by de‑dollarization—a gradual shift away from exclusive reliance on the U.S. dollar in global trade and reserves. A July 2025 report from Coinfomania highlights BlackRock’s observation that central banks are moving away from the dollar amid rising inflation, high U.S. debt and political risks. These institutions are increasing holdings of gold and exploring Bitcoin as a complementary reserve asset. The article states that Bitcoin is gaining serious attention not just from retail investors but from big institutions and even central banks, illustrating how digital assets are entering reserve‑asset discussions. The report interprets this shift as “a new era where crypto could join global reserve assets”.

While the U.S. dollar remains dominant—comprising about 58 % of global foreign exchange reserves—its share has been declining, partly because countries worry about exposure to U.S. sanctions and desire more diversified reserves. Some nations see Bitcoin and stablecoins as means of reducing their dependency on U.S. banks and payment networks, especially for cross‑border transactions. The Banking 2.0 paper notes that countries like Switzerland, Singapore, the UAE and Saudi Arabia are increasing their gold holdings while exploring crypto reserves, reflecting a hedging strategy that echoes the gold accumulation of the early 1970s.

How Crypto Resembles the Gold‑Standard Shift​

The transition from a gold‑backed monetary regime to a fiat system and the current emergence of crypto share several macroeconomic parallels:

1. Loss of tangible backing → new monetary experiment: In 1971 the dollar lost its commodity backing, making money wholly dependent on government credibility. The Harvard thesis emphasises that since 1971 the dollar has been a floating currency printed at will. Today’s fiat system is again being questioned because unlimited money creation and rising debts undermine trust. Cryptocurrencies propose a new system where monetary units are backed by algorithmic scarcity (Bitcoin) or diversified reserves (stablecoins) rather than government promises.
2. Inflation and macro instability: Both shifts arise amid inflationary pressures. The early 1970s witnessed stagflation due to oil shocks and war spending. The 2020s have seen high inflation following the pandemic, supply chain disruptions and expansive fiscal policy. Stablecoins and digital assets are being promoted as hedges against such macro instability.
3. Rewriting reserve management: Ending the gold standard forced central banks to manage reserves through currency baskets and gold holdings. The current shift is prompting a re‑evaluation of reserve composition, with gold purchases hitting multi‑decade highs and discussions about including Bitcoin or stablecoins in reserve portfolios.
4. Redefining payment infrastructure: Bretton Woods established a dollar‑centric payment system. Today, stablecoins threaten to bypass card networks and correspondent banking. With transfer volumes exceeding $27.6 trillion, stablecoins process more value than Visa and Mastercard. Predictions suggest that by 2032 stablecoins will make 2 % transaction fees obsolete, forcing card networks to reinvent themselves. This is analogous to the rapid adoption of electronic payments after 1971, but on a larger scale.
5. Institutional adoption: Just as banks and governments gradually accepted fiat currency, major financial institutions are integrating crypto. JPMorgan’s deposit token (JPMD), PayPal’s “Pay with Crypto” service and state approval of Bitcoin ETFs exemplify the mainstreaming of digital assets.

Implications for Wall Street​

Wall Street is at the centre of this macro shift. The integration of crypto into financial markets and corporate balance sheets could alter investment flows, trading infrastructure and risk management.

1. New asset class and investment flows: Digital assets have grown from speculative instruments into a recognized asset class. Spot Bitcoin and Ether ETFs approved in 2024 enable institutional investors to gain exposure through regulated products. Crypto now competes with equities, commodities and bonds for capital, affecting portfolio construction and risk diversification strategies.
2. Tokenization of real‑world assets (RWAs): Blockchain technology enables the issuance and fractional ownership of securities, commodities and real estate on chain. Tokenization reduces settlement times and counterparty risk, potentially displacing traditional clearinghouses and custodians. The Futurist Speaker article predicts that stablecoin‑backed mortgages will make home‑buying instant and bank‑free by 2031, demonstrating how tokenized assets could transform lending and capital markets.
3. Disintermediation of payment networks: Stablecoins offer near‑zero fees and instant settlement, threatening the revenue models of Visa, Mastercard and correspondent banks. By 2032 these networks may have to evolve into blockchain infrastructure providers or risk obsolescence.
4. Corporate treasury and supply chain transformation: Companies are exploring stablecoins to manage treasury operations, automate vendor payments and optimise cash across subsidiaries. Branded stablecoins (e.g., Amazon or Walmart coins) will create closed‑loop ecosystems that bypass banks.
5. De‑dollarization pressures: As central banks diversify reserves and some countries embrace crypto transactions, demand for U.S. Treasuries could decline. A senior Treasury official warned that stablecoin growth would significantly impact U.S. debt demand. For Wall Street, which depends on the Treasury market for liquidity and collateral, shifts in reserve preferences could affect interest rates and funding dynamics.
6. Regulatory and compliance challenges: Crypto’s rapid growth raises concerns about consumer protection, financial stability and money laundering. Frameworks like the GENIUS Act provide oversight, but global coordination remains fragmented. Wall Street firms must navigate a complex regulatory landscape while integrating digital asset services.

Challenges and Differences from 1971​

While crypto represents a profound shift, it differs from the gold‑standard transition in several ways:

1. Decentralization vs. centralization: The move away from gold empowered central banks and governments to control money supply. In contrast, cryptocurrencies are designed to be decentralised and resistant to central control. Stablecoins, however, introduce a hybrid model—often issued by private entities but regulated by central banks.
2. Volatility and adoption: Bitcoin’s volatility remains a major barrier to its use as a stable store of value. Studies show that Bitcoin’s price volatility is eight times higher than that of conventional stock markets. Therefore, while Bitcoin is called digital gold, it has not yet achieved gold’s stability. Stablecoins attempt to solve this problem, but they depend on the quality of their reserves and regulatory oversight.
3. Technological complexity: The gold‑standard exit was primarily a macroeconomic decision. Today’s shift involves complex technology (blockchains, smart contracts), new cyber risks and interoperability challenges.
4. Regulatory fragmentation: Whereas Bretton Woods was a coordinated international agreement, the crypto transition is happening in a patchwork of national regulations. Some countries embrace crypto innovation; others impose strict bans or explore central‑bank digital currencies, leading to regulatory arbitrage.

Conclusion​

Crypto and stablecoins are catalysing the most significant macro shift on Wall Street since the United States abandoned the gold standard. Like the 1971 transition, this shift stems from erosion of confidence in existing monetary arrangements and emerges during periods of inflation and geopolitical tension. Stablecoins—digital tokens designed to maintain stable value—are central to this transformation. Researchers call them the most significant banking innovation since the end of the gold standard because they integrate digital assets with traditional finance, unify global transactions and address vulnerabilities of fiat money. Their adoption is exploding: by 2024 stablecoins processed $27.6 trillion in transactions, and a regulatory framework now grants them legitimacy.

De‑dollarization pressures are pushing central banks to diversify reserves into gold and even consider Bitcoin. Countries such as the UAE and Saudi Arabia hedge with both gold and crypto reserves. These trends suggest that digital assets may join gold and foreign currencies as reserve instruments. For Wall Street, the implications are profound: new asset classes, tokenized securities, disintermediation of payment networks, corporate stablecoins and potential changes in demand for U.S. debt.

The transition is far from complete. Cryptocurrencies face high volatility, regulatory uncertainty and technological challenges. Yet the trajectory points to an era where money is programmable, borderless and backed by diversified reserves rather than government fiat alone. As with the 1971 shift, those who adapt early stand to benefit, while those who ignore the changing monetary landscape risk being left behind.

OKX is quietly pushing deeper into consumer payments with OKX Pay, a smart-account-powered mode that lives inside the main OKX app. Below is a concise, researcher-style briefing on what the product is, how it works, the rails it rides on, the compliance context, and the key questions to keep on your diligence checklist.

TL;DR​

• What it is: A self-custody-style payment mode for verified users that lets them send or receive USDC and USDT with zero user fees on X Layer, the OKX-operated Polygon CDK Layer 2. It relies on a smart-contract "Smart Account" secured with passkeys while OKX co-signs on-chain actions to complete transfers.
• Scope today: OKX is positioning Pay for consumer P2P and social payments via contacts, gift flows, and shareable payment links. Merchant acceptance is explicitly off-limits unless OKX grants permission, so any merchant reach is expected to land through the upcoming OKX Card and Mastercard’s stablecoin capabilities.
• Rails & assets: Pay defaults to X Layer (OKB gas), and users can bridge funds with Convert to Pay from Ethereum, TRON, Arbitrum, Base, Avalanche, or Optimism into USDC/USDT on X Layer.
• Costs & rewards: P2P transfers on X Layer are marketed as fee-free; converting from external chains still consumes that chain’s native gas. Stablecoin balances can earn daily-accruing, monthly-paid rewards, although rates vary and OKX can pause or change them.
• Availability & risk: Access requires an OKX account plus KYC, and Pay is not available in every jurisdiction. OKX’s February 2025 U.S. AML guilty plea leaves it under an independent monitor through 2027, a meaningful compliance consideration for American strategies.

Product Snapshot​

User flow​

• Switch the mobile app to Pay mode, then send value by name, phone, email, QR code, or payment link. Payments that go unclaimed automatically return after 48 hours.
• Convert to Pay pulls assets from multiple EVM and TRON networks into X Layer stablecoins. Conversions that stay inside X Layer have their gas covered by OKX.

Security and custody model​

• Pay relies on a Smart Account, which is a smart-contract wallet where every transaction needs signatures from the user and OKX. Assets are marketed as “not directly managed or hosted by OKX,” but the co-signature requirement makes Pay effectively semi-custodial.
• Users authenticate with passkeys stored in iCloud or Google Password Manager. ZK-Email supports passkey resets (except on TRON), and each chain can store up to three passkeys.

Assets and networks​

• Pay currently supports USDC and USDT, with OKX hinting that more stablecoins are on the roadmap.
• On-chain sends and receives work across X Layer, Ethereum, TRON, “and many other networks,” but the Pay experience is optimized for X Layer.

Fees, limits, and rewards​

• OKX advertises no additional fees for P2P stablecoin transfers on X Layer. Moving funds from other networks still requires paying that network’s gas.
• Internal transfers and deposits are free, while on-chain withdrawals incur normal network gas.
• Stablecoin balances inside Pay can enter Smart Savings, where rewards accrue daily and pay monthly; OKX can change, pause, or terminate the program at will, and identity verification is required to participate.

Messaging and social layer​

• Pay bakes in chat and gift-giving flows to emphasize social tipping and casual P2P use cases.

Rails & Ecosystem: X Layer​

• X Layer is OKX’s Ethereum Layer 2 built on Polygon CDK. An August 2025 upgrade pushed throughput toward ~5,000 TPS and moved the gas token to OKB, while subsidizing near-zero gas fees for Pay.
• X Layer ties directly into OKX Wallet and the centralized exchange, enabling features like “0-gas fast withdrawal” rails that reuse Pay’s infrastructure.

Merchant Reach (Now vs. Next)​

• Today: OKX Pay’s terms explicitly prohibit business-to-business or merchant transactions unless OKX authorizes them, cementing Pay as a consumer P2P feature for now.
• Near-term: Merchant reach is expected to flow through the OKX Card in partnership with Mastercard, which is rolling out end-to-end stablecoin acceptance capabilities so wallets can spend at traditional merchants.

Availability, KYC, and Compliance​

• Activating Pay demands an OKX account and completed KYC, and recipients must also verify their identity to receive funds.
• OKX cautions that Pay is not offered in every jurisdiction and maintains a list of restricted regions.
• Compliance observers should note OKX’s February 2025 guilty plea in the United States over AML violations. The settlement included roughly $505 million in penalties and an independent monitor through February 2027. Conversely, OKX has achieved in-principle approval from Singapore’s MAS for a payments licence and now supports instant SGD transfers via DBS rails.

Competitive Snapshot (Payments)​

Feature	OKX Pay	Binance Pay	Bybit Pay	Coinbase Payments / Commerce
Core use	P2P stablecoin pay on X Layer; social gifting; fee-free UX	P2P plus merchant ecosystem; zero gas for users; 80+ assets	P2P with web/app/POS integrations	USDC checkout infrastructure (Base) for platforms; Coinbase Commerce for merchants
Merchant use	Restricted unless OKX authorizes; merchant reach via OKX Card & Mastercard stack	Broad merchant program & partners	Positioning toward merchant integrations	Platform-level stablecoin rails; Commerce charges 1% today
Fees	No user fee on X Layer P2P; conversion gas for external chains	“Zero gas fees” positioning for users	Marketing around low fees	Commerce currently 1% to merchants
Assets	USDT, USDC (more stablecoins “later”)	80+ assets including BTC/ETH/USDT/USDC	Multi-asset	Primarily USDC (with PYUSD promos)
Rails	X Layer (OKB gas)	Binance internal + supported networks	Bybit internal + networks	Base + Coinbase stack

Strengths​

• Frictionless UX: passkeys, phone/email/links, and 48-hour auto-returns keep the Pay experience friendly for consumers.
• Gas-abstracted P2P: zero-fee transfers on X Layer plus covered intra-X Layer conversions reduce user friction.
• Exchange adjacency: tight links to the OKX exchange, X Layer, and the forthcoming OKX Card create an on/off-ramp bundle.

Frictions and Risks​

• Semi-custodial design: every Smart Account action depends on an OKX co-signature, so users inherit OKX’s availability and policy decisions.
• Merchant gap today: Pay’s consumer-first positioning limits merchant adoption until card and Mastercard flows mature.
• Regulatory overhang: the U.S. enforcement outcome and jurisdictional restrictions constrain global rollout.

What to Watch (3–9 Months)​

• OKX Card rollout: geography, fees, FX, rewards, BIN controls, and whether card spend can directly draw from Pay balances.
• Stablecoin coverage: expansion beyond USDT/USDC and how APY tiers evolve by region.
• Merchant pilots: concrete examples of Mastercard stablecoin settlement or OKX-authorized merchant flows inside Pay.
• X Layer economics: the impact of OKB-as-gas, throughput upgrades, and gas subsidies on Pay growth and on-chain activity.

Diligence Checklist​

• Regulatory scope: confirm jurisdictional eligibility and service availability before planning deployments.
• KYC and data flows: document the identity verification steps and what transaction metadata is shared between counterparties.
• Custody model: map failure modes if OKX cannot co-sign or if passkey resets are required; test ZK-Email recovery.
• Cost validation: measure actual user fees on X Layer versus gas consumed when bridging from other chains.
• Rewards: track APY, accrual, and payout mechanics while noting OKX’s right to adjust or suspend the program.

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Sources: OKX Pay FAQ and documentation, OKX Smart Account terms, X Layer upgrade announcements, Mastercard OKX Card partnership materials, Mastercard stablecoin settlement releases, OKX risk and compliance disclosures, Reuters coverage of the February 2025 U.S. enforcement action.

Traditional fintech applications have fundamentally transformed from consumer-facing services into critical infrastructure for the global crypto economy, with five major platforms collectively serving over 700 million users and processing hundreds of billions in crypto transactions annually. This shift from apps to assets represents not merely product expansion but a wholesale reimagining of financial infrastructure, where blockchain technology becomes the foundational layer rather than an adjacent feature. Robinhood, Revolut, PayPal, Kalshi, and CoinGecko are executing parallel strategies that converge on a singular vision: crypto as essential financial infrastructure, not an alternative asset class.

The transformation gained decisive momentum in 2024-2025 as regulatory clarity emerged through Europe's MiCA framework and the U.S. GENIUS Act for stablecoins, institutional adoption accelerated through Bitcoin ETFs managing billions in assets, and fintech companies achieved technological maturity enabling seamless crypto integration. These platforms now collectively represent the bridge between 400 million traditional finance users and the decentralized digital economy, each addressing distinct aspects of the same fundamental challenge: making crypto accessible, useful, and trustworthy for mainstream audiences.

The regulatory breakthrough that enabled scale​

The period from 2024-2025 marked a decisive shift in the regulatory environment that had constrained fintech crypto ambitions for years. Johann Kerbrat, General Manager of Robinhood Crypto, captured the industry's frustration: "We received our Wells notice recently. For me, the main takeaway is the need for regulatory clarity in the U.S. regarding what are securities and what are cryptocurrencies. We've met with the SEC 16 times to try to register." Yet despite this uncertainty, companies pressed forward with compliance-first strategies that ultimately positioned them to capitalize when clarity arrived.

The European Union's Markets in Crypto-Assets regulation provided the first comprehensive framework, enabling Revolut to launch crypto services across 30 European Economic Area countries and Robinhood to expand through its $200 million Bitstamp acquisition in June 2025. Mazen ElJundi, Global Business Head of Crypto at Revolut, acknowledged: "The MiCA framework has a lot of pros and cons. It is not perfect, but it has merit to actually exist, and it helps companies like ours to understand what we can offer to customers." This pragmatic acceptance of imperfect regulation over regulatory vacuum became the industry consensus.

In the United States, multiple breakthrough moments converged. Kalshi's victory over the CFTC in its lawsuit regarding political prediction markets established federal jurisdiction over event contracts, with the regulatory agency dropping its appeal in May 2025. John Wang, Kalshi's 23-year-old Head of Crypto appointed in August 2025, declared: "Prediction markets and event contracts are now being held at the same level as normal derivatives and stocks—this is genuinely like the new world's newest asset class." The Trump administration's establishment of a U.S. Federal Strategic Bitcoin Reserve through Executive Order in March 2025 and the passage of the GENIUS Act providing a regulated pathway for stablecoins created an environment where fintech companies could finally build with confidence.

PayPal epitomized the compliance-first approach by becoming one of the first companies to receive a full BitLicense from New York's Department of Financial Services in June 2022, years before launching its PayPal USD stablecoin in August 2023. May Zabaneh, Vice President of Product for Blockchain, Crypto, and Digital Currencies at PayPal, explained the strategy: "PayPal chose to become fully licensed because it was the best way forward to offer cryptocurrency services to its users, given the robust framework provided by the NYDFS for such services." This regulatory groundwork enabled PayPal to move swiftly when the SEC closed its PYUSD investigation without action in 2025, removing the final uncertainty barrier.

The regulatory transformation enabled not just permissionless innovation but coordinated infrastructure development across traditional and crypto-native systems. Robinhood's Johann Kerbrat noted the practical impact: "My goal is to make sure that we can work no matter which side is winning in November. I'm hopeful that it's been clear at this point that we need regulation, otherwise we're going to be late compared to the EU and other places in Asia." By late 2025, fintech platforms had collectively secured over 100 licenses across global jurisdictions, transforming from regulatory supplicants to trusted partners in shaping crypto's integration into mainstream finance.

Stablecoins emerge as the killer application for payments​

The convergence of fintech platforms on stablecoins as core infrastructure represents perhaps the clearest signal of crypto's evolution from speculation to utility. May Zabaneh articulated the industry consensus: "For years, stablecoins have been deemed crypto's 'killer app' by combining the power of the blockchain with the stability of fiat currency." By 2025, this theoretical promise became operational reality as stablecoin circulation doubled to $250 billion within 18 months, with McKinsey forecasting $2 trillion by 2028.

PayPal's PayPal USD stablecoin exemplifies the strategic pivot from crypto as tradable asset to crypto as payment infrastructure. Launched in August 2023 and now deployed across Ethereum, Solana, Stellar, and Arbitrum blockchains, PYUSD reached $894 million in circulation by mid-2025 despite representing less than 1% of the total stablecoin market dominated by Tether and Circle. The significance lies not in market share but in use case: PayPal used PYUSD to pay EY invoices in October 2024, demonstrating real-world utility within traditional business operations. The company's July 2025 "Pay with Crypto" merchant solution, accepting 100+ cryptocurrencies but converting everything to PYUSD before settlement, reveals the strategic vision—stablecoins as the settlement layer bridging volatile crypto and traditional commerce.

Zabaneh emphasized the payments transformation: "As we see cross-border payments being a key area where digital currencies can provide real world value, working with Stellar will help advance the use of this technology and provide benefits for all users." The expansion to Stellar specifically targets remittances and cross-border payments, where traditional rails charge 3% on a $200 trillion global market. PayPal's merchant solution reduces cross-border transaction fees by 90% compared to traditional credit card processing through crypto-stablecoin conversion, offering a 0.99% promotional rate versus the average 1.57% U.S. credit card processing fee.

Both Robinhood and Revolut have signaled stablecoin ambitions, with Bloomberg reporting in September 2024 that both companies were exploring proprietary stablecoin issuance. For Revolut, which already contributes price data to Pyth Network supporting DeFi applications managing $15.2 billion in total value, a stablecoin would complete its transformation into crypto infrastructure provider. Mazen ElJundi framed this evolution: "Our partnership with Pyth is an important milestone in Revolut's journey to modernize finance. As DeFi continues to gain traction, Pyth's position as the backbone of the industry will help Revolut capitalize on this transformation."

The stablecoin strategy reflects deeper insights about crypto adoption. Rather than expecting users to embrace volatile assets, these platforms recognized that crypto's transformative power lies in its rails, not its assets. By maintaining fiat denomination while gaining blockchain benefits—instant settlement, programmability, 24/7 availability, lower costs—stablecoins offer the value proposition that 400 million fintech users actually want: better money movement, not speculative investments. May Zabaneh captured this philosophy: "In order for things to become mainstream, they have to be easily accessible, easily adoptable." Stablecoins, it turns out, are both.

Prediction markets become the trojan horse for sophisticated financial products​

Kalshi's explosive growth trajectory—from 3.3% market share in early 2024 to 66% by September 2025, with a single-day record of $260 million in trading volume—demonstrates how prediction markets successfully package complex financial concepts for mainstream audiences. John Wang's appointment as Head of Crypto in August 2025 accelerated the platform's explicit strategy to position prediction markets as the gateway drug for crypto adoption. "I think prediction markets are similar to options that are packaged in the most accessible form possible," Wang explained at Token 2049 Singapore in October 2025. "So I think prediction markets are like the Trojan Horse for people to enter crypto."

The platform's CFTC-regulated status provides a critical competitive advantage over crypto-native competitors like Polymarket, which prepared for U.S. reentry by acquiring QCEX for $112 million. Kalshi's federal regulatory designation as a Designated Contract Market bypasses state gambling restrictions, enabling 50-state access while traditional sportsbooks navigate complex state-by-state licensing. This regulatory arbitrage, combined with crypto payment rails supporting Bitcoin, Solana, USDC, XRP, and Worldcoin deposits, creates a unique position: federally regulated prediction markets with crypto-native infrastructure.

Wang's vision extends beyond simply accepting crypto deposits. The launch of KalshiEco Hub in September 2025, with strategic partnerships on Solana and Base (Coinbase's Layer-2), positions Kalshi as a platform for developers to build sophisticated trading tools, analytics dashboards, and AI agents. "It can range anywhere from pushing data onchain from our API to, in the future, tokenizing Kalshi positions, providing margin and leveraged trading, and building third-party front ends," Wang outlined at Solana APEX. The developer ecosystem already includes tools like Kalshinomics for market analytics and Verso for professional-grade discovery, with Wang committing that Kalshi will integrate with "every major crypto app and exchange" within 12 months.

The Robinhood partnership announced in March 2025 and expanded in August exemplifies the strategic distribution play. By embedding Kalshi's CFTC-regulated prediction markets within Robinhood's app serving 25.2 million funded customers, both companies gain: Robinhood offers differentiated products without navigating gambling regulations, while Kalshi accesses mainstream distribution. The partnership initially focused on NFL and college football markets but expanded to politics, economics, and broader event contracts, with revenue split equally between platforms. Johann Kerbrat noted Robinhood's broader strategy: "We don't really see this distinction between a crypto company and a non-crypto company. Over time, anyone who is basically moving money or anyone who's in financial services is going to be a crypto company."

Kalshi's success validates Wang's thesis that simplified financial derivatives—yes/no questions on real-world events—can democratize sophisticated trading strategies. By removing the complexity of options pricing, Greeks, and contract specifications, prediction markets make probabilistic thinking accessible to retail audiences. Yet beneath this simplicity lies the same risk management, hedging, and market-making infrastructure that supports traditional derivatives markets. Wall Street firms including Susquehanna International Group provide institutional liquidity, while the platform's integration with Zero Hash for crypto processing and LedgerX for clearing demonstrates institutional-grade infrastructure. The platform's $2 billion valuation following its June 2025 Series C led by Paradigm and Sequoia reflects investor conviction that prediction markets represent a genuine new asset class—and crypto provides the ideal infrastructure to scale it globally.

Retail crypto trading matures into multi-asset wealth platforms​

Robinhood's transformation from the company that restricted GameStop trading in 2021 to a crypto infrastructure leader generating $358 million in crypto revenue in Q4 2024 alone—representing 700% year-over-year growth—illustrates how retail platforms evolved beyond simple buy/sell functionality. Johann Kerbrat, who joined Robinhood over three years ago after roles at Iron Fish, Airbnb, and Uber, has overseen this maturation into comprehensive crypto-native financial services. "We think that crypto is actually the way for us to rebuild the entire Robinhood in the EU from the ground up, just using blockchain technology," Kerbrat explained at EthCC 2025 in Cannes. "We think that blockchain technology can make things more efficient, faster, and also include more people."

The $200 million Bitstamp acquisition completed in June 2025 marked Robinhood's decisive move into institutional crypto infrastructure. The 14-year-old exchange brought 50+ global licenses, 5,000 institutional clients, 500,000 retail users, and approximately $72 billion in trailing twelve-month trading volume—representing 50% of Robinhood's retail crypto volume. More strategically, Bitstamp provided institutional capabilities including lending, staking, white-label crypto-as-a-service, and API connectivity that position Robinhood to compete beyond retail. "The acquisition of Bitstamp is a major step in growing our crypto business," Kerbrat stated. "Through this strategic combination, we are better positioned to expand our footprint outside of the US and welcome institutional customers to Robinhood."

Yet the most ambitious initiative may be Robinhood's Layer-2 blockchain and stock tokenization program announced in June 2025. The platform plans to tokenize over 200 U.S. stocks and ETFs, including controversial derivatives tied to private company valuations like SpaceX and OpenAI tokens. "For the user, it's very simple; you will be able to tokenize any financial instrument in the future, not just US stocks, but anything," Kerbrat explained. "If you want to change brokers, you won't have to wait multiple days and wonder where your stocks are going; you'll be able to do it in an instant." Built on Arbitrum technology, the Layer-2 aims to provide compliance-ready infrastructure for tokenized assets, integrated seamlessly with Robinhood's existing ecosystem.

This vision extends beyond technical innovation to fundamental business model transformation. When asked about Robinhood's crypto ambitions, Kerbrat increasingly emphasizes technology over trading volumes: "I think this idea of blockchain as fundamental technology is really underexplored." The implication—Robinhood views crypto not as a product category but as the technological foundation for all financial services—represents a profound strategic bet. Rather than offering crypto alongside stocks and options, the company is rebuilding its core infrastructure on blockchain rails, using tokenization to eliminate settlement delays, reduce intermediary costs, and enable 24/7 markets.

The competitive positioning against Coinbase reflects this strategic divergence. While Coinbase offers 260+ cryptocurrencies versus Robinhood's 20+ in the U.S., Robinhood provides integrated multi-asset trading, 24/5 stock trading alongside crypto, lower fees for small trades (approximately 0.55% flat versus Coinbase's tiered structure starting at 0.60% maker/1.20% taker), and cross-asset functionality appealing to hybrid investors. Robinhood's stock quadrupled in 2024 versus Coinbase's 60% gain, suggesting markets reward the diversified fintech super-app model over pure-play crypto exchanges. Kerbrat's user insight validates this approach: "We have investors that are brand new to crypto, and they will just start going from trading one of their stocks to one of the coins, then get slowly into the crypto world. We are also seeing a progression from just holding assets to actually transferring them out using a wallet and getting more into Web3."

Global crypto banking bridges traditional and decentralized finance​

Revolut's achievement of 52.5 million users across 48 countries with crypto-related wealth revenue surging 298% to $647 million in 2024 demonstrates how neobanks successfully integrated crypto into comprehensive financial services. Mazen ElJundi, Global Business Head of Crypto, Wealth & Trading, articulated the strategic vision on the Gen C podcast in May 2025: Revolut is "creating a bridge between traditional banking and Web3, driving crypto adoption through education and intuitive user experiences." This bridge manifests through products spanning the spectrum from beginner education to sophisticated trading infrastructure.

The Learn & Earn program, which onboarded over 3 million customers globally with hundreds of thousands joining monthly, exemplifies the education-first approach. Users complete interactive lessons on blockchain protocols including Polkadot, NEAR, Avalanche, and Algorand, receiving crypto rewards worth €5-€15 per course upon passing quizzes. The 11FS Pulse Report named Revolut a "top cryptocurrency star" in 2022 for its "fun and simple approach" to crypto education. ElJundi emphasized the strategic importance: "We're excited to continue our mission of making the complex world of blockchain technology more accessible to everyone. The appetite for educational content on web3 continues to increase at a promising and encouraging rate."

For advanced traders, Revolut X—launched in May 2024 for the UK and expanded to 30 EEA countries by November 2024—provides standalone exchange functionality with 200+ tokens, 0% maker fees, and 0.09% taker fees. The March 2025 mobile app launch extended this professional-grade infrastructure to on-the-go trading, with Leonid Bashlykov, Head of Crypto Exchange Product, reporting: "Tens of thousands of traders actively using the platform in UK; feedback very positive, with many already taking advantage of our near-zero fees, wide range of available assets, and seamless integration with their Revolut accounts." The seamless fiat-to-crypto conversion within Revolut's ecosystem—with no fees or limits for on/off-ramping between Revolut account and Revolut X—eliminates friction that typically impedes crypto adoption.

The partnership with Pyth Network announced in January 2025 signals Revolut's ambition to become crypto infrastructure provider, not merely consumer application. As the first banking data publisher to join Pyth Network, Revolut contributes proprietary digital asset price data to support 500+ real-time feeds securing DeFi applications managing $15.2 billion and handling over $1 trillion in total traded volume across 80+ blockchain ecosystems. ElJundi framed this as strategic positioning: "By working with Pyth to provide our reliable market data to applications, Revolut can influence digital economies by ensuring developers and users have access to the precise, real-time information they need." This data contribution allows Revolut to participate in DeFi infrastructure without capital commitment or active trading—a elegant solution to regulatory constraints on more direct DeFi engagement.

Revolut Ramp, launched in March 2024 through partnership with MetaMask, provides the critical on-ramp connecting Revolut's 52.5 million users to self-custody Web3 experiences. Users can purchase 20+ tokens including ETH, USDC, and SHIB directly into MetaMask wallets using Revolut account balances or Visa/Mastercard, with existing Revolut customers bypassing additional KYC and completing transactions within seconds. ElJundi positioned this as ecosystem play: "We are excited to announce our new crypto product Revolut Ramp, a leading on-ramp solution for the web3 ecosystem. Our on-ramp solution ensures high success rates for transactions done within the Revolut ecosystem and low fees for all customers."

The UK banking license obtained in July 2024 after a three-year application process, combined with Lithuanian banking license from the European Central Bank enabling MiCA-compliant operations, positions Revolut uniquely among crypto-friendly neobanks. Yet significant challenges persist, including €3.5 million fine from Bank of Lithuania in 2025 for AML failures related to crypto transactions and ongoing regulatory pressure on crypto-related banking services. Despite naming Revolut the "most crypto-friendly UK bank" with 38% of UK crypto firms using it for banking services, the company must navigate the perpetual tension between crypto innovation and banking regulation. ElJundi's emphasis on cross-border payments as the most promising crypto use case—"borderless payments represent one of the most promising use cases for cryptocurrency"—reflects pragmatic focus on defensible, regulation-compatible applications rather than pursuing every crypto opportunity.

Data infrastructure becomes the invisible foundation​

CoinGecko's evolution from consumer-facing price tracker to enterprise data infrastructure provider processing 677 billion API requests annually reveals how data and analytics became essential plumbing for fintech crypto integration. Bobby Ong, Co-Founder and newly appointed CEO as of August 2025, explained the foundational insight: "We decided to pursue a data site because, quite simply, there's always a need for good quality data." That simple insight, formed when Bitcoin was trading at single-digit prices and Ong was mining his first coins in 2010, now underpins an enterprise serving Consensys, Chainlink, Coinbase, Ledger, Etherscan, Kraken, and Crypto.com.

The independence that followed CoinMarketCap's acquisition by Binance in 2020 became CoinGecko's defining competitive advantage. "The opposite happened, and users turned towards CoinGecko," Ong observed. "This happened because CoinGecko has always remained neutral & independent when giving numbers." This neutrality matters critically for fintech applications requiring unbiased data sources—Robinhood, Revolut, and PayPal cannot rely on data from competitors like Coinbase or exchanges with vested interests in specific tokens. CoinGecko's comprehensive coverage of 18,000+ cryptocurrencies across 1,000+ exchanges, plus 17 million tokens tracked through GeckoTerminal across 1,700 decentralized exchanges, provides fintech platforms the complete market visibility required for product development.

The Chainlink partnership exemplifies CoinGecko's infrastructure role. By providing cryptocurrency market data—price, trading volume, and market capitalization—for Chainlink's decentralized oracle network, CoinGecko enables smart contract developers to access reliable pricing for DeFi applications. "CoinGecko's cryptocurrency market data can now be easily called by smart contract developers when developing decentralized applications," the companies announced. "This data is available for Bitcoin, Ethereum, and over 5,700 coins that are currently being tracked on CoinGecko." This integration eliminates single points of failure by evaluating multiple data sources, maintaining oracle integrity crucial for DeFi protocols handling billions in locked value.

Ong's market insights, shared through quarterly reports, conference presentations including his Token 2049 Singapore keynote in October 2025 titled "Up Next: 1 Billion Tokens, $50 Trillion Market Cap," and his long-running CoinGecko Podcast, provide fintech companies valuable intelligence for strategic planning. His prediction that gaming would be the "dark horse" of crypto adoption—"hundreds of millions of dollars have gone into gaming studios to build web3 games in the past few years. All we need is just one game to become a big hit and suddenly we have millions of new users using crypto"—reflects the data-driven insights accessible to CoinGecko through monitoring token launches, DEX activity, and user behavior patterns across the entire crypto ecosystem.

The leadership transition from COO to CEO in August 2025, with co-founder TM Lee becoming President focused on long-term product vision and R&D, signals CoinGecko's maturation into institutionalized data provider. The appointment of Cedric Chan as CTO with mandate to embed AI into operations and deliver "real-time, high-fidelity crypto data" demonstrates the infrastructure investments required to serve enterprise customers. Ong framed the evolution: "TM and I started CoinGecko with a shared vision to empower the decentralized future. These values will continue to guide us forward." For fintech platforms integrating crypto, CoinGecko's comprehensive, neutral, and reliable data services represent essential infrastructure—the Bloomberg terminal for digital assets that enables everything else to function.

Technical infrastructure enables seamless user experiences​

The transformation from crypto as separate functionality to integrated infrastructure required solving complex technical challenges around custody, security, interoperability, and user experience. These fintech platforms collectively invested billions in building the technical rails enabling mainstream crypto adoption, with architecture decisions revealing strategic priorities.

Robinhood's custody infrastructure holding $38 billion in crypto assets as of November 2024 employs industry-standard cold storage for the majority of funds, third-party security audits, and multi-signature protocols. The platform's licensing by New York State Department of Financial Services and FinCEN registration as money services business demonstrates regulatory-grade security. Yet the user experience abstracts this complexity entirely—customers simply see balances and execute trades within seconds. Johann Kerbrat emphasized this principle: "I think what makes us unique is that our UX and UI are pretty innovative. Compared to all the competition, this is probably one of the best UIs out there. I think that's what we want to bring to every product we build. Either the best-in-class type of pricing or the best-in-class UI UX."

The Crypto Trading API launched in May 2024 reveals Robinhood's infrastructure ambitions beyond consumer applications. Providing real-time market data access, programmatic portfolio management, automated trading strategies, and 24/7 crypto market access, the API enables developers to build sophisticated applications atop Robinhood's infrastructure. Combined with Robinhood Legend desktop platform featuring 30+ technical indicators, futures trading, and advanced order types, the company positioned itself as infrastructure provider for crypto power users, not merely retail beginners. The integration of Bitstamp's smart order routing post-acquisition provides institutional-grade execution across multiple liquidity venues.

PayPal's technical approach prioritizes seamless merchant integration over blockchain ideology. The Pay with Crypto solution announced in July 2025 exemplifies this philosophy: customers connect crypto wallets at checkout, PayPal sells cryptocurrency on centralized or decentralized exchanges, converts proceeds to PYUSD, then converts PYUSD to USD for merchant deposit—all happening transparently behind familiar PayPal checkout flow. Merchants receive dollars, not volatile crypto, eliminating the primary barrier to merchant adoption while enabling PayPal to capture transaction fees on what becomes a $3+ trillion addressable market of 650 million global crypto users. May Zabaneh captured the strategic insight: "As with almost anything with payments, consumers and shoppers should be given the choice in how they want to pay."

Revolut's multi-blockchain strategy—Ethereum for DeFi access, Solana for low-cost high-speed transactions, Stellar for cross-border payments—demonstrates sophisticated infrastructure architecture matching specific blockchains to use cases rather than single-chain maximalism. The staking infrastructure supporting Ethereum, Cardano, Polkadot, Solana, Polygon, and Tezos with automated staking for certain tokens reflects the deep integration required to abstract blockchain complexity from users. Over two-thirds of Revolut's Solana holdings in Europe are staked, suggesting users increasingly expect yield generation as default functionality rather than optional feature requiring technical knowledge.

Kalshi's partnership with Zero Hash for all crypto deposit processing—instantly converting Bitcoin, Solana, USDC, XRP, and other cryptocurrencies to USD while maintaining CFTC compliance—illustrates how infrastructure providers enable regulated companies to access crypto rails without becoming crypto custodians themselves. The platform supports $500,000 crypto deposit limits versus lower traditional banking limits, providing power users advantages while maintaining federal regulatory oversight. John Wang's vision for "purely additive" onchain initiatives—pushing event data onto blockchains in real-time, future tokenization of Kalshi positions, permissionless margin trading—suggests infrastructure evolution will continue expanding functionality while preserving the core regulated exchange experience for existing users.

The competitive landscape reveals collaborative infrastructure​

The apparent competition between these platforms masks underlying collaboration on shared infrastructure that benefits the entire ecosystem. Kalshi's partnership with Robinhood, Revolut's integration with MetaMask and Pyth Network, PayPal's collaboration with Coinbase for fee-free PYUSD purchases, and CoinGecko's data provision to Chainlink oracles demonstrate how competitive positioning coexists with infrastructure interdependence.

The stablecoin landscape illustrates this dynamic. PayPal's PYUSD competes with Tether's USDT and Circle's USDC for market share, yet all three protocols require the same infrastructure: blockchain networks for settlement, crypto exchanges for liquidity, fiat banking partners for on/off ramps, and regulatory licenses for compliance. When Robinhood announced joining the Global Dollar Network for USDG stablecoin, it simultaneously validated PayPal's stablecoin strategy while creating competitive pressure. Both Robinhood and Revolut exploring proprietary stablecoins according to Bloomberg reporting in September 2024 suggests industry consensus that stablecoin issuance represents essential infrastructure for fintech platforms, not merely product diversification.

The blockchain network partnerships reveal strategic alignment. Kalshi's KalshiEco Hub supports both Solana and Base (Coinbase's Layer-2), Robinhood's Layer-2 builds on Arbitrum technology, PayPal's PYUSD deploys across Ethereum, Solana, Stellar, and Arbitrum, and Revolut integrates Ethereum, Solana, and prepares for Stellar expansion. Rather than fragmenting across incompatible networks, these platforms converge on the same handful of high-performance blockchains, creating network effects that benefit all participants. Bobby Ong's observation that "we're finally seeing DEXes challenge CEXes" following Hyperliquid's rise to 8th largest perpetuals exchange reflects how decentralized infrastructure matures to institutional quality, reducing advantages of centralized intermediaries.

The regulatory advocacy presents similar dynamics. While these companies compete for market share, they share interests in clear frameworks that enable innovation. Johann Kerbrat's statement that "my goal is to make sure that we can work no matter which side is winning in November" reflects industry-wide pragmatism—companies need workable regulation more than they need specific regulatory outcomes. The passage of the GENIUS Act for stablecoins, the Trump administration's establishment of a Strategic Bitcoin Reserve, and the SEC's closure of investigations into PYUSD without action all resulted from years of collective industry advocacy, not individual company lobbying. May Zabaneh's repeated emphasis that "there has to be some clarity that comes out, some standards, some ideas of the dos and the don'ts and some structure around it" articulates the shared priority that supersedes competitive positioning.

User adoption reveals mainstream crypto's actual use cases​

The collective user bases of these platforms—over 700 million accounts across Robinhood, Revolut, PayPal, Venmo, and CoinGecko—provide empirical insights into how mainstream audiences actually use crypto, revealing patterns often divergent from crypto-native assumptions.

PayPal and Venmo's data shows 74% of users who purchased crypto continued holding it over 12 months, suggesting stability-seeking behavior rather than active trading. Over 50% chose Venmo specifically for "safety, security, and ease of use" rather than decentralization or self-custody—the opposite of crypto-native priorities. May Zabaneh's insight that customers want "choice in how they want to pay" manifests in payment functionality, not DeFi yield farming. The automatic "Cash Back to Crypto" feature on Venmo Credit Card reflects how fintech platforms successfully integrate crypto into existing behavioral patterns rather than requiring users to adopt new ones.

Robinhood's observation that users "start going from trading one of their stocks to one of the coins, then get slowly into the crypto world" and show "progression from just holding assets to actually transferring them out using a wallet and getting more into Web3" reveals the onboarding pathway—familiarity with platform precedes crypto experimentation, which eventually leads some users to self-custody and Web3 engagement. Johann Kerbrat's emphasis on this progression validates the strategy of integrating crypto into trusted multi-asset platforms rather than expecting users to adopt crypto-first applications.

Revolut's Learn & Earn program onboarding 3 million users with hundreds of thousands joining monthly demonstrates that education significantly drives adoption when paired with financial incentives. The UK's prohibition of Learn & Earn rewards in September 2023 due to regulatory changes provides natural experiment showing education alone less effective than education plus rewards. Mazen ElJundi's emphasis that "borderless payments represent one of the most promising use cases for cryptocurrency" reflects usage patterns showing cross-border payments and remittances as actual killer apps, not NFTs or DeFi protocols.

Kalshi's user demographics skewing toward "advanced retail investors, like options traders" seeking direct event exposure reveals prediction markets attract sophisticated rather than novice crypto users. The platform's explosive growth from $13 million monthly volume in early 2025 to a single-day record of $260 million in September 2025 (driven by sports betting, particularly NFL) demonstrates how crypto infrastructure enables scaling of financial products addressing clear user demands. John Wang's characterization of the "crypto community as the definition of power users, people who live and breathe new financial markets and frontier technology" acknowledges Kalshi's target audience differs from PayPal's mainstream consumers—different platforms serving different segments of the crypto adoption curve.

Bobby Ong's analysis of meme coin behavior provides contrasting insights: "In the long run, meme coins will probably follow an extreme case of power law, where 99.99% will fail." His observation that "the launch of $TRUMP and$MELANIA marked the top for meme coins as it sucked liquidity and attention out of all the other cryptocurrencies" reveals how speculative frenzies disrupt productive adoption. Yet meme coin trading represented significant volume across these platforms, suggesting user behavior remains more speculative than infrastructure builders prefer to acknowledge. The divergence between platform strategies emphasizing utility and stablecoins versus user behavior including substantial meme coin trading reflects ongoing tension in crypto's maturation.

The web3 integration challenge reveals philosophical divergence​

The approaches these platforms take toward Web3 integration—enabling users to interact with decentralized applications, DeFi protocols, NFT marketplaces, and blockchain-based services—reveal fundamental philosophical differences despite superficial similarity in offering crypto services.

Robinhood's self-custody wallet, downloaded "hundreds of thousands of times in more than 100 countries" and supporting Ethereum, Bitcoin, Solana, Dogecoin, Arbitrum, Polygon, Optimism, and Base networks with cross-chain and gasless swaps, represents full embrace of Web3 infrastructure. The partnership with MetaMask through Robinhood Connect announced in April 2023 positions Robinhood as on-ramp to the broader Web3 ecosystem rather than walled garden. Johann Kerbrat's framing that blockchain technology will "rebuild the entire Robinhood in the EU from the ground up" suggests viewing Web3 as fundamental architecture, not adjacent feature.

PayPal's approach emphasizes utility within PayPal's ecosystem over interoperability with external Web3 applications. While PYUSD functions as standard ERC-20 token on Ethereum, SPL token on Solana, and maintains cross-chain functionality, PayPal's primary use cases—instant payments within PayPal/Venmo, merchant payments at PayPal-accepting merchants, conversion to other PayPal-supported cryptocurrencies—keep activity largely within PayPal's control. The Revolut Ramp partnership with MetaMask providing direct purchases into self-custody wallets represents more genuine Web3 integration, positioning Revolut as infrastructure provider for the open ecosystem. Mazen ElJundi's statement that "Revolut X along with our recent partnership with MetaMask, further consolidates our product offering in the world of Web3" frames integration as strategic priority.

The custody model differences crystallize the philosophical divergence. Robinhood's architecture where "once you purchase crypto on Robinhood, Robinhood believes you're the legal owner of the crypto" but Robinhood maintains custody creates tension with Web3's self-custody ethos. PayPal's custodial model where users cannot withdraw most cryptocurrencies to external wallets (except for specific tokens) prioritizes platform lock-in over user sovereignty. Revolut's model enabling crypto withdrawals of 30+ tokens to external wallets while maintaining staking and other services for platform-held crypto represents middle ground—sovereignty available but not required.

CoinGecko's role highlights infrastructure enabling Web3 without directly participating. By providing comprehensive data on DeFi protocols, DEXes, and token launches—tracking 17 million tokens across GeckoTerminal versus 18,000 more established cryptocurrencies on the main platform—CoinGecko serves Web3 developers and users without building competing products. Bobby Ong's philosophy that "anything that can be tokenized will be tokenized" embraces Web3's expansive vision while maintaining CoinGecko's focused role as neutral data provider.

The NFT integration similarly reveals varying commitment levels. Robinhood has largely avoided NFT functionality beyond basic holdings, focusing on tokenization of traditional securities instead. PayPal has not emphasized NFTs. Revolut integrated NFT data from CoinGecko in June 2023, tracking 2,000+ collections across 30+ marketplaces, though NFTs remain peripheral to Revolut's core offerings. This selective Web3 integration suggests platforms prioritize components with clear utility cases—DeFi for yield, stablecoins for payments, tokenization for securities—while avoiding speculative categories lacking obvious user demand.

The future trajectory points toward embedded finance redefined​

The strategic roadmaps these leaders articulated reveal convergent vision for crypto's role in financial services over the next 3-5 years, with blockchain infrastructure becoming invisible foundation rather than explicit product category.

Johann Kerbrat's long-term vision—"We don't really see this distinction between a crypto company and a non-crypto company. Over time, anyone who is basically moving money or anyone who's in financial services is going to be a crypto company"—articulates the endpoint where crypto infrastructure ubiquity eliminates the crypto category itself. Robinhood's stock tokenization initiative, planning to tokenize "any financial instrument in the future, not just US stocks, but anything" with instant broker transfers replacing multi-day settlement, represents this vision operationalized. The Layer-2 blockchain development built on Arbitrum technology for compliance-ready infrastructure suggests 2026-2027 timeframe for these capabilities reaching production.

PayPal's merchant strategy targeting its 20 million business customers for PYUSD integration and expansion of Pay with Crypto beyond U.S. merchants to global rollout positions the company as crypto payment infrastructure at scale. May Zabaneh's emphasis on "payment financing" or PayFi—providing working capital for SMBs with delayed receivables using stablecoin infrastructure—illustrates how blockchain rails enable financial products impractical with traditional infrastructure. CEO Alex Chriss's characterization of PayPal World as "fundamentally reimagining how money moves around the world" by connecting the world's largest digital wallets suggests interoperability across previously siloed payment networks becomes achievable through crypto standards.

Revolut's planned expansion into crypto derivatives (actively recruiting General Manager for crypto derivatives as of June 2025), stablecoin issuance to compete with PYUSD and USDC, and US market crypto service relaunch following regulatory clarity signals multi-year roadmap toward comprehensive crypto banking. Mazen ElJundi's framing of "modernizing finance" through TradFi-DeFi convergence, with Revolut contributing reliable market data to DeFi protocols via Pyth Network while maintaining regulated banking operations, illustrates the bridging role neobanks will play. The investment of $500 million over 3-5 years for US expansion demonstrates capital commitment matching strategic ambition.

Kalshi's 12-month roadmap articulated by John Wang—integration with "every major crypto app and exchange," tokenization of Kalshi positions, permissionless margin trading, and third-party front-end ecosystem—positions prediction markets as composable financial primitive rather than standalone application. Wang's vision that "any generational fintech company of this decade will be powered by crypto" reflects millennial/Gen-Z leadership's assumption that blockchain infrastructure is default rather than alternative. The platform's developer-focused strategy with grants for sophisticated data dashboards, AI agents, and arbitrage tools suggests Kalshi will function as data oracle and settlement layer for prediction market applications, not merely consumer-facing exchange.

Bobby Ong's Token 2049 presentation titled "Up Next: 1 Billion Tokens, $50 Trillion Market Cap" signals CoinGecko's forecast for explosive token proliferation and market value growth over the coming years. His prediction that "the current market cycle is characterized by intense competition among companies to accumulate crypto assets, while the next cycle could escalate to nation-state involvement" following Trump's establishment of Strategic Bitcoin Reserve suggests institutional and sovereign adoption will drive the next phase. The leadership transition positioning Ong as CEO focused on strategic execution while co-founder TM Lee pursues long-term product vision and R&D suggests CoinGecko preparing infrastructure for exponentially larger market than exists today.

Measuring success: The metrics that matter in crypto-fintech integration​

The financial performance and operational metrics these platforms disclosed reveal which strategies successfully monetize crypto integration and which remain primarily strategic investments awaiting future returns.

Robinhood's Q4 2024 crypto revenue of $358 million representing 35% of total net revenue ($1.01 billion total) and 700% year-over-year growth demonstrates crypto as material revenue driver, not experimental feature. However, Q1 2025's significant crypto revenue decline followed by Q2 2025 recovery to $160 million (still 98% year-over-year growth) reveals vulnerability to crypto market volatility. CEO Vlad Tenev's acknowledgment of need to diversify beyond crypto dependency led to Gold subscriber growth (3.5 million record), IRA matching, credit cards, and advisory services. The company's adjusted EBITDA of $1.43 billion in 2024 (up 167% year-over-year) and profitable operations demonstrate crypto integration financially sustainable when paired with diversified revenue streams.

Revolut's crypto-related wealth revenue of $647 million in 2024 (298% year-over-year growth) representing significant portion of $4 billion total revenue demonstrates similar materiality. However, crypto's contribution to the $1.4 billion pre-tax profit (149% year-over-year growth) shows crypto functioning as growth driver for profitable core business rather than sustaining unprofitable operations. The 52.5 million global users (38% year-over-year growth) and customer balances of $38 billion (66% year-over-year growth) reveal crypto integration supporting user acquisition and engagement metrics beyond direct crypto revenue. The obtainment of UK banking license in July 2024 after three-year process signals regulatory acceptance of Revolut's integrated crypto-banking model.

PayPal's PYUSD market cap oscillating between $700-894 million through 2025 after peaking at $1.012 billion in August 2024 represents less than 1% of the $229.2 billion total stablecoin market but provides strategic positioning for payments infrastructure play rather than asset accumulation. The $4.1 billion monthly transfer volume (23.84% month-over-month increase) demonstrates growing utility, while 51,942 holders suggests adoption remains early stage. The 4% annual rewards introduced April 2025 through Anchorage Digital partnership directly competes for deposit accounts, positioning PYUSD as yield-bearing cash alternative. PayPal's 432 million active users and $417 billion total payment volume in Q2 2024 (11% year-over-year growth) contextualize crypto as strategic initiative within massive existing business rather than existential transformation.

Kalshi's dramatic trajectory from $13 million monthly volume early 2025 to $260 million single-day record in September 2025, market share growth from 3.3% to 66% overtaking Polymarket, and $2 billion valuation in June 2025 Series C demonstrates prediction markets achieving product-market fit with explosive growth. The platform's 1,220% revenue growth in 2024 and total volume of $1.97 billion (up from $183 million in 2023) validates the business model. However, sustainability beyond election cycles and peak sports seasons remains unproven—August 2025 volume declined before September's NFL-driven resurgence. The 10% of deposits made with crypto suggests crypto infrastructure important but not dominant for user base, with traditional payment rails still primary.

CoinGecko's 677 billion API requests annually and enterprise customers including Consensys, Chainlink, Coinbase, Ledger, and Etherscan demonstrate successful transition from consumer-facing application to infrastructure provider. The company's funding history, including Series B and continued private ownership, suggests profitability or strong unit economics enabling infrastructure investment without quarterly earnings pressure. Bobby Ong's elevation to CEO with mandate for "strategic foresight and operational excellence" signals maturation into institutionalized enterprise rather than founder-led startup.

The verdict: Crypto becomes infrastructure, not destination​

The transformation from apps to assets fundamentally represents crypto's absorption into financial infrastructure rather than crypto's replacement of traditional finance. These five companies, collectively serving over 700 million users and processing hundreds of billions in crypto transactions annually, validated that mainstream crypto adoption occurs through familiar platforms adding crypto functionality, not through users adopting crypto-native platforms.

Johann Kerbrat's observation that "anyone who is basically moving money or anyone who's in financial services is going to be a crypto company" proved prescient—by late 2025, the distinction between fintech and crypto companies became semantic rather than substantive. Robinhood tokenizing stocks, PayPal settling merchant payments through stablecoin conversion, Revolut contributing price data to DeFi protocols, Kalshi pushing event data onchain, and CoinGecko providing oracle services to smart contracts all represent crypto infrastructure enabling traditional financial products rather than crypto products replacing traditional finance.

The stablecoin convergence exemplifies this transformation. As McKinsey forecast $2 trillion stablecoin circulation by 2028 from $250 billion in 2025, the use case clarified: stablecoins as payment rails, not stores of value. The blockchain benefits—instant settlement, 24/7 availability, programmability, lower costs—matter for infrastructure while fiat denomination maintains mainstream acceptability. May Zabaneh's articulation that stablecoins represent crypto's "killer app" by "combining the power of the blockchain with the stability of fiat currency" captured the insight that mainstream adoption requires mainstream denominations.

The regulatory breakthrough in 2024-2025 through MiCA, GENIUS Act, and federal court victories for Kalshi created the clarity all leaders identified as prerequisite for mainstream adoption. May Zabaneh's statement that "there has to be some clarity that comes out, some standards, some ideas of the dos and the don'ts" reflected universal sentiment that regulatory certainty mattered more than regulatory favorability. The companies that invested in compliance-first strategies—PayPal's full BitLicense, Robinhood's meeting with SEC 16 times, Kalshi's CFTC litigation, Revolut's UK banking license—positioned themselves to capitalize when clarity arrived.

Yet significant challenges persist. Robinhood's 35% Q4 revenue dependence on crypto followed by Q1 decline demonstrates volatility risk. Revolut's €3.5 million AML fine highlights ongoing compliance challenges. PayPal's PYUSD capturing less than 1% stablecoin market share shows incumbent advantages in crypto markets. Kalshi's sustainability beyond election cycles remains unproven. CoinGecko's challenge competing against exchange-owned data providers with deeper pockets continues. The path from 700 million accounts to mainstream ubiquity requires continued execution, regulatory navigation, and technological innovation.

The ultimate measure of success will not be crypto revenue percentages or token prices but rather crypto's invisibility—when users obtain yield on savings accounts without knowing stablecoins power them, transfer money internationally without recognizing blockchain rails, trade prediction markets without understanding smart contracts, or tokenize assets without comprehending custody architecture. John Wang's vision of prediction markets as "Trojan Horse for crypto," Mazen ElJundi's "bridge between Web2 and Web3," and Bobby Ong's philosophy that "anything that can be tokenized will be tokenized" all point toward the same endpoint: crypto infrastructure so seamlessly integrated into financial services that discussing "crypto" as separate category becomes obsolete. These five leaders, through parallel execution of convergent strategies, are building that future—one API request, one transaction, one user at a time.

Bo Hines and Cody Carbone are architecting America's transformation from crypto skeptic to global leader through stablecoin legislation, regulatory clarity, and strategic positioning that extends dollar dominance worldwide. Their complementary visions—Hines executing from the private sector after shaping White House policy, Carbone orchestrating congressional advocacy through The Digital Chamber—reveal how deliberate U.S. policy frameworks will become the template for international crypto adoption. The July 2025 passage of the GENIUS Act, which both champions helped architect, represents not just domestic regulation but a strategic play to ensure dollar-backed stablecoins become global payment infrastructure, reaching billions who currently lack access to digital dollars.

This policy revolution matters because it resolves a decade-long regulatory stalemate. From 2021-2024, unclear U.S. rules drove innovation offshore to Singapore, Dubai, and Europe. Now, with comprehensive frameworks in place, the U.S. is reclaiming leadership at precisely the moment when institutional capital is ready to deploy—71% of institutional investors plan crypto allocations, up from negligible percentages just years ago. The backstory involves Trump's January 2025 executive order establishing crypto as a national priority, the creation of David Sacks' White House Crypto Council where Hines served as executive director, and The Digital Chamber's bipartisan congressional strategy that delivered 68-30 Senate passage of stablecoin legislation.

The broader implication: this isn't just American policy reform but a geopolitical strategy. By establishing clear rules that enable private dollar-backed stablecoins while explicitly banning government-issued CBDCs, the U.S. is positioning digital dollars as the alternative to China's digital yuan and Europe's planned digital euro. Hines and Carbone both predict other nations will adopt U.S. regulatory frameworks as the global standard, accelerating worldwide crypto adoption while maintaining American financial hegemony.

Two architects of crypto's American moment​

Bo Hines, at just 30, embodies the political-to-private sector pipeline that now defines crypto leadership. After failing twice in congressional races despite Trump endorsements, he leveraged his law degree and early crypto exposure (first learning about Bitcoin at the 2014 BitPay-sponsored bowl game) into a pivotal White House role. As executive director of the Presidential Council of Advisers on Digital Assets from January to August 2025, he coordinated weekly meetings with SEC, CFTC, Treasury, Commerce, and bank regulators—approximately 200 stakeholder meetings in seven months. His fingerprints are all over the GENIUS Act, which he calls "the first piece of the puzzle" in revolutionizing America's economic state.

Within days of resigning in August 2025, Hines received "well over 50 job offers" before joining Tether as strategic advisor and then CEO of Tether USA in September 2025. This positioned him to launch USAT, the first federally-compliant U.S. stablecoin designed to meet GENIUS Act standards. His political capital—direct Trump connections, regulatory expertise, and policy-crafting experience—makes him uniquely valuable as Tether navigates the new regulatory environment while competing against Circle's established USDC dominance in U.S. markets.

Cody Carbone represents a different archetype: the patient institution-builder who spent years preparing for this moment. With a JD and MPA from Syracuse, plus six years at EY's Office of Public Policy before joining The Digital Chamber, he brings legislative and financial services expertise to crypto advocacy. His April 2025 promotion from Chief Policy Officer to CEO marked a strategic shift from defensive posture to proactive policy development. Under his leadership, The Digital Chamber—the nation's first and largest blockchain trade association with 200+ members spanning miners, exchanges, banks, and Fortune 500 companies—released the comprehensive U.S. Blockchain Roadmap in March 2025.

Carbone's approach emphasizes bipartisan consensus-building over confrontation. He downplayed Democratic opposition to stablecoin legislation, highlighting support from Senators Gillibrand and others, and maintained direct engagement with both parties throughout the process. This pragmatism proved essential: the GENIUS Act passed with 68-30 Senate support, far exceeding the simple majority needed. His stated goal is ensuring "the U.S. leads in blockchain innovation" through "clear, common-sense rules" that don't stifle development.

The stablecoin foundation for dollar dominance​

Both executives identify stablecoin legislation as the critical foundation for global crypto adoption, but they articulate complementary rationales. Hines frames it through national economic strategy: "Stablecoins could usher in U.S. dollar dominance for decades to come." His White House experience taught him that archaic payment rails—many unchanged for three decades—needed blockchain-based alternatives to maintain American competitiveness. The GENIUS Act's requirement for 1:1 backing with U.S. dollars, insured bank deposits, or Treasury bills means every stablecoin creates demand for dollar-denominated assets.

Carbone emphasizes the geopolitical dimension. In his view, if Congress wants to "compete with state-controlled digital currencies abroad, the only path is to pass the GENIUS Act and let private stablecoins thrive in the U.S." This positions dollar-backed stablecoins as America's answer to CBDCs without the government surveillance concerns. The Digital Chamber's advocacy highlighted how 98% of existing stablecoins are USD-pegged and over 80% of stablecoin transactions occur outside the U.S.—demonstrating massive untapped global demand for digital dollars.

The legislation's structure reflects careful balance between innovation and oversight. Federal oversight applies to issuers over $10 billion (targeting major players like Circle's USDC at $72 billion), while smaller issuers under $10 billion can choose state regulation if "substantially similar." Monthly public disclosures of reserve composition with executive certification ensure transparency without creating the rigid, bank-like constraints some feared. Both executives note this creates a "first-mover advantage" for U.S. regulatory frameworks that other jurisdictions will emulate.

Treasury Secretary Bessent projected the stablecoin market will exceed $1 trillion "in the next few years" from current $230+ billion levels. Hines believes this conservative: "As tokenization continues to occur, it can be much greater than that." His USAT launch targets becoming the "first federally licensed stablecoin product in the U.S." with Anchorage Digital as issuer and Cantor Fitzgerald as custodian—partnerships that leverage both regulatory compliance and political capital (Cantor's CEO Howard Lutnick serves as Trump's Commerce Secretary).

Carbone sees the institutional adoption pathway clearly. The Digital Chamber's surveys show 84% of institutions are using or considering stablecoins for yield generation (73%), foreign exchange (69%), and cash management (68%). The GENIUS Act removes the regulatory uncertainty that previously blocked deployment of this capital. "For the first time, we have a government that recognizes the strategic importance of digital assets," he stated when promoted to CEO.

Regulatory clarity as the unlock for institutional capital​

Both executives emphasize that regulatory uncertainty—not technology limitations—was crypto's primary barrier to mainstream adoption. Hines describes the Biden era as requiring "demolition" of hostile regulations before "construction" of new frameworks could begin. His three-phase White House strategy started with reversing "Operation Chokepoint 2.0" enforcement patterns, dropping SEC lawsuits against Coinbase and Ripple, and hosting the first White House Crypto Summit in March 2025. The construction phase centered on the GENIUS Act and market structure legislation, with implementation focusing on integrating blockchain into financial infrastructure.

The specific regulatory changes both champions highlight reveal what institutional players needed. The January 2025 rescission of SAB 121—which required banks to hold custodied digital assets on their balance sheets—was critical. Carbone called it "low hanging fruit that signaled an immediate shift from the Biden/Gensler era and greenlit financial institutions to enter the market." This enabled BNY Mellon, State Street, and other traditional custodians to offer crypto services without prohibitive capital requirements. The result: 43% of financial institutions now collaborate with crypto custodians, up from 25% in 2021.

Carbone's policy advocacy through The Digital Chamber focused on creating "clear jurisdictional lines between the SEC and CFTC so issuers can plan for clarity who their regulator is." The FIT21 market structure bill, which passed the House 279-136 in May 2024, establishes three asset categories: Restricted Digital Assets under SEC jurisdiction, Digital Commodities under CFTC oversight, and Permitted Payment Stablecoins. A five-step decentralization test determines commodity classification. Senate passage is expected in 2025 following GENIUS Act momentum.

Hines coordinated the interagency process that made this jurisdictional clarity possible. His weekly working group meetings brought together SEC, CFTC, Treasury, Commerce, and bank regulators to ensure "everyone is singing from the same sheet of music." This unprecedented coordination—culminating in the first joint SEC-CFTC roundtable in 14 years (October 2025) and joint staff statements on spot crypto trading—ended the regulatory turf wars that previously paralyzed the industry.

The institutional response validates their thesis. A 2025 EY survey found 71% of institutional investors are invested or planning investment in digital assets, with 59% planning to allocate more than 5% of AUM—an 83% increase. Primary driver cited: regulatory clarity at 57%. Spot Bitcoin ETFs approved in January 2024 accumulated ~$60 billion in AUM by early 2025, demonstrating pent-up institutional demand. Major players like BlackRock, Fidelity, and ARK now offer crypto products, while JPMorgan CEO Jamie Dimon—previously crypto-skeptical—now permits Bitcoin purchases and considers crypto-backed loans.

Strategic Bitcoin Reserve and digital gold narrative​

Both executives strongly support the Strategic Bitcoin Reserve established by Trump's March 6, 2025 executive order, though they emphasize different strategic rationales. Hines articulates the "digital gold" framing: "We view bitcoin as digital gold. We want as much of it as we can possibly have for the American people." When pressed on target amounts, he offered: "That's like asking a country how much gold do you want, right? As much as we can get."

His budget-neutral approach addresses fiscal concerns. Creative mechanisms under White House consideration included revaluing U.S. gold holdings from the statutory $42.22 per ounce to current market levels around $3,400, generating paper profits usable for Bitcoin purchases. Other options: monetizing government-held energy assets, conducting mining operations on federal land, and utilizing the approximately 198,012 BTC already seized from criminal cases. "It's not going to cost the taxpayer a dime," Hines emphasized repeatedly, knowing congressional appetite for new expenditures is limited.

Carbone frames the reserve through competitive lens. He notes premature sales have cost U.S. taxpayers over $17 billion as Bitcoin appreciated after government auctions. No clear policy previously existed for managing seized crypto assets across federal agencies. The reserve establishes a "no-sell" protocol that prevents future opportunity losses while positioning the U.S. among the first sovereign nations to treat Bitcoin as strategic reserve asset—similar to gold, foreign currencies, or special drawing rights.

The global implications extend beyond direct holdings. As Carbone explains, establishing a Strategic Bitcoin Reserve sends powerful signal to other nations that Bitcoin deserves consideration as reserve asset. The Digital Chamber's U.S. Blockchain Roadmap advocates for enactment of the BITCOIN Act to codify this reserve legislatively, ensuring future administrations cannot easily reverse the policy. This permanence would accelerate international central bank accumulation, potentially driving Bitcoin into traditional reserve asset frameworks alongside the dollar itself.

Neither executive sees contradiction between promoting dollar-backed stablecoins and accumulating Bitcoin. Hines explains they serve different functions: stablecoins as payment rails extending dollar utility, Bitcoin as store-of-value reserve asset. The complementary strategy strengthens U.S. financial hegemony through both medium of exchange dominance (stablecoins) and reserve asset diversification (Bitcoin)—covering multiple dimensions of monetary leadership.

Cross-border payments transformation​

Hines envisions stablecoins revolutionizing cross-border payments by eliminating intermediaries and reducing costs. His focus on "updating the payment rails that existed, many of which were archaic" reflects frustration with systems fundamentally unchanged since the 1970s. Traditional correspondent banking networks involve multiple intermediaries, 2-5 day settlement times, and fees reaching 5-7% for remittances. Stablecoins enable 24/7/365 near-instantaneous settlement at fractional costs.

The existing market demonstrates this potential. Tether's USDT processes over $1 trillion monthly volume—exceeding major credit card companies—and serves nearly 500 million users globally. USDT is particularly popular in emerging markets with high banking fees and currency instability, serving "hundreds of millions of underserved people living in emerging markets" who use it for savings, payments, and business operations. This real-world adoption in Latin America, Sub-Saharan Africa, and Southeast Asia proves demand for dollar-denominated digital payment tools.

Carbone emphasizes how GENIUS Act compliance transforms this from gray-market activity into legitimate financial infrastructure. Requiring AML/CFT compliance, reserve transparency, and regulatory oversight addresses the "wild west" concerns that previously prevented institutional and government embrace. Banks can now integrate stablecoins into treasury operations knowing they meet regulatory standards. Corporations can use them for international payroll, vendor payments, and supply chain finance without compliance risk.

The geopolitical dimension is explicit in both executives' thinking. Every stablecoin transaction, regardless of where it occurs globally, reinforces dollar utility and demand for Treasury bills held as reserves. This extends American monetary influence to populations and regions historically beyond the dollar's reach. As Carbone puts it, if Congress wants to "compete with state-controlled digital currencies abroad," enabling private dollar stablecoins is essential. The alternative—China's digital yuan facilitating yuan-denominated trade outside dollar rails—poses direct threat to American financial hegemony.

Market data supports the cross-border narrative. Sub-Saharan Africa and Latin America show high year-over-year growth in retail stablecoin transfers, while North America and Western Europe dominate institutional-sized transfers. Lower-income countries use stablecoins for actual payments (remittances, business transactions), while developed markets use them for financial operations (trading, treasury management, yield generation). This bifurcated adoption pattern suggests stablecoins serve multiple global needs simultaneously.

How U.S. policy becomes the global template​

Both executives explicitly predict international regulatory convergence around U.S. frameworks. At Token 2049 Singapore in September 2025, Hines stated: "You'll start to see other regulatory frameworks around the world start to match what we did." He emphasized "the US is the powerhouse in the stablecoin space" and urged other countries including South Korea to "follow what the US has laid out." His confidence stems from first-mover advantage in comprehensive regulation—the GENIUS Act is the first major economy's complete stablecoin framework.

The mechanism for this global influence operates through multiple channels. Article 18 of the GENIUS Act includes a reciprocity clause allowing foreign stablecoin issuers to operate in U.S. markets if their home jurisdictions maintain "substantially similar" regulatory frameworks. This creates strong incentive for other countries to align their regulations with U.S. standards to enable their stablecoin issuers to access massive American markets. The Eurozone's MiCA regulation, while more prescriptive and bank-like, represents similar thinking—comprehensive frameworks that provide legal certainty.

Carbone sees U.S. regulatory clarity attracting global capital flows. The U.S. already represents 26% of global cryptocurrency transaction activity with $2.3 trillion in value from July 2024-June 2025. North America leads in high-value activity with 45% of transactions over $10 million—the institutional segment most sensitive to regulatory environment. By providing clear rules while other jurisdictions remain uncertain or overly restrictive, the U.S. captures capital that might otherwise deploy elsewhere.

The competitive dynamics between jurisdictions validate this thesis. From 2021-2024, unclear U.S. regulations drove companies to Singapore, UAE, and Europe for regulatory certainty. Exchanges, custody providers, and blockchain companies established offshore operations. The 2025 policy shift is reversing this trend. Ripple's CEO Brad Garlinghouse noted "more U.S. deals in 6 weeks post-election than previous 6 months." Binance, Coinbase, and Kraken are expanding U.S. operations. The talent and capital that left is returning.

Hines articulates the long-term vision at Token 2049: establishing U.S. leadership in crypto means "ensuring that the dollar not only remains dominant in the digital age, but thrives." With 98% of stablecoins USD-pegged and over 80% of transactions occurring abroad, clear U.S. regulation proliferates digital dollars globally. Countries wanting to participate in this financial infrastructure—whether for remittances, trade, or financial services—must engage with dollar-based systems. The network effects become self-reinforcing as more users, businesses, and institutions adopt dollar stablecoins as standard.

Institutional adoption pathways now open​

The regulatory clarity both executives championed removes specific barriers that prevented institutional deployment. Hines identifies the target audience for USAT explicitly: "businesses and institutions operating under U.S. regulatory framework." These entities—pension funds, endowments, corporate treasuries, asset managers—previously faced compliance uncertainty. Legal departments couldn't approve crypto allocations without clear regulatory treatment. The GENIUS Act, FIT21 market structure frameworks, and SAB 122 custody rules resolve this.

Carbone's Digital Chamber surveys quantify the opportunity. 71% of institutional investors are invested or planning investment in digital assets, with 85% having already allocated or planning allocation. The use cases extend beyond speculation: 73% cite yield generation, 69% foreign exchange, 68% cash management. These operational uses require regulatory certainty. A CFO can't put corporate treasury into stablecoins for yield without knowing the legal status, custody requirements, and accounting treatment.

Specific institutional developments both executives highlight demonstrate momentum. Spot Bitcoin ETFs accumulating ~$60 billion in AUM by early 2025 prove institutional demand exists. Traditional custodians like BNY Mellon ($2.1 billion digital AUM) and State Street entering crypto custody validates the infrastructure. JPMorgan conducting blockchain-based repo transactions and tokenized Treasury settlement on public ledgers shows major banks experimenting with integration. Visa and Mastercard supporting 75+ banks via blockchain networks and moving USDC onto Solana indicate payment giants embrace the technology.

The tokenized real-world assets (RWAs) segment particularly excites both executives as institutional bridge. U.S. Treasury tokenization grew from ~$2 billion to over $8 billion AUM between August 2024 and August 2025. These products—tokenized Treasury bills and bonds—combine blockchain infrastructure with familiar sovereign debt instruments. They offer 24/7 trading, instant settlement, transparent pricing, and programmability while maintaining the safety profile institutions require. This provides onramp for traditional finance to adopt blockchain infrastructure for core operations.

Hines predicts rapid acceleration: "You're going to see tokenized public securities start to happen very quickly... you're going to see market efficiency, you're going to see commodity exchange efficiency. Everything moves onchain." His timeline envisions 24/7 markets with instant settlement becoming standard within years, not decades. The CFTC's September 2025 initiative seeking input on tokenized collateral and stablecoins as derivatives margin demonstrates regulators are preparing for this future rather than blocking it.

Political economy of crypto's Washington victory​

The crypto industry's 2024 political strategy, which both executives benefited from, reveals how targeted advocacy secured policy wins. The sector spent over $100 million on congressional races through Super PACs like Fairshake, which supported pro-crypto candidates in both parties. This bipartisan approach, championed by Carbone's Digital Chamber, proved essential. The GENIUS Act passed with 68-30 Senate support including Democrats like Gillibrand and Alsobrooks. FIT21 secured 71 Democratic House votes alongside Republican support.

Carbone emphasizes this bipartisan consensus as critical for durability. Single-party legislation gets repealed when power shifts. Broad support across the political spectrum—reflecting crypto's appeal to both tech-friendly progressives and market-oriented conservatives—provides staying power. His strategy of "building bipartisan coalitions" through education rather than confrontation avoided the polarization that killed previous legislative efforts. Meeting with policy organizations that interact with Democratic members ensured the message reached both sides.

Hines' White House tenure institutionalized crypto within executive branch. The Presidential Council of Advisers on Digital Assets, chaired by David Sacks, gave industry direct line to administration. The July 2025 Working Group report—"the most comprehensive report that's ever been produced, in terms of regulatory framework"—involving SEC, CFTC, Treasury, Commerce, and bank regulators, established coordinated federal approach. This interagency alignment means regulatory agencies "have some autonomy to act independently without constantly needing an executive order."

The personnel dimension matters enormously. Trump appointed crypto advocates to key positions: Paul Atkins (former Digital Chamber board advisor) as SEC Chair, Caroline D. Pham as CFTC Acting Chair, Brian Quintenz as CFTC Chair nominee. Hines notes these individuals "understand the technology" and are "very business-friendly." Their regulatory philosophy emphasizes clear rules enabling innovation rather than enforcement actions blocking development. The contrast with Gary Gensler's SEC—125 enforcement actions totaling $6.05 billion in penalties—couldn't be starker.

Both executives acknowledge expectations are now "sky-high." Carbone describes the atmosphere as "chaotic energy with all-time high vibes and optimism" but cautions "we haven't gotten much done yet" beyond executive actions and the GENIUS Act. Market structure legislation, DeFi frameworks, taxation clarity, and banking integration all remain works in progress. The industry built a "heftier war chest" for future political engagement, recognizing that maintaining favorable policy requires sustained effort beyond single election cycle.

DeFi and decentralization challenges​

Decentralized finance presents regulatory challenges both executives address carefully. Hines strongly supports DeFi innovation, stating the administration intends to ensure DeFi projects "stay in the U.S." and that "DeFi has a secure place." However, he balances this with acknowledgment that some compliance is necessary. The Treasury's decision to drop Tornado Cash sanctions and forthcoming DOJ guidance on "software neutrality" suggest frameworks that protect protocol developers while targeting malicious users.

Carbone celebrated the Congressional Review Act resolution rolling back the Biden-administration IRS rule treating DeFi projects as brokerages, calling it "a good day for DeFi." This rule would have required decentralized protocols to collect user information for tax reporting—practically impossible for truly decentralized systems and potentially forcing them offshore or shuttering. Its reversal signals regulatory approach that accommodates DeFi's unique technical architecture.

The FIT21 market structure bill includes DeFi safe harbor provisions attempting to balance innovation and oversight. The challenge both executives recognize: how to prevent illicit activity without undermining the censorship-resistant, permissionless properties that make DeFi valuable. Their approach appears to be enforcing against bad actors while protecting neutral protocols—similar to not holding broadband providers liable for user actions while prosecuting criminals who use internet infrastructure.

This represents sophisticated evolution from blanket skepticism to nuanced understanding. Early regulatory responses treated all DeFi as high-risk or potentially illegal. Both Hines and Carbone recognize legitimate use cases: automated market makers providing efficient trading, lending protocols offering permissionless credit, decentralized exchanges enabling peer-to-peer transactions. The question becomes implementing AML/CFT requirements without centralization mandates that destroy DeFi's core value proposition.

Banking system modernization through blockchain​

Both executives view blockchain integration into banking as inevitable and beneficial. Hines emphasizes "we're talking about revolutionizing a financial marketplace which has basically been archaic for the last three decades." The correspondent banking system, ACH transfers taking days, and settlement delays costing trillions in locked capital all represent inefficiencies blockchain eliminates. His vision extends beyond crypto-native companies to transforming traditional banking infrastructure through distributed ledger technology.

The Digital Chamber's U.S. Blockchain Roadmap advocates for "modernizing the U.S. banking system" as one of six core pillars. Carbone notes "many companies are hesitant to adopt blockchain technology due to the confusion between blockchain and crypto in policymaking circles." His educational mission distinguishes between cryptocurrency speculation and blockchain infrastructure applications. Banks can use blockchain for settlement, record-keeping, and automated compliance without exposing customers to volatile crypto assets.

Concrete developments demonstrate this integration beginning. JPMorgan's blockchain-based repo transactions settle same-day rather than next-day, reducing counterparty risk. Tokenized Treasury bills trade 24/7 rather than during exchange hours. Digital bond issuances on public ledgers provide transparent, immutable records reducing administrative costs. These applications deliver clear operational benefits—faster settlement, lower costs, better transparency—without requiring banks to fundamentally change their risk models or customer relationships.

The SAB 122 rescission removing balance sheet barriers was critical enabler both executives highlight. Requiring banks to hold custodied crypto assets as liabilities artificially inflated capital requirements, making custody economically unviable. Its reversal allows banks to offer custody services with appropriate risk management rather than prohibitive capital charges. This opened flood gates for traditional financial institutions to enter digital asset services, competing with crypto-native custodians while bringing regulatory sophistication and institutional trust.

The Federal Reserve master account process remains area needing reform, per the U.S. Blockchain Roadmap. Crypto firms and blockchain-based banks struggle to obtain direct Fed access, forcing reliance on intermediary banks that can "de-bank" them arbitrarily. Carbone and The Digital Chamber advocate for transparent, fair criteria enabling crypto firms meeting regulatory standards to access Fed services directly. This would complete the integration of blockchain-based finance into official banking infrastructure rather than treating it as peripheral.

Energy security through Bitcoin mining​

Hines and Carbone both emphasize Bitcoin mining as strategic infrastructure beyond financial considerations. The U.S. Blockchain Roadmap—which Carbone oversees—declares "Bitcoin mining is a critical pillar of U.S. energy security and technological leadership." The argument: mining operations can monetize stranded energy, provide grid flexibility, and reduce reliance on foreign-controlled digital infrastructure.

Bitcoin mining's unique properties enable using energy that otherwise goes to waste. Natural gas flaring at oil wells, curtailed renewable energy when supply exceeds demand, and off-peak nuclear generation all become monetizable through mining. This provides economic incentive to develop energy resources that lack transmission infrastructure or steady demand. Mining companies increasingly partner with energy producers to capture this otherwise-wasted capacity, effectively functioning as controllable load that improves project economics.

Grid stability represents another strategic dimension. Mining operations can shut down instantly when electricity demand spikes, providing flexible load that helps balance supply and demand. Texas grid operator ERCOT has tested programs using miners as demand response resources during peak consumption. This flexibility becomes increasingly valuable as renewable energy—which is intermittent—comprises larger grid share. Miners essentially act as energy buyers of last resort, supporting renewable development by ensuring consistent demand.

The competitive and national security argument resonates particularly with policymakers. Currently, China and Central Asia host significant mining operations despite China's official ban. If adversarial nations control Bitcoin mining, they could potentially influence the network or monitor transactions. U.S.-based mining—supported by clear regulations and cheap domestic energy—ensures American participation in this strategic digital infrastructure. It also provides intelligence community means to monitor blockchain activity and enforce sanctions through collaboration with domestic mining pools.

Both executives support "clear, consistent regulations for mining operations" that enable growth while addressing environmental concerns. The Biden-era proposals for 30% excise tax on mining electricity consumption have been abandoned. Instead, the approach focuses on requiring grid connectivity, environmental reporting, and energy efficiency standards while avoiding punitive taxation that would drive mining offshore. This reflects broader philosophy: shape industry development through smart regulation rather than attempting to ban or heavily tax it.

The "everything moves onchain" thesis​

Hines' long-term prediction that "everything moves onchain"—tokenized securities, commodity trading, market infrastructure—reflects both executives' belief that blockchain becomes the backbone of future finance. This vision extends far beyond cryptocurrency speculation to fundamentally reimagining how value transfers, assets are represented, and markets operate. The transition from today's hybrid systems to fully blockchain-based infrastructure will unfold over years but is in their view inevitable.

Tokenized securities offer compelling advantages both executives cite. 24/7 trading instead of exchange hours, instant settlement rather than T+2, fractional ownership enabling smaller investments, and programmable compliance embedded in smart contracts. A tokenized stock could automatically enforce transfer restrictions, distribute dividends, and maintain shareholder registries without intermediaries. This reduces costs, increases accessibility, and enables innovations like dynamic ownership structures adjusting based on real-time data.

Derivatives and commodity markets benefit similarly from blockchain infrastructure. The CFTC's September 2025 initiative exploring tokenized collateral and stablecoins as derivatives margin demonstrates regulatory readiness. Using stablecoins for futures margin eliminates settlement risk and enables instant margin calls rather than daily processes. Tokenized gold, oil, or agricultural commodities could trade continuously with instant physical delivery coordination. These efficiency gains compound across the financial system's trillions in daily transactions.

Carbone emphasizes blockchain's applications beyond finance prove the technology's broader value. Supply chain tracking provides immutable records of product provenance—critical for pharmaceuticals, luxury goods, and food safety. Government operations could use blockchain for transparent fiscal oversight, reducing fraud and improving accountability. Cybersecurity applications include decentralized identity systems reducing single points of failure. These uses demonstrate blockchain's utility extends far beyond payments and trading.

The skeptical question—why do established financial institutions need blockchain when current systems work?—both executives answer with efficiency and access arguments. Yes, current systems work, but they're expensive, slow, and exclude billions globally. Blockchain reduces intermediaries (each taking fees), operates 24/7 (vs. business hours), settles instantly (vs. days), and requires only internet access (vs. bank relationships and minimum balances). These improvements matter to both underserved populations in emerging markets and sophisticated institutions seeking operational efficiency.

The anti-CBDC consensus as strategic decision​

Both executives strongly oppose central bank digital currencies while championing private stablecoins—a position now enshrined in U.S. policy through Trump's executive order banning federal CBDC development. Hines states explicitly: "The federal government will never issue a stablecoin and firmly opposes anything resembling a central bank digital currency." He frames private stablecoins as "effectively accomplish[ing] the same goal without government overreach."

The philosophical distinction matters enormously for global crypto adoption. CBDCs give governments programmable, surveillable money enabling unprecedented control. The People's Bank of China's digital yuan trials demonstrate the model: direct central bank accounts for citizens, transaction monitoring, and potential for controls like expiration dates or location-based spending restrictions. Over 130 countries are exploring CBDCs following this template. The U.S. choosing a different path—enabling private stablecoins instead—represents fundamental ideological and strategic divergence.

Carbone argues this private-sector approach better aligns with American values and economic system. "If Congress wants to ban a CBDC and compete with state-controlled digital currencies abroad, the only path is to pass the GENIUS Act and let private stablecoins thrive in the U.S." This frames dollar stablecoins as the democratic answer to authoritarian CBDCs—maintaining privacy, innovation, and competition while still enabling digital payments and extending dollar reach.

The global implications extend beyond technology choice to competing visions of digital financial systems. If the U.S. successfully demonstrates that private stablecoins can deliver the efficiency and accessibility benefits of digital currency without centralized control, other democracies may follow. If U.S. dollar stablecoins become dominant international payment rails, China's digital yuan loses strategic opportunity to displace dollar in global trade. The competition isn't just currencies but governing philosophies embedded in monetary infrastructure.

Both executives emphasize that stablecoin success depends on regulatory frameworks that enable private innovation. The GENIUS Act's requirements—full reserves, transparency, AML/CFT compliance—provide oversight without nationalization. Banks, fintech companies, and blockchain projects can compete to offer best products rather than government monopoly. This preserves innovation incentives while maintaining financial stability. The model more resembles how private banks issue deposits backed by FDIC insurance rather than government fiat.

Complementary visions from different vantage points​

The synthesis of Hines' and Carbone's perspectives reveals how private-sector execution and policy advocacy reinforce each other in driving crypto adoption. Hines embodies the revolving door between government and industry—bringing policy expertise to Tether while his White House connections provide ongoing access and intelligence. Carbone represents sustained institutional advocacy—The Digital Chamber's decade-plus work building coalitions and educating lawmakers created foundation for current policy momentum.

Their different vantage points generate complementary insights. Hines speaks from operational experience launching USAT, competing in markets, and navigating actual compliance requirements. His perspectives carry practitioner authenticity—he must live with the regulations he helped create. Carbone operates at meta-level, coordinating 200+ member companies with diverse needs and maintaining relationships across political spectrum. His focus on durable bipartisan consensus and long-term frameworks reflects institutional timeframes rather than product launch pressures.

Both executives' emphasis on education over confrontation marks departure from crypto's earlier libertarian, anti-establishment ethos. Hines spent seven months in ~200 stakeholder meetings explaining blockchain benefits to skeptical regulators. Carbone emphasizes that "so many lawmakers and policymakers don't understand the use cases of blockchain technology" despite years of advocacy. Their patient, pedagogical approach—treating regulators as partners to educate rather than adversaries to defeat—proved more effective than confrontational strategies.

The age dimension adds interesting dynamic. Hines at 30 represents first generation of policymakers who encountered crypto during formative years (his 2014 Bitcoin bowl exposure) rather than viewing it as alien technology. His comfort with both digital assets and traditional policy processes—law degree, congressional campaigns, White House service—bridges two worlds that previously struggled to communicate. Carbone, with more extensive traditional finance and government experience, brings institutional credibility and relationships that opened doors for newer crypto perspectives.

Their predictions for how U.S. policy accelerates global adoption ultimately rest on network effects thesis. As Hines frames it, regulatory clarity attracts institutional capital, which builds infrastructure, which enables applications, which attract users, which increase adoption, which brings more capital—a virtuous cycle. The U.S. providing first-mover clarity in world's largest financial market means this cycle initiates onshore with dollar-denominated products. Other jurisdictions then face choice: adopt compatible regulations to participate in this growing network, or isolate themselves from largest digital asset market.

Novel insights about the path forward​

The most striking revelation from synthesizing these perspectives is how policy clarity itself functions as competitive technology. Both executives describe American companies and capital fleeing to Singapore, UAE, and Europe during 2021-2024 regulatory uncertainty. The 2025 policy shift isn't primarily about specific rule changes but about ending existential uncertainty. When companies can't determine if their business model is legal or if regulators will shut them down via enforcement, they cannot plan, invest, or grow. Clarity—even with imperfect rules—enables development that uncertainty prevents.

This suggests the global crypto adoption race isn't won by most permissive regulations but by clearest frameworks. Singapore's success attracting blockchain companies stemmed from transparent licensing requirements and responsive regulators more than lax rules. The EU's MiCA regulation, while more prescriptive than U.S. approach, provides comprehensive certainty. Both executives predict American hybrid model—comprehensive federal frameworks (GENIUS Act) with state innovation (smaller stablecoin issuers)—strikes optimal balance between oversight and experimentation.

The stablecoin-as-geopolitical-strategy dimension reveals sophisticated thinking about digital currency competition. Rather than racing to create U.S. government CBDC to compete with China's digital yuan, U.S. strategy leverages private innovation while maintaining dollar dominance. Every private stablecoin becomes dollar proliferation vehicle requiring no government infrastructure investment or ongoing operational costs. The regulatory framework just enables private companies to do what they would attempt anyway, but safely and at scale. This approach plays to American strengths—innovative private sector, deep capital markets, strong rule of law—rather than attempting centralized technological feat.

The timing dimension both executives emphasize deserves attention. The confluence of technological maturity (blockchain scalability improvements), institutional readiness (71% planning allocations), political alignment (pro-crypto administration), and regulatory clarity (GENIUS Act passage) creates unique window. Hines' comment that the administration "moves at tech speed" reflects understanding that policy delays of even 1-2 years could surrender opportunities to faster-moving jurisdictions. The urgency both express isn't manufactured—it reflects recognition that global standards are being set now, and absent U.S. leadership, other powers will shape the frameworks.

Perhaps most significantly, both executives articulate vision where crypto adoption becomes largely invisible as technology gets embedded in infrastructure. The end state Hines describes—tokenized securities trading 24/7, commodity exchanges on blockchain, instant settlement as default—doesn't look like "crypto" in today's sense of speculative digital assets. It looks like normal financial operations that happen to use blockchain backend infrastructure. Carbone's emphasis on distinguishing blockchain technology from cryptocurrency speculation serves this vision: making blockchain adoption about modernization and efficiency rather than ideological cryptocurrency embrace.

The path forward both executives outline faces implementation challenges they acknowledge but downplay. Legislative consensus on stablecoins proves easier than market structure details where SEC-CFTC jurisdictional battles persist. DeFi frameworks remain conceptual more than operational. International coordination on standards requires diplomacy beyond U.S. unilateral action. Banking system integration faces cultural and technological inertia. But both express confidence these obstacles are surmountable with sustained focus—and that rivals face same challenges without America's advantages in capital, technology, and institutional development.

Their complementary work—Hines building products within new regulatory frameworks, Carbone advocating for continued policy improvements—suggests this is marathon not sprint. The July 2025 GENIUS Act passage marks inflection point, not conclusion. Both emphasize expectations are "sky-high" but caution much work remains. The success of their shared vision depends on translating policy clarity into actual adoption: institutional capital deploying, traditional banks offering services, global users adopting dollar stablecoins, and infrastructure proving reliable at scale. The next 2-3 years will reveal whether American regulatory frameworks actually do become template others follow, or if competing approaches from EU, Asia, or elsewhere prove more attractive.

What's certain is that U.S. crypto policy has fundamentally transformed from hostile to enabling in remarkably short time—18 months from peak enforcement to comprehensive legislation. Bo Hines and Cody Carbone, from their respective positions orchestrating this transformation, offer rare insight into both the deliberate strategy behind the shift and ambitious vision for how it accelerates global adoption. Their playbook—regulatory clarity over ambiguity, private stablecoins over government CBDCs, institutional integration over parallel systems, and bipartisan consensus over partisan battles—represents calculation that American competitive advantages lie in enabling innovation within frameworks rather than attempting to control or suppress technologies that will develop regardless. If they're right, the next decade sees blockchain become invisible infrastructure powering global finance, with dollar-denominated stablecoins serving as rails reaching billions currently beyond traditional banking access.

U.S. stablecoins just graduated from a legal gray area to a federally regulated payments instrument. The new GENIUS Act establishes a comprehensive rulebook for issuing, backing, redeeming, and supervising USD-pegged stablecoins. This newfound clarity doesn’t stifle innovation—it standardizes the core assumptions that developers and businesses can safely build upon, unlocking the next wave of financial infrastructure.

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What the Law Locks In​

The Act creates a stable foundation by codifying several non-negotiable principles for payment stablecoins.

• Full-Reserve, Cash-Like Design: Issuers must maintain 1:1 identifiable reserves in highly liquid assets, such as cash, demand deposits, short-dated U.S. Treasuries, and government money market funds. They are required to publish the composition of these reserves on their website monthly. Crucially, rehypothecation—lending out or reusing customer assets—is strictly prohibited.
• Disciplined Redemption: Issuers must publish a clear redemption policy and disclose all associated fees. The ability to halt redemptions is removed from the issuer’s discretion; limits can only be imposed when ordered by regulators under extraordinary circumstances.
• Rigorous Supervision and Reporting: Monthly reserve reports must be examined by a PCAOB-registered public accounting firm, with the CEO and CFO personally certifying their accuracy. Compliance with Anti-Money Laundering (AML) and sanctions rules is now an explicit requirement.
• Clear Licensing Paths: The Act defines who can issue stablecoins. The framework includes bank subsidiaries, federally licensed nonbank issuers supervised by the OCC, and state-qualified issuers under a $10 billion threshold, above which federal oversight generally applies.
• Securities and Commodities Clarity: In a landmark move, a compliant payment stablecoin is explicitly defined as not being a security, commodity, or a share in an investment company. This resolves years of ambiguity and provides a clear path for custody providers, brokers, and market infrastructure.
• Consumer Protection in Failure: Should an issuer fail, stablecoin holders are granted first-priority access to the required reserves. The law directs courts to begin distributing these funds quickly, protecting end-users.
• Self-Custody and P2P Carve-Outs: The Act acknowledges the nature of blockchains by explicitly protecting direct, lawful peer-to-peer transfers and the use of self-custody wallets from certain restrictions.
• Standards and Timelines: Regulators have approximately one year to issue implementing rules and are empowered to set interoperability standards. Builders should anticipate forthcoming API and specification updates.

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The “No-Interest” Rule and the Rewards Debate​

A key provision in the GENIUS Act bars issuers from paying any form of interest or yield to holders simply for holding the stablecoin. This cements the product’s identity as digital cash, not a deposit substitute.

However, a potential loophole has been widely discussed. While the statute restricts issuers, it doesn’t directly block exchanges, affiliates, or other third parties from offering "rewards" programs that function like interest. Banking associations are already lobbying for this gap to be closed. This is an area where builders should expect further rulemaking or legislative clarification.

Globally, the regulatory landscape is varied but trending toward stricter rules. The EU’s MiCA framework, for instance, prohibits both issuers and service providers from paying interest on certain stablecoins. Hong Kong has also launched a licensing regime with similar considerations. For those building cross-border solutions, designing for the strictest venue from the start is the most resilient strategy.

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Why This Unlocks New Markets for Blockchain Infrastructure​

With a clear regulatory perimeter, the focus shifts from speculation to utility. This opens up a greenfield opportunity for building the picks-and-shovels infrastructure that a mature stablecoin ecosystem requires.

• Proof-of-Reserves as a Data Product: Transform mandatory monthly disclosures into real-time, on-chain attestations. Build dashboards, oracles, and parsers that provide alerts on reserve composition, tenor, and concentration drift, feeding directly into institutional compliance systems.
• Redemption-SLA Orchestration: Create services that abstract away the complexity of ACH, FedNow, and wire rails. Offer a unified "redeem at par" coordinator with transparent fee structures, queue management, and incident workflows that meet regulatory expectations for timely redemption.
• Compliance-as-Code Toolkits: Ship embeddable software modules for BSA/AML/KYC, sanctions screening, Travel Rule payloads, and suspicious activity reporting. These toolkits can come pre-mapped to the specific controls required by the GENIUS Act.
• Programmable Allowlists: Develop policy-driven allow/deny logic that can be deployed at RPC gateways, custody layers, or within smart contracts. This logic can be enforced across different blockchains and provide a clear audit trail for regulators.
• Stablecoin Risk Analytics: Build sophisticated tools for wallet and entity heuristics, transaction classification, and de-peg stress monitoring. Offer circuit-breaker recommendations that issuers and exchanges can integrate into their core engines.
• Interoperability and Bridge Policy Layers: With the Act encouraging interoperability standards, there is a clear need for policy-aware bridges that can propagate compliance metadata and redemption guarantees across Layer-1 and Layer-2 networks.
• Bank-Grade Issuance Stacks: Provide the tooling for banks and credit unions to run their own issuance, reserve operations, and custody within their existing control frameworks, complete with regulatory capital and risk reporting.
• Merchant Acceptance Kits: Develop SDKs for point-of-sale systems, payout APIs, and accounting plugins that deliver a card-network-like developer experience for stablecoin payments, including fee management and reconciliation.
• Failure-Mode Automation: Since holder claims have statutory priority in an insolvency, create resolution playbooks and automated tools that can snapshot holder balances, generate claim files, and orchestrate reserve distributions if an issuer fails.

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Architecture Patterns That Will Win​

• Event-Sourced Compliance Plane: Stream every transfer, KYC update, and reserve change to an immutable log. This allows for the compilation of explainable, auditable reports for both bank and state supervisors on demand.
• Policy-Aware RPC and Indexers: Enforce rules at the infrastructure level (RPC gateways, indexers), not just within applications. Instrumenting this layer with policy IDs makes auditing straightforward and comprehensive.
• Attestation Pipelines: Treat reserve reports like financial statements. Build pipelines that ingest, validate, attest, and notarize reserve data on-chain. Expose this verified data via a simple /reserves API for wallets, exchanges, and auditors.
• Multi-Venue Redemption Router: Orchestrate redemptions across multiple bank accounts, payment rails, and custodians using best-execution logic that optimizes for speed, cost, and counterparty risk.

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Open Questions to Track (and How to De-Risk Now)​

• Rewards vs. Interest: Expect further guidance on what affiliates and exchanges can offer. Until then, design rewards to be non-balance-linked and non-duration-based. Use feature flags for anything that resembles yield.
• Federal–State Split at $10B Outstanding: Issuers approaching this threshold will need to plan their transition to federal oversight. The smart play is to build your compliance stack to federal standards from day one to avoid costly rewrites.
• Rulemaking Timeline and Spec Drift: The next 12 months will see evolving drafts of the final rules. Budget for schema changes in your APIs and attestations, and seek early alignment with regulatory expectations.

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A Practical Builder’s Checklist​

1. Map your product to the statute: Identify which GENIUS Act obligations directly impact your service, whether it’s issuance, custody, payments, or analytics.
2. Instrument transparency: Produce machine-readable artifacts for your reserve data, fee schedules, and redemption policies. Version them and expose them via public endpoints.
3. Bake in portability: Normalize your system for the strictest global regulations now—like MiCA’s rules on interest—to avoid forking your codebase for different markets later.
4. Design for audits: Log every compliance decision, whitelist change, and sanctions screening result with a hash, timestamp, and operator identity to create a one-click view for examiners.
5. Scenario test failure modes: Run tabletop exercises for de-pegging events, bank partner outages, and issuer failures. Wire the resulting playbooks to actionable buttons in your admin consoles.

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The Bottom Line​

The GENIUS Act does more than just regulate stablecoins; it standardizes the interface between financial technology and regulatory compliance. For infrastructure builders, this means less time guessing at policy and more time shipping the rails that enterprises, banks, and global platforms can adopt with confidence. By designing to the rulebook today—focusing on reserves, redemptions, reporting, and risk—you can build the foundational platforms that others will plug into as stablecoins become the internet’s default settlement asset.

Note: This article is for informational purposes only and is not legal advice. Builders should consult legal counsel for specifics on licensing, supervision, and product design under the Act.

Stablecoins are most widely known for their role as the "settlement layer" in the crypto market. However, to truly fulfill their potential as the core of the internet of value, stablecoins must cross the chasm from an insider tool to a form of everyday payment, becoming the next generation of digital currency in our pockets.

This path is full of challenges, but not unachievable. Let's start with the conclusion: for stablecoins to transition from a "settlement layer" to "everyday payment" in the U.S., the most viable path is to—

First, establish sustainable "strongholds" in niche scenarios by leveraging incentives and relative convenience.

Then, use an open, neutral, and participant-governed network to standardize and interconnect these fragmented strongholds, aggregating them into a unified whole to reach the mainstream.

1. Learning the "Two-Step" from Credit Cards

Any new payment method faces a common hurdle in its early stages: the bootstrapping problem. This is a classic "chicken-or-egg" dilemma—a network has no value without users, and users won't join a network that lacks value. To understand how stablecoins can break this cycle, we can learn from the successful path of credit cards, particularly the "two-step" strategy pioneered by BankAmericard (the precursor to Visa).

Credit cards' initial breakthrough was not through instant nationwide coverage but by creating positive feedback loops in local areas based on their "innate characteristics." The first was convenience—a single card could be used at multiple stores, greatly reducing the friction of carrying cash and writing checks. The second was incentives—it offered easier access to revolving credit, reaching a population underserved by traditional charge cards and providing tangible benefits to users. For merchants, credit cards brought incremental sales; by "outsourcing" credit and risk management to financial institutions, even small and medium-sized businesses could enjoy the sales boost from offering credit.

Once these fragmented strongholds formed a positive feedback loop, the true leap came in the second step: connecting them. The key was building an organizationally neutral network governed by all participants. This addressed the early distrust that came with being "both the referee and the player," allowing banks and merchants to join with confidence. At the same time, technical interoperability provided uniform rules for authorization, clearing, settlement, and dispute resolution, making the system efficient enough to compete with cash and checks.

The takeaway is: first, use "innate characteristics" to create a positive feedback loop in a niche, then use an "open network" to scale this local advantage into a national network effect.

2. The Three Levers of Stablecoins: Convenience | Incentives | Incremental Sales

Today's stablecoin ecosystem is gradually acquiring the "innate characteristics" that credit cards once had.

1) Convenience (The Gap Is Narrowing)

The pain points of current stablecoin payments are clear: high friction for fiat on-ramps, a poor user experience with private keys and gas tokens, and the complexity of cross-chain compatibility. Fortunately, we have clear technological and regulatory pathways to approximate the bank card experience.

In the future, deep integration with regulated custodians and financial institutions will significantly reduce the friction of exchanging fiat for stablecoins. Concurrently, infrastructure improvements like account abstraction, gas sponsorship, and passkeys will free users from the burden of private key management and gas payments. Furthermore, advances in chain abstraction and smart routing technology will simplify the complexity of users and merchants needing to be on the same chain, enabling seamless payments.

The conclusion is: while stablecoin payments are not convenient enough today, the technological and regulatory pathways are clear and are rapidly catching up.

2) Incentives (For Both Merchants and Consumers)

Stablecoins can offer incentives far beyond static loyalty points. Imagine "white-label stablecoins," where a regulated issuer handles the underlying issuance and operation, while a brand distributes it under its own label. This new type of membership asset is more user-friendly than traditional closed-loop stored value because it's transferable and redeemable. Brands can leverage its programmability to provide targeted subsidies, such as instant discounts, free shipping, priority access, or even VIP services.

On the consumer side, programmable rewards will bring a revolutionary experience. Stablecoins' native programmability allows rewards to be tightly coupled with payments: you can implement instant subsidies at settlement or dynamic rewards triggered by specific behaviors. Airdrops can be used for low-cost, targeted reach and immediate activation. If wallets can seamlessly route a user's floating funds to a compliant yield source, users will be more willing to keep balances within the ecosystem and spend directly with stablecoins.

3) Incremental Sales (Yield-Driven "BNPL-like" Model)

Stablecoins themselves are not credit instruments, but they can be layered with custodial and yield mechanisms to create a new model for stimulating consumption. A merchant could set it up so that when transaction funds enter a custodial account and earn yield, a portion of that yield is used to subsidize the user's bill upon maturity. This is essentially a redistribution of DeFi yield, transformed into a more refined and attractive transaction subsidy, exchanging lower capital costs for higher conversion rates and average order values.

3. How to Bootstrap a Stablecoin Payment Network

Step One: Build Self-Contained "Strongholds"

The secret to success is to start in marginal, niche scenarios rather than directly challenging the mainstream.

• Niche A: Relative Convenience + New Sales.

  • Scenario: A U.S. merchant sells dollar-denominated digital goods or services to international users, where traditional payment methods are either expensive or restricted.
  • Value: Stablecoins provide an accessible and affordable payment rail, bringing the merchant new sales and a wider reach.

• Niche B: Incentive-Driven Audiences & High-Frequency Platforms.

  • Scenario 1: Fan Economy/Cultural Icons. Fan communities commit to holding a "her-branded dollar" in exchange for priority access and exclusive rights.
  • Scenario 2: High-Velocity In-Platform Markets. For example, a second-hand marketplace or content creation platform where sellers' revenue is often recirculated within the platform. Using a "platform dollar" reduces the friction of funds entering and exiting, amplifying turnover efficiency.

For these strongholds to succeed, three elements are essential: incentives must be impactful (instant reductions are better than long-term points), the experience must be smooth (quick on-ramps, gas-less experience, chain abstraction), and the funds must be transferable/redeemable (avoiding the psychological burden of "permanent lock-in").

Step Two: Use an Open Network to Connect the "Strongholds"

Once fragmented strongholds achieve scale, a unified network is needed to aggregate them. This network must be:

• Neutrally Governed: Co-governed by participants to avoid vertical integration with a specific issuer or acquirer, thereby earning everyone's trust.
• Unified Rules: Under the appropriate regulatory and licensing frameworks, establish uniform rules for KYC/AML, consumer protection, redemption, and dispute resolution, as well as clear procedures for extreme situations like asset freezing or blacklisting.
• Technically Interoperable: Standardize messaging for authorization, clearing, and reconciliation. Support a consistent API and smart routing for multi-chain stablecoins, and integrate compliant risk gateways for anti-money laundering, suspicious transaction monitoring, and traceability.
• Shared Economics: Fairly distribute network fees, service fees, and yield returns to ensure that issuers, merchants, wallets, and various service providers all benefit. Support co-branded loyalty programs and yield-sharing, much like co-branded credit cards once "recruited" major merchants.

4. Common Objections and Counterarguments

• "Credit cards are more convenient, why switch?"

  • This is not about replacement, but "attacking the flanks first." Stablecoins will first build an advantage in underserved segments and among incentive-driven audiences, and then scale their coverage through network aggregation.

• "Without chargebacks, how are consumers protected?"

  • Functional equivalents can be achieved through escrow, dispute arbitration, and insurance mechanisms. For high-risk categories, a revocable layer and token-gated identity management can be provided.

• "With regulatory uncertainty, how to scale?"

  • The premise is "compliance-first" issuance and custody. Within clear state or federal frameworks, "do what can be done first." The network layer can be designed for pluggable compliance and geo-fencing, gradually expanding as regulatory clarity improves.

• "Could card networks retaliate with lower fees?"

  • Stablecoins' core advantage is the new product space created by their programmability and open APIs, not just competing on fees. In cross-border and high-velocity closed-loop scenarios, their structural cost and experience advantages are difficult for card networks to replicate.

5. Verifiable Milestones in 12–24 Months

Over the next 1-2 years, we can expect the following milestones:

• Experience: The time for a new user to go from zero to making a payment is ≤ 2 minutes; a gas-less experience and automatic cross-chain routing with failure rates and latency comparable to mainstream e-wallets.
• Ecosystem: ≥ 5 compliant issuers/custody service providers have launched white-label stablecoins; ≥ 50,000 merchants accept them, with ≥ 30% from cross-border or digital goods/services.
• Economics: The all-in merchant cost of a stablecoin payment (including risk management and redemption) is significantly lower than traditional alternatives in target scenarios; repeat purchases or average order value driven by co-branding/yield-sharing achieve statistical significance.

Conclusion

If stablecoins were to race against bank cards head-on, their chances of winning would be low. But by starting in niche segments, establishing "strongholds" with incentives and relative convenience, and then using an open, neutral, and participant-owned network to standardize, interconnect, and scale these strongholds—this path is not only feasible, but once the network takes shape, it will look like a natural and logical next step in hindsight.

Stablecoins have emerged as transformative infrastructure for Chinese companies expanding internationally, offering 50-80% cost savings and settlement times reduced from days to minutes. The market reached $300+ billion by October 2025 (up 47% year-to-date), processing $6.3 trillion in cross-border payments over 12 months—equivalent to 15% of global retail cross-border payments. Major Chinese companies including JD.com, Ant Group, and Zoomlion are actively deploying stablecoin strategies through Hong Kong's newly regulated framework, which became effective August 1, 2025. This development comes as China maintains strict crypto restrictions on the mainland while positioning Hong Kong as a compliant gateway, creating a dual-track approach that allows Chinese enterprises to access stablecoin benefits while the government develops the digital yuan (e-CNY) as a strategic alternative.

The shift represents more than technological innovation—it's a fundamental restructuring of cross-border payment infrastructure. Traditional SWIFT transfers cost 6-6.3% of transaction value and take 3-5 business days, leaving approximately $12 billion trapped in-transit globally. Stablecoins eliminate correspondent banking chains, operate 24/7, and settle in seconds for 0.5-3% total cost. For Chinese companies facing capital controls, foreign exchange volatility, and high banking fees, stablecoins offer a pathway to operational efficiency—though one fraught with regulatory complexity, technical risks, and the strategic tension between dollar-backed stablecoins and China's digital currency ambitions.

Understanding stablecoins: types, mechanisms, and market dominance​

Stablecoins are cryptocurrencies designed to maintain stable value by pegging to external assets, primarily the US dollar. The sector is dominated by fiat-collateralized models, which hold 99% market share and back each token 1:1 with reserves—typically US Treasury bills, cash, and equivalents. Tether (USDT) leads with $174-177 billion market capitalization (58-68% dominance), followed by Circle's USDC at $74-75 billion (20.5-24.5%). Both experienced explosive 2024 growth: USDT added $45 billion in new issuance (+50% annually), while USDC grew 79% from $24.4 billion to $43.9 billion.

USDT generates significant revenue from yields on its $113+ billion US Treasury holdings, earning $13 billion net profit in 2024 (record-breaking). The company maintains 82,000+ Bitcoin (~$5.5 billion) and 48 metric tons of gold as additional reserves, with a $7+ billion excess buffer. However, transparency remains contentious: Tether has never completed a full independent audit, relying instead on quarterly attestations from BDO. The CFTC fined Tether $42.5 million in 2021 for claims that USDT was fully backed only 27.6% of the time during 2016-2018. Despite controversies, USDT dominates with daily trading volumes consistently exceeding $75 billion—often surpassing Bitcoin and Ethereum combined.

USDC offers stronger transparency through monthly attestations by Deloitte & Touche and detailed CUSIP-level disclosure of Treasury holdings. Circle manages approximately 80% of reserves through BlackRock's government money market fund (USDXX), with 20% in cash at Global Systemically Important Banks (GSIBs). This structure proved both strength and vulnerability: during March 2023's Silicon Valley Bank collapse, Circle's $3.3 billion exposure (8% of reserves) caused USDC to briefly depeg to $0.87 before recovering within four days after federal intervention. The incident demonstrated how traditional banking system risks contaminate stablecoins, triggering cascade effects—DAI depegged to $0.85 due to 40% USDC collateral exposure, causing ~3,400 automatic liquidations worth $24 million on Aave.

Crypto-collateralized stablecoins like DAI (MakerDAO) represent the decentralized alternative, with $5.0-5.4 billion market capitalization. DAI requires over-collateralization—typically 150%+ collateralization ratios—using crypto assets (ETH, WBTC, USDC) locked in smart contracts. When collateral value drops too low, positions automatically liquidate to maintain DAI stability. This model proved resilient during the 2023 banking crisis, maintaining peg while USDC wobbled, but faces capital inefficiency and complexity challenges. MakerDAO is evolving toward "Endgame" plans to scale DAI (rebranding as USDS) to 100 billion supply to compete with Tether.

Algorithmic stablecoins have been largely abandoned following Terra/Luna's catastrophic May 2022 collapse that wiped out $45-60 billion. TerraUST (UST) relied solely on arbitrage with LUNA token without true collateral, offering unsustainable 19.5% APY through Anchor Protocol that required $6 million daily subsidies by April 2022. When large withdrawals triggered runs on May 7, 2022, the death spiral mechanics caused LUNA to mint exponentially while UST fell from $1 to $0.35, then pennies. Research revealed 72% of UST was concentrated in Anchor, wealthier investors exited first with smaller losses, and retail investors who "bought the dip" suffered the most. The Luna Foundation Guard's $480 million Bitcoin reserves proved insufficient to restore the peg, demonstrating fatal flaws in undercollateralized algorithmic models.

Stablecoins maintain their dollar peg through arbitrage mechanisms: when trading above $1, arbitrageurs mint new tokens from issuers at $1 and sell at market price for profit, increasing supply and pushing prices down; when trading below $1, arbitrageurs buy cheap tokens on markets and redeem at issuers for $1, decreasing supply and pushing prices up. This self-stabilizing system works in normal conditions with credible issuer commitment, supplemented by reserve management, redemption guarantees, and collateral liquidation protocols.

Cross-border payment pain points that stablecoins address for Chinese companies​

Chinese companies face severe friction in traditional cross-border payments, stemming from high costs, settlement delays, capital controls, and currency volatility. Transaction fees average 6-6.3% of transfer value according to 2024 World Bank data, comprising sending bank fees ($15-$75), multiple intermediary correspondent bank fees ($15-$50 per bank, typically 2-4 banks in payment chain), receiving bank fees ($10-$30), and foreign exchange markups (2-6% above mid-market rate hidden in exchange rates). For a typical $10,000 wire transfer, total costs reach $260-$463 (2.6-4.63%), with international remittances to Sub-Saharan Africa averaging 7.7%.

Settlement times of 3-5 business days create massive working capital inefficiency, with approximately $12 billion trapped in-transit globally at any moment. SWIFT's T+2 to T+3 settlement cycles result from different time zones and banking hours (limited to business hours only), weekend and holiday closures, multiple intermediary banks in payment chains, manual AML/KYC verification processes, batch-based processing systems, and currency conversion requirements. SWIFT data shows approximately 10% of cross-border transactions require correction or fail: 4% cancelled before/on settlement date, 1% cancelled after settlement date, and 5% completed after settlement date.

China's foreign exchange controls create unique challenges under SAFE (State Administration of Foreign Exchange) and PBOC (People's Bank of China) administration. The $5 million threshold requires SAFE approval for all outbound remittances exceeding this amount (reduced from previous $50 million limit). The $50 million ODI threshold means SAFE supervises and can halt ODI projects requiring larger transfers. Pre-payment registration requirements mandate companies register with SAFE within 15 working days of contract signing for advance payments. Companies must report overseas payments with terms exceeding 90 days, and overpayment amounts cannot exceed 10% of prior year's total importation. December 2024 SAFE regulations now require banks to monitor and report crypto-related transactions, specifically targeting illegal cross-border transactions.

Individual restrictions compound challenges: annual foreign currency conversion limits of $50,000 per person, transactions exceeding $10,000 must be reported, and cash transactions exceeding RMB 50,000 (~$7,350) must be reported. Companies report unpredictable approval times from SAFE, with window guidance varying by city and region, creating lack of consistency and uncertain process times that differ by jurisdiction.

Stablecoins dramatically address these pain points through multiple mechanisms. Cost reductions reach 50-80% versus traditional methods: blockchain transaction costs on Ethereum average ~$1 for USDC transfers (down from $12 in 2021), while Layer 2 networks like Base and Arbitrum charge less than $0.01 average, and Solana processes transactions for ~$0.01 with 1-2 second settlement. Total stablecoin fees range 0.5-3.0% of transfer amount compared to 6-6.3% traditional. For a $10,000 transfer, stablecoins cost $111-$235 (1.11-2.35%) versus $260-$463 traditional, yielding net savings of $149-$228 per transaction (49-57% reduction). For companies with $1 million annual cross-border payments, this translates to $30,000-$70,000 annual savings (50-87% reduction).

Speed improvements are even more dramatic: settlement reduced from 3-5 days to seconds or minutes with 24/7/365 availability. Solana achieves 1,133 TPS with 30-second finality; Ethereum processes transactions in 2-5 minutes with 12-confirmation finality (~3 minutes); Layer 2 solutions achieve 1-5 second settlement; and Stellar completes transactions in 3-5 seconds. This eliminates the approximately $1.5 million in capital trapped in-transit at any moment for a company with $10 million monthly cross-border payments. At 5% annual cost of capital, this freed capital provides $75,000 annual benefit, combined with fee savings of $60,000-$80,000 for total annual benefit of $135,000-$155,000 (1.35-1.55% of payment volume).

Stablecoins bypass traditional banking friction through direct wallet-to-wallet transfers requiring no bank intermediaries, eliminating 3-5 intermediary banks in payment chains, circumventing capital controls (blockchain-based transfers harder to restrict than traditional banking flows), reduced AML/KYC friction through smart contract automation and on-chain compliance tools (companies like Chainalysis, Elliptic, TRM Labs provide real-time AML screening), and no pre-funding requirements eliminating need for local currency accounts in multiple jurisdictions. For Chinese companies specifically, stablecoins potentially bypass SAFE approval requirements for smaller transactions, provide faster options than 15-day registration requirements for pre-payments, offer more flexibility than $5 million threshold restrictions, and enable real-time settlement despite capital controls—with Hong Kong serving as gateway through JD.com's Jingdong Coinlink preparing HKD and USD stablecoins.

Volatility mitigation occurs through 1:1 fiat peg with each stablecoin backed by equivalent fiat reserves. USDC's reserve composition includes 85% short-term US Treasuries or repos and 15% cash for immediate liquidity. Instant settlement eliminates multi-day currency risk windows, providing predictability where companies know exact amounts recipients receive. Major stablecoins achieved $250 billion total circulation by 2025 (doubled from $120 billion 18 months prior), with daily velocity of 0.15-0.25 indicating high liquidity and projected growth to $400 billion by end-2025 and $2 trillion by 2028.

Regulatory landscape: China's dual-track approach and global frameworks​

China maintains strict crypto restrictions on the mainland while positioning Hong Kong as a regulated gateway, creating a complex dual-track system for Chinese enterprises. In June 2025, full criminalization of cryptocurrency ownership, trading, and mining became effective, expanding the 2021 ban. The August 2024 Supreme People's Court ruling classified using cryptocurrencies to convert criminal proceeds as criminal law violation. December 2024 SAFE regulations require banks to monitor and report crypto-related transactions, specifically targeting illegal cross-border financial activities. Using yuan to buy crypto assets before converting to foreign currencies is now classified as illegal cross-border financial activity, with banks identifying high-risk transactions based on individual identity, fund sources, and trade frequency.

Despite these restrictions, an estimated 59 million Chinese users continue crypto activity through VPNs and offshore platforms, and the Chinese government owns 194,000 BTC (~$18 billion) seized from illicit activities. Stablecoins are viewed as threats to capital controls—prior estimates showed $50 billion left China via crypto/stablecoins in 2020 before the comprehensive ban.

Hong Kong's stablecoin framework provides the compliant pathway. In May 2025, Hong Kong's Legislative Council passed the landmark Stablecoins Bill, allowing licensed entities to issue fiat-backed stablecoins (HKD-pegged and CNH-pegged), effective August 1, 2025. The Hong Kong Monetary Authority (HKMA) oversees licensing and audits, with minimum capital requirements of HK$25 million ($3.2 million), full reserve requirements, monthly attestations, and AML compliance. Over 40 companies applied for licenses, with single digits expected for initial approvals. The first batch of sandbox participants (July 2024) included Jingdong Coinlink Technology (JD.com), Circle Coin Technology, and Standard Chartered Bank.

Chinese firms are actively pursuing Hong Kong licenses: Ant International (Singapore-based unit of Alibaba's Ant Group) is applying for stablecoin licenses in Hong Kong, Singapore, and Luxembourg, focusing on cross-border payment services and supply-chain finance through the Alipay+ global payment network. JD.com is participating in HKMA's stablecoin sandbox, planning to secure "stablecoin licences across key currency markets globally" with initial HKD and USD stablecoins, and potential offshore yuan stablecoin pending PBOC approval.

PBOC Governor Pan Gongsheng's June 2025 remarks at Lujiazui Forum marked a significant policy shift—the first official acknowledgment of stablecoins' positive role, noting they are "reshaping the global payment system" and recognizing shorter cross-border payment cycles. This signals China's evolution from complete ban to controlled experimentation using a "two-zone" approach: experimentation offshore (Hong Kong), control onshore (mainland).

United States regulatory clarity arrived with the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) signed by President Trump in July 2025. This first comprehensive federal stablecoin legislation defines collateral, disclosure, and marketing rules; creates pathway for bank-issued stablecoins; establishes reserve requirements; and gives the Federal Reserve oversight of large stablecoin issuers with master account access requirements for large-scale operations. The GENIUS Act aims to maintain USD dominance amid China's digital currency challenge and is expected to accelerate institutional entry. State-level regulation continues with multiple states maintaining money transmission licenses for stablecoin issuers, with New York (via NYDFS) particularly active. The June 2024 court ruling (SEC v. Binance) confirmed fiat-backed stablecoins like USDC and BUSD are NOT securities, with the SEC closing investigations (Paxos/BUSD case dropped) and shifting focus away from stablecoins to other crypto assets.

European Union's MiCA (Markets in Crypto-Assets) regulation became effective January 2025, requiring detailed reserve disclosure, licenses for issuers operating in EU, with 18-month transition period (until July 2026) for existing operators. MiCA prohibits interest on stablecoins to discourage use as stores of value and imposes transaction limits: if ARTs exceed 1 million transactions daily or €200 million daily value, issuers must stop new issuances. Circle became the first MiCA-licensed issuer in July 2024, with Tether claiming full compliance.

Asia-Pacific jurisdictions are creating supportive frameworks: Singapore's MAS finalized its framework in August 2023 and actively experiments with tokenized deposits through Project Guardian. Japan regulates stablecoins under the Payment Services Act since June 2022, with JPYC launching as first JPY-pegged stablecoin in August 2025, distinguishing between fiat-backed (regulated) and algorithmic (less regulated). Bahrain's Stablecoin Issuance and Offering Module (July 2025) allows single currency fiat-backed stablecoins while prohibiting algorithmic stablecoins. El Salvador granted Tether stablecoin issuer and DASP licenses in 2024, with Tether establishing headquarters there. Dubai and Hong Kong granted Tether VASP licenses in 2024, with both jurisdictions welcoming stablecoin issuers.

Compliance pathways for Chinese companies require offshore legal structures (Hong Kong subsidiaries being most common), payment service provider partnerships with licensed entities, extensive KYC/AML requirements through automated compliance tools (Chainalysis, Elliptic provide real-time AML screening for blockchain identity solutions), and appropriate licensing based on target markets. Hong Kong's framework allows Chinese companies to operate compliantly while maintaining separation from mainland restrictions, positioning Hong Kong as the primary gateway for China's stablecoin experimentation.

Real-world applications: how Chinese companies use stablecoins​

Chinese companies are deploying stablecoins across four major categories: cross-border e-commerce, supply chain finance, international trade settlement, and overseas payroll—with concrete implementations emerging in 2024-2025.

Cross-border e-commerce payment and settlement​

JD.com represents the flagship case study. China's second-largest e-commerce company (often called "China's Amazon") established Jingdong Coinlink Technology in Hong Kong, participating in HKMA's stablecoin sandbox since July 2024. Chairman Richard Liu announced in June 2025 that JD.com intends to "secure stablecoin licences across key currency markets globally" with initial HKD-pegged and USD-pegged stablecoins, plus future offshore yuan (CNH) stablecoin pending PBOC approval.

Richard Liu stated JD.com "can reduce the global cross border payment cost by 90% and then improve the efficiency to within ten seconds," hoping "JD stablecoin will become a universal payment method worldwide." CEO Teddy Liu of Jingdong Coinlink declared in June 2025: "I believe stablecoins will become the next-generation payment system – that is beyond doubt." JD.com's initial focus targets B2B payments before consumer adoption, with direct transactions planned with Southeast Asian suppliers using JD stablecoins for minute-level transfers, targeting Asia-Pacific, Middle East, and African markets.

The Chinese seller ecosystem on Amazon and eBay is massive: over 63% of Amazon third-party sellers are from mainland China or Hong Kong, with Shenzhen alone accounting for approximately 25% of all Amazon third-party sellers. China's cross-border e-commerce exports grew 19.6% in 2023, reaching RMB 2.38 trillion ($331 billion). These sellers face 7-15 day payment cycles from Amazon, but stablecoins enable minute-level transfers versus 1-5 days traditional. Stablecoin transaction fees are approximately 1/10th of traditional foreign trade transaction fees.

Jiang Bo, a cross-border payment expert interviewed by 36Kr in 2025, analyzed: "From the customers we have contacted, cross-border e-commerce merchants and enterprises engaged in digital service exports are more willing to try stablecoins, mainly because they see the advantages of stablecoins in terms of efficiency and cost." He noted "The repayment cycle for Amazon merchants is generally 7-15 days. Higher payment efficiency helps ensure stable cash flow and improve the efficiency of capital utilization."

Payment platforms enabling this include Shopify integration with Coinbase Commerce for crypto/stablecoin payments where merchants can accept USDC and USDT globally. TransFi processes over $10 billion in annualized payment volume (300% YoY growth in 2025), supporting local collection and payout across 70+ markets, backed by Circle Ventures and Ripple. Grab in Southeast Asia partnered with Alipay and StraitsX in March 2024, allowing Chinese tourists to pay using Alipay converted to XSGD stablecoin, with merchants receiving Singapore dollars.

Supply chain finance and Belt and Road settlements​

Zoomlion Heavy Industry provides the flagship manufacturing case. This construction and agricultural machinery manufacturer with $3.3 billion in offshore revenue (2024) partnered with AnchorX (Hong Kong fintech) to use AxCNH, the first licensed offshore yuan-pegged stablecoin. AxCNH received regulatory license from Astana Financial Services Authority (AFSA) in Kazakhstan and operates on Conflux Network blockchain. Launched at the 10th Belt and Road Summit in Hong Kong in February 2025, Zoomlion completed pilot transactions on Conflux blockchain for cross-border settlements with Belt and Road Initiative (BRI) partners.

The strategic significance is substantial: in 2024, China's trade with BRI countries reached RMB 22.1 trillion ($3.2 trillion), targeting 150+ countries across Asia, Africa, South America, and Oceania. AxCNH provides reduced exchange rate volatility, lower transaction costs, and improved settlement efficiency (minute-level versus days). Lenovo also signed an MOU with AnchorX for AxCNH usage, focusing on supply chain and international settlements. ATAIX Eurasia (Kazakhstan exchange) listed AxCNH with trading pairs AxCNH:KZT and AxCNH:USDT, positioning Kazakhstan as gateway to Central Asia and Europe for BRI trade settlements.

Ant Group/Ant International focuses on cross-border finance and supply chain finance, applying for stablecoin licenses in Hong Kong, Singapore, and Luxembourg. The company completed significant tokenized asset projects: August 2024 partnership with Longshine Technology for renewable energy asset tokenization, and December 2024 GCL Energy Technology solar asset project (RMB 200 million / $28 million). Ant's tokenization model uses stablecoins as settlement layer for tokenized assets, bypassing SWIFT system for asset transactions while providing cash-like, low-volatility investment options.

Standard Chartered Bank formed a joint venture with Animoca Brands for HKD stablecoin, participating in Hong Kong's stablecoin sandbox. As one of three banks authorized to issue physical HKD, Standard Chartered's focus on cross-border B2B payments represents traditional banking's embrace of stablecoin infrastructure.

International trade settlement and B2B transactions​

Monthly stablecoin transaction volumes between businesses reached $3 billion+ in early 2025, up from under $100 million at start of 2023. 2024 saw 29.6% increase in crypto payment transaction volume (CoinGate data), with stablecoins accounting for 35.5% of all crypto transactions in 2024 (up from 25.4% in 2023 and 16% in 2022, representing 171% YoY growth 2022-2023 and 26.2% YoY growth 2023-2024).

JD.com's B2B focus prioritizes direct transactions with Southeast Asian suppliers using JD stablecoins for minute-level transfers and supply chain payments before expanding to consumer adoption. Use case categories include: commodity trading using AxCNH for Belt and Road commodity imports; manufacturing settlements with direct supplier payments; treasury management enabling real-time liquidity management across borders; and trade finance through pilot corridors in Hong Kong and Shanghai free trade zones.

Ant Digital Technologies' tokenized renewable energy asset projects use stablecoins as settlement layer, with investors receiving stablecoin-denominated returns while bypassing traditional banking for asset-backed financing. This represents the evolution of trade finance where stablecoins serve as universal settlement layer for tokenized real-world assets.

Overseas employee payroll and contractor payments​

General market adoption shows 75% of Gen Z workers prefer receiving at least part of their salary in stablecoins, with Web3 professionals earning average $103,000 annually. USDC holds 63% market share for payroll, USDT 28.6%. Benefits include stablecoin transaction fees of 0.1-1% versus 3.5% credit card fees; speed of minutes versus 3-5 days for international transfers; blockchain-recorded transparency for all transactions; and USD-pegged stablecoins protecting against local currency devaluation.

Rise processed over $800 million in payroll volume, operating across 20+ blockchains with Circle partnership for USDC payments. The platform includes compliance tools through Chainalysis and SumSub integration, issues 1099s, and gathers W9/W8-Ben forms. Deel uses BVNK for stablecoin settlements, paying contractors in 100+ countries with focus on international hiring. Bitwage offers over 10 years experience in crypto payroll, supporting Bitcoin and stablecoin payments as add-on to existing payroll systems.

While specific named Chinese companies using these for payroll remain limited in public reporting, the infrastructure is being built for tech startups in Web3 space, gaming companies with international developers, and e-commerce platforms with global remote teams. Chinese companies with distributed international workforces are increasingly exploring these platforms to reduce remittance costs and improve payment speed for overseas contractors.

Southeast Asian payment corridors​

Singapore-China corridor demonstrates practical implementation. StraitsX issues XSGD (Singapore dollar stablecoin) as an MAS-regulated licensed issuer, processing over $8 billion in volume. The real-world application shows Chinese tourists using Alipay to scan GrabPay QR codes, with behind-the-scenes operations where Alipay purchases XSGD and transfers to Grab merchants who receive SGD settlement. Volume data shows 75% of XSGD transfers under $1 million and 25% of transfers under $10,000 (retail activity), with steady $200+ million quarterly transfer value since Q3 2022.

Thailand-Singapore's PromptPay-PayNow connection (since 2021) provides a blueprint: real-time, low-cost mobile payments with daily limit of SGD 1,000 / THB 25,000 ($735/$695) at THB 150 ($4) cost in Thailand and free in Singapore. This represents potential infrastructure for China-ASEAN payment integration with stablecoin layers on top of fast payment systems, supporting Chinese businesses operating in Southeast Asia.

Risks and challenges: regulatory, technical, and operational hazards​

Regulatory risks dominate the landscape​

China's June 2025 full criminalization of cryptocurrency ownership, trading, and mining creates existential legal risk for mainland entities. Using stablecoins to circumvent capital controls can result in criminal prosecution, with banks required to monitor and report crypto-related transactions. The August 2024 Supreme People's Court ruling classified using cryptocurrencies to convert criminal proceeds as criminal law violation, expanding enforcement beyond trading to include any financial manipulation using crypto.

Chinese entities face extreme difficulty accessing compliant on/off ramps within mainland China due to forex controls. All centralized exchanges were banned since 2017, with OTC trading persisting but carrying legal risks. VPN usage required to access foreign platforms is itself restricted. Yuan-to-crypto conversions are classified as illegal forex activity as of December 2024. Hong Kong provides the legal gateway, but requires extensive KYC/AML compliance, with licensed exchanges operational while maintaining separation from mainland capital controls.

Banking de-risking concerns create operational challenges. US banks increasingly wary of processing crypto-related transactions force issuers to offshore banks. Tether lacks full regulatory oversight with no authoritative body monitoring reserve investments. Circle's $3.3 billion exposure to Silicon Valley Bank demonstrated interconnected risks. Chinese entities face extreme difficulty accessing compliant on/off ramps, with Western banks hesitant to service China-linked crypto entities due to compliance costs for AML/KYC requirements and concerns about facilitating capital control circumvention.

Enforcement actions demonstrate real consequences. Chainalysis estimates $25-32 billion in stablecoins received by illicit actors in 2024 (12-16% of market cap). The UN Office of Drugs and Crime (January 2024) identified stablecoins as preferred currency for cybercriminals in Southeast Asia. $20 billion in Tether transactions through sanctioned Russian exchange Garantex are under investigation, though Tether has frozen $12 million linked to scams through its T3 Financial Crime Unit (2024) and recovered $108.8 million USDT linked to illicit activities.

Technical risks: smart contracts, congestion, and custody​

Smart contract vulnerabilities caused massive losses in 2024. According to DeFiHacksLabs data, over 150 contract attack incidents resulted in losses exceeding $328 million in 2024 alone, with $9.11 billion accumulated DeFi losses according to DeFiLlama. Q1 2024 alone saw $45 million in losses across 16 incidents ($2.8 million average per exploit).

The OWASP Smart Contract Top 10 (2025) analyzed $1.42 billion in losses, identifying: Access Control Vulnerabilities ($953.2 million), Logic Errors ($63.8 million), Reentrancy Attacks ($35.7 million), Flash Loan Attacks ($33.8 million), and Price Oracle Manipulation ($8.8 million). High-profile 2024 attacks included Sonne Finance (May 2024) with $20 million exploited via Compound V2 fork vulnerability using flash loans.

Stablecoin-specific vulnerabilities show centralized stablecoins face custodial and regulatory risks, while decentralized stablecoins remain vulnerable to smart contract and oracle issues. DAI experienced depegging when USDC (40% of collateral) depegged in March 2023, demonstrating cascade contagion effects. Algorithmic stablecoins remain fundamentally flawed, as UST collapse demonstrated.

Blockchain congestion creates operational challenges. Ethereum mainnet limited to approximately 15 TPS causes high gas fees during congestion, though Layer 2 solutions (Arbitrum, Optimism) reduce fees but add complexity. Cross-chain bridges create single points of failure—the Ronin hack cost $625 million, Wormhole $325 million. Emerging solutions include Layer 2 adoption accelerating with Base costing under $0.01 versus $44 traditional wire transfer; Solana processing stablecoin transactions in 1-2 seconds at less than $0.01 fees; Circle's CCTP V2 reducing settlement from 15 minutes to seconds; and LayerZero OFT standard enabling seamless multi-chain stablecoin deployment.

Exchange and custody risks remain significant. Concentration of liquidity creates systemic vulnerability—Coinbase temporarily paused USDC redemptions during SVB crisis (March 2023). Private key management is critical with social engineering remaining the top threat. However, multi-party computation (MPC) and hardware security modules (HSM) are improving security, with institutional-grade custody now available through qualified custodians with regulatory oversight. Critically, stablecoin holders have no legal entitlement to instant redemption, being treated as unsecured creditors in bankruptcy with no legal claim to underlying assets.

De-pegging events: catastrophic precedents​

TerraUST's May 2022 collapse remains the defining catastrophe. On May 7, 2022, large withdrawals (375 million UST) triggered runs, with an $85 million trade on Curve Finance overwhelming stabilization mechanisms. By May 9, UST fell to $0.35 while LUNA fell from $80 to pennies. Total losses reached $45-60 billion in ecosystem value with $400 billion broader market impact.

Root causes included unsustainable yields with Anchor paying 19.5% APY requiring $6 million daily subsidies by April 2022; algorithmic instability where UST relied solely on LUNA arbitrage without true collateral; death spiral mechanics as panicking UST holders caused LUNA to mint exponentially, diluting value; and liquidity attacks exploiting Curve 3pool vulnerability during planned liquidity migration to 4pool. The concentration risk showed 72% of UST deposited in Anchor, with wealthier investors exiting first with smaller losses while retail investors who "bought the dip" suffered most. Luna Foundation Guard's $480 million Bitcoin reserves proved insufficient to restore peg.

USDC's March 2023 de-pegging from Silicon Valley Bank collapse revealed how traditional banking risks contaminate stablecoins. On March 10, 2023, SVB failure revealed Circle held $3.3 billion (~8% of reserves) with the failed bank. USDC fell to $0.87 (13% depeg) on Saturday March 11, with Coinbase suspending USDC-USD conversions over the weekend when banks were closed. Cascade effects included DAI depegging to $0.85 (40% collateral was USDC), FRAX also affected due to USDC exposure, and approximately 3,400 automatic liquidations on Aave worth $24 million collateral (86% USDC).

Recovery occurred by Monday after FDIC waived $250,000 insurance limit, but S&P Research findings (June 2023) showed USDC was below $0.90 for 23 minutes (longest depeg), DAI below $0.90 for 20 minutes, USDT only dipped below $0.95 for 1 minute, and BUSD never dropped below $0.975. Frequency analysis revealed USDC and DAI depegged far more often than USDT over the 24-month period. Post-crisis, Circle expanded banking partnerships (BNY Mellon, Cross River), increased reserve diversification, and enhanced transparency through monthly attestations.

Tether transparency concerns persist despite its relative stability. Historical problems include 2018 claims of $2.55 billion reserves backing $2.54 billion USDT supported only by law firm report (not audit); 2019 New York Attorney General investigation revealing only 74% backing by cash/equivalents; 2021 CFTC fine of $41 million for false statements about dollar backing; and reserves held for only 27.6% of time during 2016-2018 sample period per CFTC findings.

Current reserve composition (Q2 2024) shows $100 billion+ in U.S. Treasury bonds, 82,000+ Bitcoin (~$5.5 billion value), 48 metric tons of gold, and over $120 billion total reserves with $5.6 billion surplus (Q1 2025). However, discrepancy exists between $120 billion reserves and 150 billion+ USDT circulation. Tether maintains no comprehensive audit from Big Four accounting firm (only quarterly attestations from BDO), with $6.57 billion in "secured loans" (up from $4.7 billion in Q1 2024) having unclear composition. Reliance on offshore banks without authoritative reserve monitoring earned S&P risk rating of 4 out of 5 (December 2023).

Operational challenges: on-ramps, banking, and taxation​

Mainland China restrictions make on/off ramps extremely difficult. All centralized exchanges banned since 2017, with OTC trading persisting but carrying legal risks. VPN usage required to access foreign platforms is itself restricted. Yuan-to-crypto conversions classified as illegal forex activity (December 2024). Hong Kong provides gateway through licensed exchanges operational with KYC/AML compliance requirements. AxCNH listed on ATAIX Eurasia (Kazakhstan) targets Chinese firms, with Zoomlion ($3.3 billion offshore revenue) signed to use AxCNH for settlements. PBOC Shanghai center developing cross-border digital payment platform.

Global access challenges include off-ramp liquidity fragmented across 100+ blockchains, cross-chain bridge security concerns following major hacks, weekend/holiday conversion limited by traditional banking hours (SVB crisis example), though Real-Time Payments (RTP) and FedNow may eventually enable 24/7 fiat settlement.

Banking relationships pose correspondent banking issues where Western banks hesitate to service China-linked crypto entities. Compliance costs high due to AML/KYC requirements, with SWIFT dominance at $5 trillion daily versus China's CIPS at $200+ billion processed but growing. Banking relationships essential for institutional-scale stablecoin operations. Institutional solutions emerging include Stripe's $1.1 billion acquisition of Bridge (stablecoin infrastructure) signaling fintech integration, PayPal and SAP offering native stablecoin support, Coinbase and Circle pursuing banking licenses under favorable US regulatory environment, and regional API providers differentiating on compliance and service.

Tax implications and reporting create complexity. Post-June 2025 ban makes crypto tax largely irrelevant for mainland individuals, though previous unreported crypto gains subject to capital gains treatment. Cross-border transactions monitored for capital flight, while Hong Kong provides clearer framework with stablecoin regulatory clarity. International compliance requires FATF Travel Rule adoption by China for international transactions, wallet registration for traceability, Chinese entities using offshore structures facing complex multi-jurisdictional reporting, and capital losses from depegging events requiring classification based on business versus capital treatment.

Future trends: e-CNY expansion, institutional adoption, and technology evolution​

Central Bank Digital Currency: e-CNY's international push​

China's digital yuan (e-CNY) represents the government's strategic alternative to private stablecoins, with massive domestic deployment and expanding international ambitions. As of 2025, the e-CNY achieved 261 million individual wallets opened, $7.3 trillion cumulative transaction value (up from $1 trillion mid-2024), 180 million individual users (July 2024), and operations in 29 cities across 17 provinces, used for metro fares, government wages, and merchant payments.

September 2025 marked a critical inflection point when PBOC inaugurated the International Operations Center in Shanghai with three platforms: a cross-border digital payment platform exploring e-CNY for international transactions; a blockchain service platform providing standardized cross-chain transaction transfers; and a digital asset platform integrating with existing financial infrastructure.

Project mBridge represents wholesale CBDC infrastructure through collaboration with Bank for International Settlements (BIS), with 11+ central banks in trials as of 2024 expanding to 15 new countries in 2025. The 2025 projection targets $500 billion annually through mBridge, with 2030 scenarios suggesting 20-30% of China's foreign trade could use e-CNY rails.

Belt and Road Integration shows ASEAN trade volume in RMB reaching 5.8 trillion yuan, with e-CNY used for oil transactions. The China-Laos Railway and Jakarta-Bandung High-Speed Rail accept e-CNY. UnionPay expanded e-CNY network to 30+ countries with Cambodia and Vietnam focus, targeting the Belt and Road corridor.

China's strategic objectives include countering USD stablecoin dominance (99% of stablecoin activity is dollar-denominated), circumventing SWIFT sanctions potential, enabling offline payments for rural areas and in-flight use, and programmable sovereignty through code-based capital controls and transaction limits.

Challenges remain substantial: yuan represents only 2.88% of global payments (June 2024), down from 4.7% peak (July 2024), with capital controls limiting convertibility. Competition from established WeChat Pay/Alipay (90%+ market share) domestically limits e-CNY adoption enthusiasm. USD still commands 47%+ of global payments with euro at 23%, making yuan internationalization a long-term strategic challenge.

Institutional adoption: projections through 2030​

Market growth projections vary widely but all point upward. Conservative estimates from Bernstein project $3 trillion by 2028, Standard Chartered forecasts $2 trillion by 2028, from current $240-250 billion (Q1 2025). Aggressive forecasts include futurist predictions of $10+ trillion by 2030 based on GENIUS Act regulatory clarity, Citi GPS $2 trillion by 2028 potentially higher with corporate adoption, and McKinsey suggesting daily transactions could reach $250 billion in next 3 years.

Transfer volume data shows 2024 reached $27.6 trillion total (exceeding Visa + Mastercard combined), with daily real payment transactions at $20-30 billion (remittances + settlements). Currently representing less than 1% of global money transfer volume but doubling every 18 months, Q1 2025 remittances reached 3% of $200 trillion global cross-border payments.

Banking sector developments include JPMorgan's JPM Coin processing over $1 billion daily in tokenized deposit settlements. Citibank, Goldman Sachs, and UBS experiment via Canton Network. US banks discuss joint stablecoin issuance, with 50%+ of financial institutions reporting stablecoin infrastructure readiness (2025 survey).

Corporate adoption shows Stripe's Bridge acquisition for $1.1 billion signaling fintech integration, PayPal launching PYUSD ($38 million issued January 2025, though slowing), retailers exploring branded stablecoins (Amazon, Walmart predicted 2025-2027), and Standard Chartered launching Hong Kong dollar-pegged stablecoin.

Academic and institutional research shows 60% of institutional investors prefer stablecoins (Harvard Business Review 2024), MIT Digital Currency Initiative conducting active research, 200+ new academic papers on stablecoins published in 2025, and Stanford launching Stablecoin and Digital Assets Lab.

Regulatory evolution and compliance frameworks​

United States GENIUS Act impact creates dual role for Federal Reserve as gatekeeper and infrastructure provider. Bank-issued stablecoins anticipated to dominate with compliance infrastructure, tier-2 banks forming consortiums for scale, and regional banks relying on tech stack providers (Fiserv, FIS, Velera). The framework expected to generate $1.75 trillion in new dollar stablecoins by 2028, viewed by China as strategic threat to yuan internationalization, spurring China's accelerated Hong Kong stablecoin framework and support for CNH-pegged stablecoins offshore.

European Union MiCA fully applicable since late 2024, prohibits interest payments limiting adoption (largest EU stablecoin only €200 million versus USDC $60 billion), imposes stringent reserve requirements and liquidity management, with 18-month grace period ending July 2026.

Asia-Pacific frameworks show Singapore and Hong Kong creating supportive frameworks attracting issuers. Hong Kong stablecoin licenses creating compliant CNH-pegged options, Japan regulatory clarity enabling expansion, with 88% of North American firms viewing regulations favorably (2025 survey).

Cross-jurisdictional challenges include the same stablecoin being treated as payment instrument, security, or deposit in different countries. Extraterritorial regulations create compliance complexity, regulatory fragmentation forces issuers to choose markets or adopt complex structures, and enforcement risks persist even without clear guidelines.

Technology improvements: Layer 2 scaling and cross-chain interoperability​

Layer 2 scaling solutions dramatically reduce costs and increase speed. Major networks in 2025 include: Arbitrum using high-speed Ethereum scaling via optimistic rollups; Optimism with reduced fees while maintaining Ethereum security; Polygon achieving 65,000 TPS with 28,000+ contract creators, 220 million unique addresses, and $204.83 million TVL; Base (Coinbase L2) with under $0.01 transaction costs; zkSync using zero-knowledge rollups for trustless scaling; and Loopring achieving 9,000 TPS for DEX operations.

Cost reductions are dramatic: Base charges less than $0.01 versus $44 traditional wire; Solana stablecoins achieve 1-2 seconds settlement at less than $0.01 fees; Ethereum gas fees significantly reduced via L2 bundling.

Cross-chain interoperability advances through leading protocols. LayerZero OFT Standard enables Ethena's USDe deployment across 10+ chains with $50 million USD weekly cross-chain volume. Circle CCTP V2 reduces settlement from 15 minutes to seconds. Wormhole and Cosmos IBC move beyond lock-and-mint to message-passing validation. USDe averaged $230 million+ monthly cross-chain volume since inception, while CCTP transferred $3+ billion volume last month.

Bridge evolution moves away from vulnerable "lock-and-mint" models toward light-client validation and message-passing, with native interoperability becoming standard rather than optional. Stablecoin issuers leverage protocols to reduce operational costs. Market impact shows stablecoin transactions across Layer 2s growing rapidly, with USDC on Arbitrum facilitating major Uniswap markets. Binance Smart Chain and Avalanche run major fiat-backed tokens. The multi-chain reality means stablecoins must be natively interoperable for success.

Expert predictions and industry outlook​

McKinsey insights suggest "2025 may witness material shift across payments industry," with stablecoins transcending banking hours and global borders. True scaling requires paradigm shift from currency settlement to stablecoin retention, with financial institutions needing to integrate or risk irrelevance.

Citi GPS predicts "2025 will be blockchain's ChatGPT moment" with stablecoins igniting transformation. Issuance jumped from $200 billion (early 2025) to $280 billion (mid-2025), with institutional adoption accelerating through company listings and record fundraising.

Fireblocks 2025 survey found 90% of firms taking action on stablecoins today, with 48% citing speed as top benefit (cost cited last), 86% reporting infrastructure readiness, and 9 in 10 saying regulations drive adoption.

Regional insights show Latin America at 71% using stablecoins for cross-border payments (highest globally), Asia with 49% citing market expansion as primary driver, North America with 88% viewing regulations as green light rather than barrier, and Europe with 42% citing legacy risks and 37% demanding safer rails.

Security focus reveals 36% say better protection will drive scale, 41% demand speed, 34% require compliance as non-negotiable, with real-time threat detection becoming essential and enterprise-grade security fundamental to scaling.

Expert warnings from Atlantic Council's Ashley Lannquist highlight network transaction fees often overlooked, fragmentation of money across multiple stablecoins, wallet compatibility issues, bank deposit/liquidity challenges, and lack of legal entitlement to reserves (unsecured creditors).

Academic perspectives include Stanford's Darrell Duffie noting e-CNY enables Chinese surveillance of foreign businesses, Harvard research revealing TerraUST collapse information asymmetries where wealthy exited first, and Federal Reserve analysis showing algorithmic stablecoins as fundamentally flawed designs.

Timeline predictions for 2025-2027 include GENIUS Act framework solidifying corporate adoption, major retailers launching branded stablecoins, traditional payment companies pivoting or declining, and banking deposits beginning to flee to yield-bearing stablecoins. For 2027-2030: emerging markets achieving mass stablecoin adoption, energy and commodity tokenization scaling globally, universal interoperability creating unified global payment system, and AI-driven commerce emerging at massive scale. For 2030-2035: programmable money enabling impossible business models, complete payment system transformation, and stablecoins potentially reaching $10+ trillion in aggressive scenarios.

Strategic implications for Chinese cross-border business​

Chinese companies face a complex calculus in adopting stablecoins for international expansion. The technology delivers undeniable benefits: 50-80% cost savings, settlement times reduced from days to minutes, 24/7 liquidity, and elimination of correspondent banking friction. Major Chinese enterprises including JD.com ($74-75 billion target for its stablecoins), Ant Group (applying across three jurisdictions), and Zoomlion ($3.3 billion offshore revenue using AxCNH) demonstrate real-world viability through Hong Kong's regulatory framework.

However, risks remain substantial. China's June 2025 full criminalization of crypto creates existential legal exposure for mainland operations. The March 2023 USDC depeg to $0.87 and May 2022 TerraUST collapse ($45-60 billion lost) demonstrate catastrophic potential. Tether's opacity—never completing a full independent audit, only backed 27.6% of time during 2016-2018 per CFTC, though now holding $120+ billion reserves—poses systemic concerns. Smart contract vulnerabilities caused $328+ million in 2024 losses alone, with over 150 attack incidents.

The dual-track approach China has adopted—strict mainland prohibition with Hong Kong experimentation—creates a viable pathway. PBOC Governor Pan Gongsheng's June 2025 acknowledgment that stablecoins are "reshaping the global payment system" signals policy evolution from complete rejection to strategic engagement. Hong Kong's August 1, 2025 effective stablecoin framework provides legal infrastructure for CNH-pegged stablecoins targeting Belt and Road trade ($3.2 trillion annually).

Yet the geopolitical dimension cannot be ignored. The US GENIUS Act aims to "maintain USD dominance amid China's digital currency challenge," generating an expected $1.75 trillion in new dollar stablecoins by 2028. Ninety-nine percent of current stablecoin activity is dollar-denominated, extending American monetary hegemony into digital finance. China's response—accelerating e-CNY international expansion through Project mBridge ($500 billion target for 2025, 20-30% of Chinese trade by 2030)—represents strategic competition where stablecoins serve as proxies for currency influence.

For Chinese enterprises, the strategic recommendations are:

First, utilize Hong Kong-licensed operations exclusively for legal compliance, avoiding mainland exposure to criminal liability. JD.com, Ant Group, and Standard Chartered's participation in HKMA's sandbox demonstrates this pathway's viability.

Second, diversify across multiple stablecoins (USDC, USDT, potentially AxCNH) to avoid concentration risk, maintaining 10-15% reserves in fiat as contingency for depegging events. The SVB crisis demonstrated cascade effects where 40% USDC collateral exposure caused DAI to depeg to $0.85.

Third, implement robust custody solutions with qualified custodians using multi-party computation (MPC) and hardware security modules (HSM), recognizing that stablecoin holders are unsecured creditors with no legal claim to reserves in bankruptcy.

Fourth, monitor e-CNY international expansion as the primary long-term strategic option. The September 2025 PBOC International Operations Center in Shanghai with cross-border digital payment platform, blockchain service platform, and digital asset platform represents state-backed infrastructure that will ultimately receive government preference over private stablecoins for Chinese companies.

Fifth, maintain contingency plans recognizing regulatory uncertainty. The same technology treated as payment instrument in Singapore may be deemed security in one US state and deposit in another, creating enforcement risks even without clear guidelines.

The 2025-2027 period represents a critical window as the GENIUS Act framework solidifies, MiCA's 18-month transition period ends (July 2026), and Hong Kong's licensing regime matures. Chinese companies that establish compliant stablecoin capabilities now—through proper legal structures, qualified custody, diversified banking relationships, and real-time compliance monitoring—will capture first-mover advantages in efficiency gains while the 90% of firms globally "taking action" on stablecoins reshape cross-border payment infrastructure.

The fundamental tension between dollar-backed stablecoins extending US monetary hegemony and China's digital yuan ambitions will define the next decade of international finance. Chinese companies navigating this landscape must balance immediate operational benefits against long-term strategic alignment, recognizing that today's efficiency gains through USDC and USDT may tomorrow face policy reversal if geopolitical tensions escalate. The Hong Kong gateway—with CNH-pegged stablecoins for Belt and Road trade and eventual e-CNY integration—offers the most sustainable path for Chinese enterprises seeking to modernize cross-border payments while remaining aligned with national strategy.

Stablecoins are not merely a technological upgrade to SWIFT—they represent a fundamental restructuring of global payment architecture where programmable money, 24/7 settlement, and blockchain transparency create entirely new business models. Chinese companies that master this infrastructure through compliant pathways will thrive in the next era of international commerce, while those that ignore these developments risk competitive obsolescence as the rest of the world settles transactions in seconds for fractions of traditional costs.

Background and Recent PWG Reports on Digital Assets​

The President’s Working Group on Financial Markets (PWG) – a high-level U.S. interagency panel – has recently focused on digital assets in response to the rapid growth of crypto markets. In late 2024 and 2025, the PWG (rechartered as the Working Group on Digital Asset Markets under a January 2025 Executive Order) produced comprehensive recommendations for crypto regulation. The most significant publication is the July 30, 2025 PWG report titled “Strengthening American Leadership in Digital Financial Technology,” issued pursuant to an executive order by the U.S. President. This official report – accompanied by a White House fact sheet – lays out a federal roadmap for digital asset policy. It includes over 100 recommendations aiming to establish clear regulations, modernize financial rules, and reinforce U.S. leadership in crypto innovation. Key topics addressed span stablecoins, DeFi (decentralized finance), centralized crypto exchanges, tokenization of assets, custody solutions, market integrity and systemic risk, as well as the overall regulatory framework and enforcement approach for digital assets.

(The full PWG report is available via the White House website. Below, we summarize its main takeaways and analyze the implications for investors, industry operators, and global markets.)

Stablecoins and the Future of Payments​

Stablecoins – privately issued digital currencies pegged to fiat (often the U.S. dollar) – receive special attention as “one of the most promising” applications of distributed ledger technology in payments. The PWG’s report views dollar-backed stablecoins as a groundbreaking payment innovation that can modernize U.S. payments infrastructure while reinforcing the primacy of the U.S. dollar in the digital economy. The report notes that widespread adoption of USD-pegged stablecoins could help move the U.S. off costly legacy payment systems and improve efficiency. To harness this potential, a federal regulatory framework for stablecoins has been endorsed. In fact, by July 2025 the U.S. enacted the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the GENIUS Act), the first national law governing payment stablecoin issuers. The PWG urges regulators to implement the new stablecoin law quickly and faithfully, establishing robust oversight and risk requirements for stablecoin issuers (e.g. reserve quality, redemption rights, interoperability standards).

Key PWG recommendations on stablecoins include:

• Fast-track Stablecoin Regulations: Swiftly implement the GENIUS Act to provide stablecoin issuers a clear, federally supervised regime. This should include fit-for-purpose AML/CFT rules for stablecoin activities (e.g. customer due diligence, reporting of illicit transactions) to ensure safe integration of stablecoins into mainstream finance.
• Reinforce U.S. Dollar Leadership: Encourage adoption of USD-backed stablecoins in both domestic and cross-border payments, as these can lower transaction costs and uphold the dollar’s global role. The PWG explicitly views well-regulated stablecoins as a tool to “strengthen the role of the U.S. dollar” in the digital era.
• Oppose a U.S. CBDC: The Working Group pointedly opposes the creation of a U.S. central bank digital currency (CBDC), citing concerns over privacy and government overreach. It supports legislative efforts (such as the House-passed “Anti-CBDC Surveillance State Act”) to ban or restrict any U.S. CBDC initiative, thereby favoring private-sector stablecoin innovation over a federal digital currency. This stance reflects a priority on civil liberties and a market-led approach to digital dollars.

Overall, the PWG’s stablecoin guidance suggests that regulated stablecoins could become a pillar of future payments, provided there are strong consumer protections and financial stability guardrails. By enacting a stablecoin framework, the U.S. aims to prevent the risks of unregulated stablecoins (such as runs or loss of peg stability) while enabling the benefits of faster, cheaper transactions. The report warns that without broad and coherent oversight, stablecoins’ reliability as a payment instrument could be undermined, impacting market liquidity and confidence. Thus, clear rules are needed to support stablecoin growth without introducing systemic risk.

Decentralized Finance (DeFi) and Innovation​

The PWG report recognizes Decentralized Finance (DeFi) as an emerging segment of the crypto industry that leverages smart contracts to provide financial services without traditional intermediaries. Rather than attempting to suppress DeFi, the Working Group adopts a cautiously supportive tone, urging policymakers to embrace DeFi technology and acknowledge its potential benefits. The recommendations aim to integrate DeFi into regulatory frameworks in a way that fosters innovation while addressing risks.

Key points and recommendations on DeFi include:

• Integrate DeFi into Regulatory Frameworks: Congress and regulators should recognize DeFi’s potential in mainstream finance and work to incorporate it into existing laws. The report suggests that a “fit-for-purpose” approach is needed for digital asset market structure – one that eliminates regulatory blind spots but does not stifle novel decentralized models. For example, lawmakers are urged to clarify how laws apply to activities like decentralized trading or lending, possibly through new exemptions or safe harbors.
• Clarify the Status of DeFi Protocols: The PWG notes that regulation should consider how “decentralized” a protocol truly is when determining compliance obligations. It recommends that software developers or providers who lack control over user assets not be treated as traditional financial intermediaries in the eyes of the law. In other words, if a DeFi platform is sufficiently decentralized (no single party controlling funds or making unilateral decisions), it might not trigger the same licensing as a centralized exchange or money transmitter. This principle aims to avoid unfairly imposing bank-like regulations on open-source developers or automated protocols.
• AML/CFT in DeFi: A significant focus is on countering illicit finance in decentralized ecosystems. The PWG calls on regulators (and Congress, if needed) to clarify Bank Secrecy Act (BSA) obligations for DeFi participants. This means determining who in a DeFi context has anti-money laundering (AML) responsibilities – e.g. whether certain DeFi application front-ends, liquidity pool operators, or DAO entities should register as financial institutions. The report suggests tailoring AML/CFT requirements to different business models in crypto, and establishing criteria to identify when a system is truly decentralized versus under the control of an identifiable entity. It also emphasizes that even as the U.S. updates its rules, it should engage internationally (through bodies like FATF) to develop consistent global norms for DeFi oversight.

Implications of the PWG’s DeFi approach: By embracing DeFi’s promise, the PWG signals that crypto innovation can coexist with regulation. Regulators are encouraged to work with the industry – for instance, by possibly providing time-limited safe harbors or exemptions for new decentralized projects until they achieve sufficient decentralization or functionality. This reflects a shift from the earlier enforcement-centric approach to a more nuanced strategy that avoids treating all DeFi as inherently illicit. Still, the emphasis on AML means DeFi platforms may need to build in compliance features (like on-chain analytics tools or optional KYC portals) to detect and mitigate illicit activity. Ultimately, the PWG’s recommendations aim to legitimize DeFi within the U.S. financial system – allowing entrepreneurs to develop decentralized protocols onshore (rather than abroad) under clearer rules, and giving users greater confidence that DeFi services can operate above board rather than in legal gray areas.

Centralized Exchanges and Market Structure Oversight​

A core theme of the PWG’s report is establishing a “fit-for-purpose market structure framework” for digital assets. This directly addresses the regulation of centralized crypto exchanges, trading platforms, and other intermediaries that facilitate the buying, selling, and custody of digital assets. In recent years, high-profile exchange failures and scandals highlighted gaps in oversight – for example, the collapse of FTX in 2022 exposed the lack of federal authority over crypto spot markets. The PWG’s latest recommendations seek to fill these regulatory gaps to protect consumers and ensure market integrity.

Key actions on market structure and exchanges include:

• Clear Jurisdiction and Token Taxonomy: The report urges Congress to enact legislation (such as the proposed Digital Asset Market Clarity Act) that definitively classifies digital assets and delineates regulatory jurisdiction. In practice, this means identifying which tokens are “securities” versus “commodities” or other categories, and assigning oversight accordingly to the SEC or CFTC. Notably, the PWG suggests granting the Commodity Futures Trading Commission (CFTC) authority to oversee spot trading of non-security tokens (e.g. Bitcoin, Ether, and other commodities). This would eliminate the current gap where no federal regulator directly supervises cash markets for crypto commodities. The Securities and Exchange Commission (SEC) would retain authority over digital asset securities. By establishing a token taxonomy and regulatory split, exchanges and investors would know under which rules (SEC or CFTC) a given asset and its trading falls.
• Federal Licensing of Crypto Trading Platforms: The PWG recommends that both the SEC and CFTC use their existing powers to enable crypto trading at the federal level – even before new legislation is passed. This could involve agencies providing tailored registration pathways or exemptive orders to bring major crypto exchanges into compliance. For example, the SEC could explore exemptions to allow trading of certain tokens on SEC-regulated ATS or broker-dealer platforms without full securities exchange registration. Likewise, the CFTC could use its “crypto sprint” initiative to permit listing of spot crypto commodities on regulated venues by extending commodity exchange rules. The goal is to “immediately enable the trading of digital assets at the Federal level” by giving market participants clarity on registration, custody, trading, and recordkeeping requirements. This would be a shift from the status quo, where many U.S. exchanges operate under state licenses (e.g. as money transmitters) without unified federal oversight.
• Safe Harbors for Innovation: To encourage new products and services, the PWG endorses the use of safe harbors and sandboxes that allow innovative financial products to reach consumers with appropriate safeguards. For instance, the report favorably cites ideas like SEC Commissioner Hester Peirce’s proposed safe harbor for token projects (which would give startups a grace period to decentralize without full securities compliance). It also suggests regulators could allow pilot programs for things like tokenized securities trading or novel exchange models, under close monitoring. This approach aims to avoid “bureaucratic delays” in bringing new crypto offerings to market, which in the past have led U.S. firms to launch products overseas. Any safe harbor would be time-limited and conditioned on investor protection measures.

By formalizing oversight of centralized exchanges, the recommendations seek to bolster market integrity and reduce systemic risks. Federal supervision would likely impose stronger compliance standards (capital requirements, cybersecurity, audits, segregation of customer assets, etc.) on major crypto platforms. This means fewer opportunities for fraud or poor risk management – issues at the heart of past exchange collapses. In the PWG’s view, a well-regulated U.S. crypto market structure will protect consumers while keeping the industry’s center of gravity in America (rather than ceding that role to offshore jurisdictions). Notably, the House of Representatives had already passed a comprehensive market structure bill in 2024 with bipartisan support, and the PWG’s 2025 report strongly supports such legislation to “ensure the most cost-efficient and pro-innovation regulatory structure for digital assets.”

Tokenization of Assets and Financial Markets​

Another forward-looking topic in the PWG report is asset tokenization – using blockchain tokens to represent ownership of real-world assets or financial instruments. The Working Group views tokenization as part of the next wave of fintech innovation that can make markets more efficient and accessible. It encourages regulators to modernize rules to accommodate tokenized assets in banking and securities markets.

Key insights on tokenization include:

• Tokenized Bank Deposits and Payments: The report highlights ongoing private-sector experiments with tokenized bank deposits (sometimes called “deposit tokens”) which could enable instant settlement of bank liabilities on a blockchain. Regulators are urged to clarify that banks may tokenize their assets or deposits and treat such tokens similarly to traditional accounts under appropriate conditions. The PWG recommends banking agencies provide guidance on tokenization activities, ensuring that if a tokenized deposit is fully reserved and redeemable, it should not face undue legal barriers. Recently, large banks and consortia have explored interoperable tokenized money to improve payments, and the PWG wants U.S. rules to accommodate these developments so the U.S. remains competitive in payments tech.
• Tokenized Securities and Investment Products: The SEC is encouraged to adapt existing securities regulations to permit tokenization of traditional assets. For example, Regulation ATS and exchange rules could be updated to allow trading of tokenized securities alongside crypto assets on the same platforms. The PWG also suggests the SEC consider explicit rules or exemptions for tokenized shares, bonds, or funds, such that the custody and transfer of these tokens can legally occur on distributed ledgers. This would involve ensuring that custody rules accommodate digital asset securities (e.g. clarifying how a broker or custodian can hold tokens on behalf of customers in compliance with the SEC’s custody rule). If successful, these steps could integrate blockchain efficiencies (like faster settlement and 24/7 trading) into mainstream capital markets, under regulated structures.

By addressing tokenization, the PWG acknowledges a future where traditional financial assets live on blockchain networks. Adapting regulations now could unlock new funding and trading models – for instance, private equity or real estate shares being fractionalized and traded as tokens 24/7, or bonds settling instantly via smart contracts. The recommendations imply that investor protections and disclosure requirements should travel with the asset into its tokenized form, but that the mere use of a blockchain should not prohibit innovation. In summary, the PWG urges U.S. regulators to future-proof their rules so that as finance evolves beyond paper certificates and legacy databases, the U.S. remains the leading venue for tokenized markets rather than letting other jurisdictions take the lead.

Crypto Custody and Banking Services​

The report places strong emphasis on integrating digital assets into the U.S. banking system. It critiques past regulatory resistance that made banks hesitant to serve crypto clients (e.g. the so-called “Operation Choke Point 2.0” where crypto firms were debanked). Going forward, the PWG calls for a predictable, innovation-friendly banking regulatory environment for digital assets. This involves enabling banks to provide custody and other services, under clear guidelines.

Major recommendations for banks and custody include:

• End Discriminatory Barriers: Regulators have “ended Operation Choke Point 2.0” – meaning agencies should no longer deny banking services to lawful crypto businesses simply due to their sector. The PWG insists bank regulators ensure that risk management policies are technology-neutral and do not arbitrarily exclude crypto clients. In practice, this means banks should be able to open accounts for exchanges, stablecoin issuers, and other compliant crypto firms without fear of regulatory reprisal. A stable banking partner network is critical for crypto markets (for fiat on/off ramps and trust), and the report seeks to normalize those relationships.
• Clarity on Permissible Activities: The PWG recommends “relaunching crypto innovation efforts” within the bank regulatory agencies. Specifically, it asks the OCC, FDIC, and Federal Reserve to clarify what digital asset activities banks may engage in. This includes issuing updated guidance or regulations confirming that custody of crypto assets is a permissible activity for banks (with appropriate safeguards), that banks can assist customers in crypto trading or use public blockchains for settlement, and even that banks could issue stablecoins with proper oversight. Under the prior administration, the OCC had issued interpretive letters (in 2020–21) allowing national banks to custody crypto and hold reserves for stablecoin issuers; the PWG signals a return to that constructive guidance, but with interagency consistency.
• Regulatory Process and Fairness: The report calls for greater transparency in bank chartering and Federal Reserve master account access for fintech and crypto firms. This means if a crypto-focused institution seeks a national bank charter or access to Fed payment systems, regulators should have a clear, fair process – potentially addressing concerns that novel applicants were being stonewalled. The PWG also urges parity across charter types (so, for example, a state-chartered crypto bank isn’t unfairly disadvantaged compared to a national bank). All regulated entities should have a pathway to offer digital asset services if they meet safety and soundness standards.
• Align Capital Requirements with Risk: To encourage bank involvement, capital and liquidity rules should reflect the actual risks of digital assets rather than blanket high risk-weights. The PWG is critical of overly punitive capital treatment (such as a 1250% risk weight for certain crypto exposures as initially proposed by Basel). It advocates for revisiting international and U.S. bank capital standards to ensure that, for example, a tokenized asset or stablecoin fully backed by cash is not penalized more than the underlying asset itself. Right-sizing these rules would allow banks to hold crypto assets or engage in blockchain activities without incurring outsized capital charges that make such business uneconomical.

In summary, the PWG envisions banks as key infrastructure for a healthy digital asset ecosystem. By explicitly permitting custody and crypto-related banking, customers (from retail investors to institutional funds) would gain safer, insured options to store and transfer digital assets. Banks entering the space could also increase market stability – for instance, well-capitalized banks issuing stablecoins or settling crypto trades might reduce reliance on offshore or unregulated entities. The recommendations, if implemented, mean U.S. banks and credit unions could more freely compete in providing crypto custody, trading facilitation, and tokenization services, all under the umbrella of U.S. banking law. This would be a sea change from the 2018–2022 era, when many U.S. banks exited crypto partnerships under regulatory pressure. The PWG’s stance is that customer demand for digital assets is here to stay, and it’s better for regulated U.S. institutions to meet that demand in a transparent way.

Market Integrity and Systemic Risk Management​

A driving rationale behind the PWG’s digital asset push is preserving market integrity and mitigating systemic risks as the crypto sector grows. The report acknowledges events like stablecoin failures and exchange bankruptcies that rattled markets in the past, and it aims to prevent such scenarios through proper oversight. Several recommendations implicitly target strengthening market resilience:

• Filling Regulatory Gaps: As noted, giving the CFTC spot market authority and the SEC clearer authority over crypto securities is intended to bring all major trading under regulatory supervision. This would mean regular examinations of exchanges, enforcement of conduct rules (against market manipulation, fraud, insider trading), and requirements for risk management. By eliminating the “grey area” where large platforms operated outside federal purview, the likelihood of hidden problems (like commingling of funds or reckless lending) spilling into crises is reduced. In other words, robust oversight = healthier markets, with early detection of issues before they become systemic.
• Stablecoin Stability and Backstops: The stablecoin framework (GENIUS Act) introduces prudential standards (e.g. high-quality reserves, audits, redemption guarantees) for payment stablecoins. This greatly lowers the risk of a stablecoin “breaking the buck” and causing a crypto market liquidity crunch. The report’s emphasis on dollar stablecoins reinforcing dollar dominance also implies a goal of avoiding a scenario where a poorly regulated foreign stablecoin (or an algorithmic stablecoin like the failed TerraUSD) could dominate and then collapse, harming U.S. users. Additionally, by considering stablecoins as potential payment system components, regulators can integrate them into the existing financial safety nets (for example, oversight akin to banks or money market funds) to absorb shocks.
• Disclosure and Transparency: The PWG supports requiring appropriate disclosures and audits for crypto firms to improve transparency. This might involve exchanges publishing proof of reserves/liabilities, stablecoin issuers disclosing reserve holdings, crypto lenders providing risk factors, etc. Better information flow helps both consumers and regulators judge risks and reduces the chance of sudden loss of confidence due to unknown exposures. Market integrity is strengthened when participants operate with clearer, standardized reporting – analogous to public company financial reporting or regulated broker-dealer disclosures.
• Monitoring Systemic Connections: The report also implicitly calls for regulators to watch intersections between crypto markets and traditional finance. As banks and hedge funds increasingly engage with crypto, regulators will need data and tools to monitor contagion risk. The PWG encourages leveraging technology (like blockchain analytics and inter-agency information sharing) to keep an eye on emerging threats. For example, if a stablecoin grew large enough, regulators might track its reserve flows or major corporate holders to foresee any run risk. Similarly, enhanced cooperation with global standard-setters (IOSCO, FSB, BIS, etc.) is recommended so that standards for crypto market integrity are aligned internationally, preventing regulatory arbitrage.

In essence, the PWG’s plan aims to integrate crypto into the regulatory perimeter in a risk-focused manner, thereby guarding the broader financial system. An important point the report makes is that inaction carries its own risk: “a lack of broad, coherent, and robust oversight can undermine stablecoins’ reliability... limiting their stability and potentially affecting the broader health of digital asset markets.” Unregulated crypto markets could also lead to “trapped liquidity” or fragmentation that exacerbates volatility. By contrast, the recommended framework would treat similar activities consistently (same risks, same rules), ensuring market integrity and fostering public trust, which in turn is necessary for market growth. The desired outcome is that crypto markets become safer for all participants, diminishing the likelihood that crypto-related shocks could have knock-on effects on the wider economy.

Regulatory Framework and Enforcement Approach​

A notable shift in the PWG’s 2025 recommendations is the pivot from regulation-by-enforcement to proactive rulemaking and legislation. The report outlines a vision for a comprehensive regulatory framework that is developed transparently and in collaboration with industry, rather than solely through after-the-fact enforcement actions or patchwork state rules. Key elements of this framework and enforcement philosophy include:

• New Legislation to Fill in the Blanks: The PWG explicitly calls on Congress to enact major digital asset laws – building on efforts already underway. Two priority areas are market structure legislation (like the CLARITY Act) and stablecoin legislation (the GENIUS Act, now law). By codifying rules in statute, regulators will have clear mandates and tools for oversight. For example, once the CLARITY Act (or similar) is passed, the SEC and CFTC will have defined boundaries and possibly new authorities (such as the CFTC’s spot market oversight). This reduces regulatory turf wars and uncertainty. The PWG also backs bills to ensure crypto taxation is predictable and that CBDCs are prohibited absent congressional approval. In sum, the PWG sees Congress as a crucial player in providing regulatory certainty through legislation that keeps pace with crypto innovation. Lawmakers in 2024–2025 have shown bipartisan interest in such frameworks, and the PWG’s report reinforces that momentum.

• Use of Existing Authorities – Guidance and Exemptions: While awaiting new laws, the PWG wants financial regulators to actively use their rulemaking and exemptive powers under current law to clarify crypto rules now. This includes the SEC tailoring securities rules (e.g. defining how crypto trading platforms can register, or exempting certain token offerings under a new safe harbor). It includes the CFTC issuing guidance on what tokens are considered commodities and how brokers and funds should handle crypto. And it includes Treasury/FinCEN updating or rescinding outdated guidance that may hinder innovation (for instance, reviewing prior AML guidance to ensure it aligns with new laws and doesn’t unnecessarily burden non-custodial actors). Essentially, regulators are encouraged to proactively clarify gray areas – from custody rules to definitions – before crises occur or enforcement becomes the default. The report even suggests regulators consider no-action letters, pilot programs, or interim final rules as tools to provide quicker clarity to the market.

• Balanced Enforcement: Target Bad Actors, Not Technology. The PWG advocates an enforcement posture that is aggressive on illicit activity but fair to lawful innovation. One recommendation is that regulators “prevent the misuse of authorities to target lawful activities of law-abiding citizens”. This is a direct response to concerns that previous regulators applied bank regulations or securities laws in an overly punitive way to crypto firms, or pursued enforcement without giving clarity. Going forward, enforcement should focus on fraud, manipulation, sanctions evasion, and other crimes – areas where the report also calls for bolstering agencies’ tools and training. At the same time, responsible actors who seek to comply should get guidance and the opportunity to do so, rather than being ambushed by enforcement. The end of “Operation Choke Point 2.0” and closure of certain high-profile enforcement cases in early 2025 (as noted by officials) underscores this shift. That said, the PWG does not suggest going soft on crime – it actually recommends enhancing blockchain surveillance, information sharing, and global coordination to trace illicit funds and enforce sanctions in crypto. In summary, the approach is tough on illicit finance, welcoming to legitimate innovation.

• Tax Compliance and Clarity: A part of the regulatory framework often overlooked is taxation. The PWG addresses this by urging the IRS and Treasury to update guidance so that crypto taxation is more fair and predictable. For example, providing clarity on whether small crypto transactions qualify for de minimis tax exemptions, how staking rewards or “wrapped” tokens are taxed, and ensuring crypto assets are subject to anti-abuse rules like the wash-sale rule. Clear tax rules and reporting requirements will improve compliance and make it easier for U.S. investors to meet obligations without excessive burden. The report suggests collaboration with industry tax experts to craft practical rules. Improved tax clarity is part of the broader enforcement picture too – it reduces the likelihood of tax evasion in crypto and signals that digital assets are being normalized within financial regulations.

In effect, the PWG’s plan outlines a comprehensive regulatory framework where all major aspects of the crypto ecosystem (trading platforms, assets, issuers, banks, investors, and illicit finance controls) are covered by updated rules. This framework is designed to replace the current patchwork (where some activities fall between regulators or rely on enforcement to set precedent) with explicit guidelines and licenses. Enforcement will still play a role, but ideally as a backstop once rules are in place – going after outright frauds or sanctions violators – rather than as the primary tool to shape policy. If implemented, such a framework would mark the maturation of U.S. crypto policy, giving both industry and investors a clearer rulebook to follow.

Implications for U.S.-Based Investors​

For U.S. investors, the PWG’s recommendations promise a safer and more accessible crypto market. Key impacts include:

• Greater Consumer Protection: With federal oversight of exchanges and stablecoin issuers, investors should benefit from stronger safeguards against fraud and insolvency. Regulatory oversight would require exchanges to segregate customer assets, maintain adequate reserves, and follow conduct rules – reducing the risk of losing funds to another exchange collapse or scam. Enhanced disclosures (e.g. audits of stablecoin reserves or risk reports from crypto firms) will help investors make informed decisions. Overall, the market integrity measures aim to protect investors much like securities and banking laws do in traditional markets. This could increase public confidence in participating in digital assets.
• More Investment Opportunities: The establishment of clear rules may unlock new crypto investment products in the U.S. For instance, if tokenized securities are allowed, investors could access fractional shares of assets that were previously illiquid. If the SEC provides a pathway for spot Bitcoin ETFs or registered trading of top crypto commodities, retail investors could get exposure through familiar, regulated vehicles. The emphasis on allowing innovative products via safe harbors means U.S. investors might not have to go offshore or to unregulated platforms to find the latest crypto offerings. In the long run, bringing crypto into mainstream regulation could integrate it with brokerages and retirement accounts, further widening access (with proper risk warnings).
• Continued USD Dominance in Crypto: By promoting USD-backed stablecoins and discouraging a U.S. CBDC, the framework doubles down on the U.S. dollar as the unit of account in global crypto markets. For U.S. investors, this means the crypto economy will likely remain dollar-centric – minimizing currency risk and potentially keeping dollar-denominated liquidity high. Payment stablecoins overseen by U.S. regulators may become ubiquitous in crypto trading and DeFi, ensuring U.S. investors can transact in a stable value they trust (versus volatile or foreign tokens). This also aligns with protecting investors from inflation or instability of non-USD stablecoins.
• Fair Tax Treatment: The push to clarify and modernize crypto tax rules (such as exempting small transactions or defining tax treatment for staking) could reduce the compliance burden on individual investors. For example, a de minimis exemption might allow an investor to spend crypto for small purchases without triggering capital gains calculations on each cup of coffee – making crypto use more practical in daily life. Clear rules on staking or airdrops would prevent unexpected tax bills. In short, investors would get predictability, knowing how their crypto activities will be taxed ahead of time, and potentially relief in areas where current rules are overly onerous.

In combination, these changes create a more investor-friendly crypto environment. While new regulations can add some compliance steps (e.g. stricter KYC on all U.S. exchanges), the trade-off is a market less prone to catastrophic failures and scams. U.S. investors would be able to engage in crypto with protections closer to those in traditional finance – a development that could encourage more participation from conservative investors and institutions that so far stayed on the sidelines due to regulatory uncertainty.

Implications for Crypto Operators (Exchanges, Custodians, DeFi Platforms)​

For crypto industry operators, the PWG’s roadmap presents both opportunities and responsibilities. Some of the key impacts on exchanges, custodians, and DeFi developers/operators include:

• Regulatory Clarity and New Licenses: Many crypto businesses have long sought clarity on “what rules apply” – the PWG report aims to deliver that. Exchanges dealing in non-security tokens might soon come under a clear CFTC licensing regime, while those dealing in security tokens would register with the SEC (or operate under an exemption). This clarity could attract more companies to become compliant rather than operate in regulatory gray areas. U.S. exchanges that obtain federal licensure may gain a competitive edge through increased legitimacy, able to advertise themselves as subject to rigorous oversight (potentially attracting institutional clients). Custodians (like Coinbase Custody or Anchorage) would similarly benefit from clear federal standards for digital asset custody – possibly even attaining bank charters or OCC trust charters with confidence that those are accepted. For DeFi platform teams, clarity on the conditions that would make them not a regulated entity (e.g. if truly decentralized and non-custodial) can guide protocol design and governance. On the other hand, if certain DeFi activities (like running a front-end or a DAO with admin keys) are deemed regulated, operators will at least know the rules and can adapt or register accordingly, rather than facing uncertain enforcement.
• Compliance Burdens and Costs: With regulation comes increased compliance obligations. Exchanges will have to implement stricter KYC/AML programs, surveillance for market manipulation, cybersecurity programs, and likely reporting to regulators. This raises operational costs, which may be challenging for smaller startups. Custodial firms might need to maintain higher capital reserves or obtain insurance as required by regulators. Smart contract developers might be expected to include certain controls or risk mitigations (for example, the report hints at standards for code audits or backstops in stablecoin and DeFi protocols). Some DeFi platforms might need to geofence U.S. users or alter their interfaces to remain compliant with U.S. rules (for instance, if unmanned protocols are allowed but any affiliated web interface must block illicit use, etc.). Overall, there’s a trade-off between innovation freedom and compliance – the largest, most established firms will likely manage the new compliance costs, whereas some smaller or more decentralized projects might struggle or choose to block U.S. users if they can’t meet requirements.
• Innovation via Collaboration: The PWG explicitly calls for public-private collaboration in crafting and implementing these new rules. This indicates regulators are open to input from the industry to ensure rules make sense technically. Crypto operators can seize this opportunity to work with policymakers (through comment letters, sandbox programs, industry associations) to shape practical outcomes. Additionally, the safe harbor concepts mean operators could have room to experiment – e.g. launching a new network under a time-bound exemption – which can accelerate innovation domestically. Firms like Chainalysis note that blockchain analytics and compliance tech will be essential to bridging gaps between industry and regulators, so crypto businesses will likely increase adoption of RegTech solutions. Those operators who invest early in compliance tools and cooperate with regulators may find themselves at an advantage when the framework solidifies. Conversely, firms that have relied on regulatory ambiguity or arbitrage will face a reckoning: they must either evolve and comply or risk enforcement crackdowns for non-compliance once clear rules are in place.
• Expanded Market and Banking Access: On a positive note, ending the hostile stance means crypto companies should find it easier to access banking and capital. With regulators directing banks to treat crypto clients fairly, exchanges and stablecoin issuers can maintain secure fiat channels (e.g. stable banking relationships for customer deposits, wire transfers, etc.). More banks might also partner with crypto firms or acquire them, integrating crypto services into traditional finance. The ability for depository institutions to engage in tokenization and custody means crypto firms could collaborate with banks (for example, a stablecoin issuer partnering with a bank to hold reserves and even issue the token). If the Federal Reserve provides a clear path to payment system access, some crypto-native firms could become regulated payment companies in their own right, widening their services. In summary, legitimate operators will find a more welcoming environment to grow and attract mainstream investment under the PWG’s pro-innovation policy, as the “crypto capital of the world” vision is to encourage building in the U.S., not abroad.

In conclusion, crypto operators should prepare for a transition: the era of light or no regulation is ending, but a more stable and legitimized business environment is beginning. Those who adapt swiftly – upgrading compliance, engaging with policymakers, and aligning their business models with the forthcoming rules – could thrive with expanded market opportunities. Those who cannot meet the standards may consolidate or leave the U.S. market. Overall, the PWG’s report signals that the U.S. government wants a thriving crypto industry onshore, but under a rule of law that ensures trust and stability.

Implications for Global Crypto Markets and Compliance​

The influence of the PWG’s digital asset recommendations will extend beyond U.S. borders, given the United States’ central role in global finance and the dollar’s reserve currency status. Here’s how the insights and recommendations may impact global crypto markets and international compliance:

• Leadership in Global Standards: The U.S. is positioning itself as a leader in setting international norms for digital asset regulation. The PWG explicitly recommends that U.S. authorities engage in international bodies to shape standards for payments technology, crypto asset classifications, and risk management, ensuring they reflect “U.S. interests and values”. This likely means more active U.S. participation and influence at forums like the Financial Stability Board (FSB), International Organization of Securities Commissions (IOSCO), and the Financial Action Task Force (FATF) on matters such as stablecoin oversight, DeFi AML rules, and cross-border digital payments. As the U.S. implements its framework, other countries may follow suit or adjust their regulations to be compatible – much as foreign banks adapt to U.S. AML and sanctions expectations. A robust U.S. framework could become a de facto global benchmark, especially for jurisdictions that have yet to develop comprehensive crypto laws.
• Competitive Pressure on Other Jurisdictions: By striving to become “the crypto capital of the world,” the U.S. is sending a message of openness to crypto innovation, albeit regulated innovation. This could spur a regulatory race-to-the-top: other major markets (Europe, UK, Singapore, Hong Kong, etc.) have also been rolling out crypto regimes (e.g. the EU’s MiCA regulation). If the U.S. framework is seen as balanced and successful – protecting consumers and fostering growth – it may attract capital and talent, prompting other countries to refine their policies to remain competitive. For example, stricter jurisdictions might soften rules to not drive businesses away, while very lax jurisdictions might raise standards to continue accessing U.S. markets under new rules (for instance, an offshore exchange registering with the CFTC to serve U.S. customers legally). Overall, global crypto firms will monitor U.S. policy closely: those rules might dictate whether they can operate in the lucrative American market and under what conditions.
• Cross-Border Compliance and Enforcement: The PWG’s focus on AML/CFT and sanctions in crypto will resonate globally. Global crypto markets will likely see increased compliance expectations for anti-illicit finance controls, as the U.S. works with allies to close loopholes. This could mean more exchanges worldwide implementing robust KYC and transaction monitoring (often using blockchain analytics) to meet not just local laws but also U.S. standards, since U.S. regulators may condition market access on such compliance. Additionally, the recommendation for Treasury’s OFAC to update sanctions guidance for digital assets and gather industry feedback means clearer global guidelines on avoiding sanctioned addresses or entities. We may see greater coordination in enforcement actions across borders – e.g. U.S. DOJ working with foreign partners to tackle ransomware crypto flows or terrorist financing through DeFi, using the improved tools and legal clarity recommended by the PWG.
• Effects on Global Market Liquidity and Innovation: If U.S. dollar stablecoins become more regulated and trusted, they could further penetrate global crypto trading and even emerging market use cases (e.g. as substitutes for local currency in high-inflation countries). A well-regulated USD stablecoin (with U.S. government oversight) might be adopted by foreign fintech apps, boosting dollarization – a geopolitical soft power win for the U.S.. Conversely, the U.S. rejecting a CBDC path could leave room for other major economies (like the EU with a digital euro, or China with its digital yuan) to set standards in state-backed digital money; however, the PWG clearly bets on private stablecoins over government coins in the global arena. On innovation, if the U.S. invites global crypto entrepreneurs “to build it with us” in America, we might see some migration of talent and capital to the U.S. from less friendly environments. However, the U.S. will need to implement its promises; otherwise, jurisdictions with clearer immediate regimes (like Switzerland or Dubai) could still attract startups. In any case, a healthy U.S. crypto sector integrated with traditional finance could increase overall liquidity in global markets, as more institutional money comes in under the new regulatory framework. That can reduce volatility and deepen markets, benefiting traders and projects worldwide.

From a global compliance perspective, one can anticipate a period of adjustment as international firms reconcile U.S. requirements with their local laws. Some foreign exchanges might choose to geofence U.S. users rather than comply (as we’ve seen with some derivative platforms), but the economic incentive to participate in the U.S. market is strong. As the PWG’s vision is implemented, any firm touching U.S. investors or the U.S. financial system will need to up its compliance game – effectively exporting U.S. standards abroad, much like FATF’s “Travel Rule” for crypto transfers has global reach. In summary, the PWG’s digital asset policies will not only shape the U.S. market but also influence the evolution of the global regulatory landscape, potentially ushering in a more uniformly regulated and safer international crypto environment.

Conclusion​

The U.S. President’s Working Group on Financial Markets’ latest reports (2024–2025) mark a pivotal shift in crypto policy. They collectively articulate a comprehensive strategy to mainstream digital assets under a robust regulatory framework while championing innovation and American leadership. All major facets – from stablecoins and DeFi to exchanges, tokenization, custody, illicit finance, and taxation – are addressed with concrete recommendations. If these recommendations translate into law and regulatory action, the result will be a clearer rulebook for the crypto industry.

For U.S. investors, this means greater protections and confidence in the market. For crypto operators, it means clearer expectations and potentially broader opportunities, albeit with higher compliance responsibilities. And for the global crypto ecosystem, U.S. engagement and leadership could drive more consistency and legitimacy worldwide. The key takeaway is that crypto in the United States appears to have moved from an uncertain “Wild West” phase to an acknowledged permanent feature of the financial landscape – one that will be built together by public authorities and private innovators under the guidance of reports like these. The PWG’s vision, in essence, is to “usher in a Golden Age of Crypto” where the U.S. is the hub of a well-regulated yet dynamic digital asset economy. The coming months and years will test how these ambitious recommendations are implemented, but the direction is clearly set: towards a future of crypto that is safer, more integrated, and globally influential.

Sources:

• U.S. White House – Fact Sheet: President’s Working Group on Digital Asset Markets Recommendations (July 30, 2025).
• U.S. White House – Strengthening American Leadership in Digital Financial Technology (PWG Report, July 2025).
• U.S. Treasury – Remarks by Treasury Secretary on White House Digital Assets Report Launch (July 30, 2025).
• Chainalysis Policy Brief – Breakdown of PWG Digital Assets Report Recommendations (July 31, 2025).
• Latham & Watkins – Summary of PWG Report on Digital Asset Markets (Aug 8, 2025).
• U.S. House Financial Services Committee – Press Release on Digital Asset Framework Legislation (July 30, 2025).
• President’s Working Group on Financial Markets – Report on Stablecoins (2021) (for historical context).