After all, banks run on an age old system called correspondent banking, where to send money from one bank to another, it has to go via five other banks. Because not all banks have direct communication with each other.

This process sometimes can take days, especially if it’s around a holiday. The average number of days in a year when banks don’t work is 117. Out of 365 days.

That’s 30% of the year.

And on those days when banks do work, they only work for 8 hours. Another 16 hours per day wasted.

Archaic. Bleh!

Stablecoins work 24/7/365. You can settle a stablecoin transaction instantly across the world without ever needing an intermediary.

You can see it in this visual. It’s that simple.

So stablecoins have won the game. That’s it!

That’s it, right?

Actually this is what the transaction looks like in the real world.

A stablecoin transaction going in and out of fiat rails looks practically indistinguishable from a generic fiat transfer. Both in the number of hops and fees.

The transaction requires an orchestrator who coordinates with onramps to convert fiat into stablecoins, FX entities to convert the stablecoin into the local currency, and local licensed fiat entities to deliver the last mile.

And just like the banking system, every entity takes a cut of the transaction.

Why is that?

Why do stablecoins, despite having solved the problem using blockchain, still suffer from the same burdens as fiat?

I dug through my notes and spoke to some people to answer this question.

Why are stablecoins “slow and expensive”?

I have been thinking about writing a orchestration piece for a long time. How it’s going to melt the boundaries between fiat and stablecoin and become one money.

What I didn’t realize was the complexity of cross border stablecoin payments isn’t technological. You could have the best possible technical solution to the speed problem (aka blockchain) and still be no better off than an MTO on legacy rails.

Before I explain, here’s what the BIS Annual Economic Report 2026 says about stablecoin cross border payments:

The claim is based on a study conducted earlier this year at the Harvard Business School.

The Harvard team compared one payment going through three different rails: banks on SWIFT, fintech MTOs, and the stablecoin sandwich.

The findings, roughly:

• Banks charge 200 to 400 bps of FX markup (300 bps median) on retail international transactions. Even on the most liquid currency pairs, that’s the markup. (Excluding Wire fees)

  • 90% of SWIFT-based transactions arrive in the destination bank within 1 hour. But it can take several hours to become available to the receiver.

• The spread on the wholesale FX market on those same currency pairs is 6 to 9 bps.

• The fintech companies charge anywhere from 40 to 400 bps all in, depending on the corridor and transaction size. And they got there without a blockchain: prefunded local accounts, internal netting, and other assorted neat accounting tricks.

  • In most cases, Fintech MTOs take minutes to a few hours to arrive at destination.

So the benchmark is right there in front of us. Stablecoins need to be faster and cheaper than the above examples.

The Harvard study tested primarily CEX → CEX transactions. Person A adds $100 USD on Coinbase, converts it into USDC, sends it to Person B on Kraken in Europe, who then off-ramps it to their bank account in euros.

Kraken charges a flat 1 percent trading fee if you do under $10,000 a month, plus a fixed euro withdrawal fee.

The total transaction cost ends up being around 2.20%.

It’s basically a median performance, against banks and legacy fintechs. Certainly nothing mindblowing.

So I ask myself why?

There are two answers to this question.

First, the Harvard study draws an incomplete picture of the stablecoin payments landscape. CEXs are possibly the worst venue to track cross-border transaction efficiency. Those platforms are designed for trading, not transacting. (But I’ll acknowledge that data is sparse on other venues, something I myself faced during this research)

Also, their dataset is extremely thin across platforms. The team only reported transaction details they manually performed. It didn’t come from a sourced list of thousands of verified transactions over a predetermined timeline.

I wouldn’t hang up my gloves because of this study.

However, however...

The study is right that there exists a stablecoin sandwich: a long chain of intermediaries through whom zigzaggingly travels the transaction.

Here is a visual from Conduit explaining the EUR to USD payment flow through Tempo.

But this is very much a case where you need to blame the game, not the player.

To test the efficacy of the stablecoin rail, I wanted to perform my own research. So I chose the most liquid and competitive corridor in the world as the battleground — US-Mexico.

Baptism by Fire

For context, the US-Mexico corridor transacts $65B per year. Every major player wants a piece of this corridor, including stablecoin rails.

I pulled the World Bank data on this corridor from Q3, 2025 (the latest available).

It’s a mix of banks and MTOs competing on fees on retail size transactions. The margins don’t get any thinner than this. It’s that competitive. The median transaction amount on this corridor is close to $400, putting the actual fees closer to the $500 column.

I wanted to see how a stablecoin app would stack up against these platforms. (not considering MoneyGram as a stablecoin play as that happened after this dataset was recorded)

The best example I found is Felix Pago. It’s a WhatsApp based money transmitting platform that serves the US-LatAm market.

I hit the same wall as the Harvard study as available information on Stablecoin rails is scarce and mostly self reported by orchestrators. Given their own stake in the game, I can’t take those numbers at face value, but they do serve as best case scenarios.

That being said, several sources converged on Felix Pago as the unanimous choice for this category.

Circle’s case study (July 2025) says Félix converts USD to USDC through Circle Mint. Stripe’s page says Bridge, a Stripe company, supplies the USDC and USD liquidity. And on the Mexico leg, Bitso converts the USDC to MXN. Which is then delivered through SPEI (Mexico’s real-time interbank system).

I arrived at the estimates through extrapolation and inference of publicly available data. The flat fee of $2.99 is factual.

As I said, my goal was to test the efficacy of the stablecoin rail in the most competitive corridor of the world.

As it stands, benchmarked against World Bank data and my own research, it’s in the top 5. Is it competitive? Very much. Does it blow legacy rails out of the water? Not really.

It gets beaten by the likes of Wise and MoneyGram on certain legacy rails, without a blockchain, head to head in this corridor.

I again question myself, why? If the actual transaction is completed in seconds for a negligible amount of fee, why doesn’t stablecoin win outright?

To understand the answer, we need to look under the hood of stablecoin orchestrators.

Under the Hood

Fiat and stablecoin don’t talk to each other. An orchestrator acts as an adapter between the two rails. It ‘orchestrates’ a series of financial entities to perform a multistep rail+currency conversion procedure.

I’ll try to unbundle the stack of three different orchestrators to break down what the actual flow looks like and who/what influences the fee and speed components.

• Bridge

• Conduit

• zerohash

I didn’t speak with any official sources from these companies, the following information is based on their public documentation.

Here is the generic flow before we get into who does what differently. The flowchart tracks a $1000 payment from the US to Mexico.

It’s about 8 hops, give or take a couple. You have two predictable fees charged by the consumer app and the orchestrator and one unpredictable FX fee based on market rate.

Bridge

Components in one US to Mexico transfer

• the consumer app (Félix for example)

• Bridge (the orchestrator)

• Circle Mint (dollars into USDC)

• a blockchain

• a market data provider for the effective rate

• an FX Counterparty for currency conversion

• a Mexican licensed institution for last mile(SPEI access)

Fee Breakdown

Bridge carefully positions itself to not have any currency risk on its books. It doesn’t lock in any fixed rate for a transaction over any period of time (others do). So the effective rate hinges on the FX swap rate at the time of conversion.

Stripe’s 2026 annual letter reported that Bridge’s transaction volume more than quadrupled during 2025. That implies roughly $20B annualized going into 2026.

zerohash

zerohash, while following a similar structure to Bridge, has a few key differences in its architecture.

Its own internal principal desk (zerohash liquidity services llc) acts a counterparty on some transactions. And they offer a rate lock of 5 to 30 seconds to initiate a transaction.

Fee Breakdown

zerohash in their 2026 Stablecoin Momentum Report mentioned $65B in total settled volume across more than 7 million end customers with a 690% yoy growth in transaction volume.

Also interestingly, before Mastercard acquired BVNK for $1.8B, they offered to acquire zerohash for up to $2B, but zerohash declined. One of the clearest signs of conviction in this space, and it shows the ultimate valuation for companies like zerohash will be orders of magnitude larger.

Conduit

There aren’t a lot of disclosed partner entities in the above two examples, but with Conduit I managed to find a few.

Conduit uses Braza Group for Brazilian FX, the CPN for the Mexico corridors, Yuno for distribution, Tempo as the chain, and somewhere between 20 and 30 banks. Take these names with a grain of salt as public documentation doesn’t necessarily disclose the entire network.

Fee Breakdown

I found this formula in Conduit’s API documentation. It doesn’t go any deeper than that, but it gives us the shell.

endUserRate = referenceRate × (1 − totalSpreadBps ÷ 10,000)

On Conduit’s $36M Series A announcement last year, they mentioned more than $10B in annualized payment volume, with operations across the US, LatAm, Europe, and Africa.

The key difference between Conduit and the two others is: ZeroHash and Bridge (under Stripe’s umbrella) operate with a full suite of licenses, fully compliant in the US and Europe. Whereas Conduit chose the rental path for its operations.

This is a move we have seen across other Stablecoin verticals, because of the time and cost that it requires (Bridge and zerohash are valued in multiple billions) smaller entities opt for a leaner partner-dependent strategy and focus on growth rather than owning the stack.

You can always go after the license later.

So who’s responsible for the fees?

The orchestrators and the consumer apps can compete against each other to shrink their portion of the fees. That’s how the free market works.

But what isn’t in their control is the FX fee.

You need four things to convert a dollar into pesos.

On top of that you have other service providers like Fireblocks payments network. Working-capital providers like Huma, who issue loans to fund the payment before the actual money arrives. It’s a neat way to get around the prefunding requirement.

The stablecoin leg is the cheapest part. The cost is disproportionately concentrated at the FX and exit leg, out of the blockchain’s reach.

It took me 2000 words to really explain that... despite having the ultimate technical solution, we’re still completely dependent on legacy fiat mechanisms to settle cross-border payments.

The stablecoin rail is only as cheap as the most expensive fiat component on the transaction flow. The same applies to settlement speed.

But remember, we’re testing the efficacy of the stablecoin rails in the most competitive corridor. Legacy rails have already compressed the fee structure to its limit and made the process as fast as the rails would allow. You need to fight for every basis point here.

But it isn’t the same everywhere else though. There are several high value corridors in the world where stablecoins can win outright both on fees and speed.

Corridors like US-India, US-Guatemala, US-Philippines present equally lucrative opportunities. You’ll find the same tradfi players competing there as well, but you get more of an opportunity to undercut the incumbents compared to US-Mexico.

Especially India is a standout corridor receiving nearly $40B every year from the US, $50B+ from the Gulf states, and around $15B from the UK.

Then there are corridors like Nigeria, Argentina, Turkey that suffer from a broken or restricted fiat exit. So much so that stablecoin p2p grey markets are a thriving business in these places already proving stablecoins’ efficacy and local demand.

The opportunity for stablecoin cross-border transactions isn’t contested anymore. I have mentioned in several of my writings that EM countries will present the most lucrative opportunities along with the hardest regulatory battles. Countries like India continue to present an adversarial outlook towards stablecoins and crypto as a whole. But I believe the size of the opportunity is worth a regulatory battle for institutions with deep pockets. But that’s a topic for another essay.

How I see the future

Stablecoin as a technology is so groundbreaking that for the first time in nearly half a century institutions are having to rethink the financial architecture.

Legacy platforms including banks and fintechs are aggressively considering adopting stablecoin rails. There is a short window (2 to 5 years in my estimates) for stablecoin native companies to establish themselves in this new financial order.

Consumer, orchestration, on/off ramp, FX are all places where we’ll see extreme competition over the next few years. More entities will chase a further shrinking margin with better products ultimately benefiting the end users.

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Whatever the current default consumer behavior is, simplify it or enrich it without adding extra steps.

Stablecoin cards pass this test with flying colors. The checkout flow remains the same as an ordinary card. And you can pay in dollars/crypto anywhere on the planet without being charged extortionate fees.

Whatever changes mechanistically take place behind the scenes.

The opportunity to silently embed stablecoins inside every card is worth multiple trillions of dollars. And the competition in the space is gearing up.

Card-linked stablecoin spending hit $4.5 billion in 2025, up 673% from the previous year. This year it’s already crossed $3.5B+ to date according to data from Paymentscan, with total card funding sitting above $5B.

Visa supports 130+ stablecoin-linked card programs across 50+ countries, and its stablecoin settlement pilot reached a $7 billion annualized run-rate in April, up 50% in a quarter, across nine blockchains.

The point of this essay is to paint a picture of how stablecoin cards work behind the scenes, what the stack looks like, and who’s taking advantage of this opportunity.

We’ll be looking at four companies in particular: Rain, Reap, Wirex, and Kulipa. None of them is a 1:1 competitor, they are all approaching the goal of dominating the payments stack from slightly different angles.

Rain is by far the biggest, worth $1.95 billion. Reap got acquired by Kraken for up to $600 million. Wirex pivoted from a decade-old consumer brand to a BaaS model. And Kulipa is a seed-stage bet, carving out a segment in this hypercompetitive space.

Business Model Breakdown: Rain, Reap, Wirex, Kulipa

To see where these four compete, you need the stack in your head.

I was planning to create a stack chart, but then I found this one from Artemis. They knocked it out of the park, so I decided to just use this.

As you can see, a card program has four layers: the network (Visa, Mastercard), the principal member who holds the BIN and settles directly with the network, the program manager who runs compliance, KYC, and the ledger, and the brand whose name is on the card.

Every fintech card you have ever used runs on this stack.

The most powerful entity in here is the card network. Visa and Mastercard have built a network completely ingrained in the modern financial architecture. 90%+ of all card transactions on earth get settled through either of these two giants (Visa/Mastercard’s market share is roughly 70/30, ex-China). Meaning they own the highways and they decide the toll for each transaction to pass.

But the card networks don’t touch the money flowing through the plumbing directly. They sell Principal Memberships to financial entities, a bank in the US, a licensed financial entity elsewhere, which actually operate the flow and interface with the card brands.

Think of a feudal hierarchy: Visa is the monarch that shares its resources with local lords to run the system effectively. The Principal Member is the most powerful landlord (equivalent to a Duke in our analogy), the Program Manager is a rung below that, and so it goes. Each layer collects rent (interchange fee) from the lower rung and sends it upward.

Rain

Rain, in our example, merges the principal member and the program manager together and collects a higher percentage of the fee.

Starting in 2021, Rain’s focus was issuing credit cards to DAOs, groups that held millions in stablecoins and could not get a bank account.

Rain’s had to figure out the tools it needed from first principles: onchain settlement, its own smart contracts, compliance program, and eventually its own network memberships.

Charles Yoo-Naut, Rain’s Co-founder, describes the stack as “you have your bank partner, you have your program manager, you might have a reseller, and then you actually have an app. We’ve merged those hops. There’s no reseller, there’s no program manager, there’s no bank, it’s just Rain”.

Rain became a Visa principal member in March 2025, a status historically reserved for banks. It has since added Mastercard principal membership as well. Today, Rain powers 200+ card programs, including Western Union, Nuvei, KAST, and EtherFi, runs $3 billion-plus in annualized volume after growing 38x in a year, and brings in around $100M in revenue. In January, ICONIQ led a $250 million Series C at $1.95 billion, a 17x markup in ten months.

Reap

Reap is the other prominent name in this stack. They approached the same business model with a twist. They chose Hong Kong as their base of operations instead of New York, got their Visa principal membership in Hong Kong and Mexico, and are focused on developing a full stack product instead of just the infra as Rain.

Earlier this year, Daren Guo shared their numbers on Peter Renton’s podcast: north of $6 billion a year in volume, revenue up 8x in ten months, profitable for more than a year, 250 people across 28 countries.

Where Reap is similar to Rain: As a Visa PM, it settles directly with Visa, in Hong Kong and Mexico. Reap rents its platform and licenses it out to card issuers in regions they operate in, acts as a program manager, and collects a percentage of the fees.

Where Reap differs from Rain: Reap offers a stablecoin-collateralized USD credit card to SMBs, putting them directly in touch with the end users, a layer Rain deliberately doesn’t operate in.

The collateralized credit card model is interesting: a company gives Reap $100 in stablecoins, receives a $100 secured credit line, and Reap works with issuers and market makers to settle Visa in fiat behind the scenes.

It holds Visa principal memberships in Hong Kong and Mexico, and a fresh MPI license in Singapore, and it powers neobanks in Africa and Brazil. On July 1, Kraken’s parent, Payward, completed its acquisition of Reap for up to $600 million. I wrote about it in March when the acquisition was announced.

Wirex

Wirex is a reflection of how the stablecoin card market has changed in the last 10 years. Wirex is the oldest company here, a 2014-vintage consumer crypto card app with 7 million users and $20 billion in lifetime transactions.

It holds its own FCA e-money license (the third crypto company ever to get one), though parts of its card issuance run through partner issuers by region. In 2025, Wirex made a strategic pivot to collect rent instead of scavenging for fees with other neobanks in an increasingly competitive landscape.

So Wirex packaged a decade of licenses, processing, and card operations into a BaaS platform. Also, it settles directly with Visa onchain and is the only company in this list that settles in both USDC and EURC. As per their company materials, they onboarded 300+ enterprise clients and reached a $ 1 billion annualized run-rate faster than any competitor’s record, plus a stablecoin Push-to-Card product on Visa Direct that can pay out to 3 billion cards in 200+ countries.

Important to mention, Wirex is still active in the consumer space. They recently launched Wirex One, a yield-paying consumer app. It’s similar to Reap, where the service provider is competing directly with its tenants. It’ll be interesting to see if the winning play is to go neutral or own the stack with a consumer product.

Kulipa

The infra stack of stablecoin issuance is a place for players with means. Acquiring licenses, onboarding major enterprise clients, operating in multiple jurisdictions — it ain’t cheap.

That’s where Kulipa is different. Kulipa entered the market with $9.2 million in total fundraising. For reference, Rain has raised $332 million to date, and Reap was acquired for $600 million.

Kulipa, founded in Paris in 2023 by Axel Cateland (ex-Mastercard), issues white-label cards for crypto wallets, with a specialty the bigger players generally avoid: self-custodial wallets, where there is no deposit-taking relationship or any KYC requirements (on the wallet side).

Axel’s pitch is total absorption of the problem: “We offer the full solution…We come with the licenses. We come with the tech”.

Its first flagship client was Argent, now Ready, whose metal card spends USDC straight from the wallet while the merchant receives euros, completely oblivious of the underlying flow. Kulipa has regulated issuing coverage via partners in the EU, in Argentina accessing LatAm, and in Nigeria.

From my perspective, the play is to target clients that are small for the incumbents’ taste. A low-maintenance plug-and-play compliance layer is perfect for early-stage neobanks.

Where these 4 compete: Rain and Reap occupy the same layer, principal membership, and program management. The Kraken acquisition now makes Reap exchange-owned, while Rain remains firmly neutral. Wirex and Kulipa sell launch speed to smaller fintechs in slightly different ways. Wirex leverages its decade-old industry contacts and insider knowledge to play the board, whereas Kulipa is positioning itself as a compliant low-lift stack with self-custodial features.

There is one challenger in this category that I want to mention, although public information is scarce, so I can’t go in depth. Bridge (owned by Stripe) partnered with Visa to issue stablecoin-linked cards through a single API last year. They have since launched across several LatAm countries with the express goal of expanding to 100+ countries by the end of this year. Given Stripe’s giant merchant network, it can indeed build a formidable competitor to eat this stack. I’ll be watching how this develops.

Why the Exponential Value Accrues at the License Tier

Let’s follow a $100 spend on a stablecoin card.

The holder spends $100. The merchant receives roughly $97.50. Visa takes its network cut, and the bulk of that ~$2.50 of interchange flows back to the issuer, Rain, which shares a negotiated slice with the brand.

Rain also charges SaaS fees in three tiers plus usage fees per KYC, per card, per transaction. The category norm across the industry is an interchange of 1 to 2%, plus FX spread, reserve yield, and cardholder fees.

That’s how much power the upper layers of the stack wield. The Principal decides the revenue split with the brand with what’s left after Visa’s cut. The card brand can only negotiate up to a certain point based on volume and region.

Every consumer stablecoin card you have seen advertised, with its cashback and metal body, is a tenant. The four companies in this essay are the landlords. The landlords get a cut of every swipe of every tenant.

KAST raised at a $600 million valuation as one of the hottest consumer brands in the category. They expect revenue to reach $100M in 2026. Rain, its landlord, is worth ~$2B at the same revenue range. Because Rain’s moat is much more defensible.

The second, less discussed economic engine is collateral. A traditional issuer has to park roughly four days of spending as collateral with the network, because Visa authorizes transactions 24/7 but they can only settle during banking hours.

Rain tokenizes the receivables and settles Visa in USDC 24/7/365. Meaning Rain can settle directly over a weekend where legacy institutions would have to put up 2-3 days’ worth of collateral to run the same volume. It frees up a significant amount of dead capital they can deploy elsewhere.

The third engine is the primary moat: accumulated regulatory suffering. Rain co-founders describe the strategy as: “If something is hard to do and you do the hard thing first, it’s very difficult to undo it or have somebody else do it... if we can just chew this glass and get through this, that’s part of our moat”. Comparing it to the AI era, software is becoming cheap, so the hard parts that remain, licenses, network memberships, compliance programs, are the moat.

Rain took two years of its four-year life to get Visa principal membership, navigating the behemoth that is Visa with no guidebook.

Reap assembled principal memberships and licenses across Hong Kong, Mexico, and Singapore over seven years. This is why the market pays infrastructure multiples for these companies while consumer brands, however fast they grow, get consumer multiples. The license tier is the most defensible, so the license tier is where the exponential value accrues.

Winner Profile

It’s still very early to predict who the winner will be or how many of them. But examining the four models, it gives you a clear idea of what you need to win in this category.

Multi-region principal memberships. A traditional issuer needs a new bank partner for every new jurisdiction, while Rain can settle globally with one integration. Reap can make the same argument across Hong Kong, Mexico, and Singapore.

Stablecoin-native settlement. The 4-day-to-1-day collateral advantage will crush any issuer still settling on legacy rails following banking hours. This freed up capital will allow them to make much more compelling offers to clients.

Neutrality. Rain serves 200+ brands that compete with each other, and can do so only because it doesn’t compete with its clients. This is the classic infrastructure position, and it is now Rain’s strongest differentiator against Reap. Post-acquisition, Reap is controlled by an exchange that has consumer ambitions of its own. Wirex looks like it’s walking the same road. They have some work to do to convince existing clients why they should buy from their competitors.

Who wins the biggest? Visa carries over 90% of onchain card volume. The vast majority of these companies depend on Visa’s onchain settlement pilot. The narrative has completely flipped from stablecoins replacing card networks to stablecoins turbocharging them for another century.

70% of all cards in the world have a Visa logo on them. Stablecoins enable those cards to have direct access to dollars anywhere on the planet. Dee Hock himself couldn’t have imagined an opportunity like this as it stands today.

What I Think of the Future

Standard Chartered projects stablecoin supply at $2 trillion by 2028, from roughly $310 billion today. Card-linked spend is compounding at 673% on a $4.5 billion base. But the actual numbers are a rounding error compared to the opportunity. Based on Paymentscan data, total stablecoin card spending in the last 12 months crossed $6B. At the category’s 1 to 2% interchange norm, that creates a revenue pool of a hundred million dollars or so a year for the whole stack.

10x spend volume will bring us to a billion-dollar revenue pool. Even then, it’ll be under 1% of global card volume. The opportunity here is massive, and we are at the proof-of-concept stage.

Demand is not the constraint. Visa can swap its entire legacy rail architecture with stablecoin rails, and the end users won’t notice a thing. The biggest constraint will be regulation and licensing. Licensed capacity takes years to build and maintain with heavy oversight. And the business is too lucrative for the incumbents to go down without a fight.

Another risk, which not enough people are discussing, is the emerging-market regulators. The same countries where these cards have the highest demand. If a consumer has direct access to USD through stablecoins, it threatens the very fabric of financial control in a sovereign nation.

On top of that, if they don’t need to convert it into the local currency to spend it, it depletes the local USD reserve, another blow that most BRICS or ASEAN countries won’t take lightly.

In all financial disruptions, the regulator is a bigger obstacle than the competitor. The fight will be slow, and the winners will be well-capitalized, politically influential entities.

This week I want to take you on a journey inside the rabbit hole of stablecoin clearing. One of the many many obstacles we need to solve to be able to onboard Fortune 500 companies and have them integrate stablecoins in their inner plumbing.

Stablecoins in the last 12 months moved $14T+ (adjusted volume) across chains. But have you tried swapping $1M from one stablecoin to another?

No matter what platform, middleparty, or OTC desk you use, $1 million USD in stablecoin A never equals $1 million USD in stablecoin B. The transaction cost can range from a few bps to a few hundred.

Imagine valuing Wells Fargo dollar 2% lower than Bank of America dollars on every transaction. That would be an inefficient system, unacceptable in modern banking. And yet, such is the case with stablecoins today.

Funnily enough, local banks solved this problem 200 years ago.

In the antebellum US, private banks had the ability to print their own dollars. With no such entity as the Federal Reserve in existence, people would rely on these private bank notes for personal and commercial transactions. While this era in economic history is tagged as the era of notorious wildcat banks, it was a great example of free banking in effect.

So what kept a system with a dozen different private bank notes functioning?

The answer is a clearinghouse.

A clearinghouse is an entity that allows for different currencies to be exchanged at par value. Meaning, if bank A had amassed a collection of Bank B, C, and D notes, and needed to reconcile the balance sheet, they’d simply visit the clearinghouse, deposit their mixture of dollars, and after netting, collect gold/silver specie on the surplus.

One of the earliest examples of such a clearing house was the Suffolk Bank in Boston that facilitated the free banking regime of New England in the mid-nineteenth century.

With stablecoins, the need for a clearinghouse is more dire than ever. While there are only two dominating stablecoins in the system, with the passage of the GENIUS Act, we’ll be seeing more compliant stablecoins pop up everywhere.

What about existing solutions?

Today, moving from one stablecoin into another means using infrastructure built for trading, not for payments. There are three options, and none of them work at size.

• A dex. You sell coin A into a pool and buy coin B at whatever price the pool quotes. The deepest USDC/USDT pool on-chain holds about $160 million, and even that is 71% skewed toward USDT, so the real two-sided depth is thinner. That is the deep end of the entire market.
  
  None of the compliant stablecoins holds meaningful liquidity against another non-USDC coin. Each is anchored only to USDC or USDT, so converting PYUSD into RLUSD, or USDG into USD1, takes two hops through a hub and pays slippage twice.
  
  Below a million dollars everything seems fine. Anything meaningfully above would destabilize the pools.

• An OTC desk. Pricing is better, roughly 2 to 8 basis points on a multi-million-dollar USDC/USDT ticket, but you take on a relationship to maintain, a minimum ticket, and counterparty risk you now manage yourself.
  
  Desks like Cumberland, FalconX, and B2C2 are general-purpose market makers, positioned across a dozen moving markets at any given moment. Relying on them exposes you to unnecessary market exposure from second order effects.

• Network-based clearing. M0 and Brale let the coins they issue swap among themselves at par. Genuinely useful, but walled. No issuer has a reason to do the slow, bilateral integration work that would make its coin fungible with a rival’s, so no one does. Circle’s CCTP and Paxos’s mint-and-redeem are at par, but only inside a single issuer. Not one of these spans Circle and Paxos and Ripple and Tether.

This is where The Better Money Company comes in, the first neutral stablecoin clearinghouse of its kind.

How it actually works

Better Money runs no order book and holds no onchain liquidity pools. When a client needs to swap between Coin A and Coin B, Better Money internally connects to the issuer’s mint-and-redeem system to conduct the swap.

Because every GENIUS-compliant coin is backed one-to-one by reserves, the swap happens at par by construction. There is no market to move and no slippage to pay, because there is no market in the loop at all.

Their primary focus is on netting. Business payments tolerate a settlement window, anything from an hour to end-of-day, and inside that window, Better Money batches the day’s flows so the money that actually has to move is a fraction of the total volume.

This is the same multilateral netting that ACH and CHIPS have run for decades.

With that primitive in place, you can solve roughly three problem categories.

Problem A: the public orderbook liquidity trap

Say you run a neobank (or a regular company) and you have issued your own stablecoin. Now a customer wants to swap out of your coin for USDC.

Today that means running a liquidity campaign: standing up a trading desk, seeding pools across a dozen venues, and hoping the depth holds when someone moves size.

The cost of moving a low-liquidity coin is at 10 to 20 basis points of slippage, and it gets hard above $100,000.

Better Money replaces this process with a membership.

You join as an issuer, it connects to your mint-and-redeem facility, and from that moment anyone holding your coin can swap, send, or bridge it at 1:1 with a known fee and a known settlement time.

You can finally put a fixed price next to the Send button, without variable external dependencies.

Problem B: agentic payments at speed

Sam Broner, Better Money’s CEO wrote about how agents will behave like locals in a bazaar, not like tourists.

They’ll transact with preexisting relations on pre-negotiated terms: transacting constantly, in small increments, with no human in the loop.

Gartner expects, by 2028, 90% of B2B buying to run through AI agents, pushing more than $15 trillion of business spend through agent exchanges.

You and I pay an agent out of a fixed budget. But a business will see it as a growth avenue. The higher the ROI, the bigger the budget.

And an agent transacting across a world of fifty branded stablecoins will face the same fungibility issue as everyone else, except that it cannot call an OTC desk.

The solution is a clearinghouse. Better Money lets the agent pay in whatever it holds (as long as GENIUS-compliant), and the merchant receives exactly what it asked for. An invoice for $789.87 settles as exactly $789.87.

Problem C: the custom stablecoin dilemma

This isn’t a today problem. But once the GENIUS Act is in effect, companies will be incentivized to launch custom stablecoins: be it for the yield and treasury management, for control over compliance, or for the brand.

But if today’s complexities were to remain as is, a low-liquidity branded stablecoin would be no different from a gift card. Practically useless outside of the brand’s ecosystem.

But a clearinghouse, regardless of liquidity economics, provides every new branded stablecoin with an instant, guaranteed exit into any other stablecoin. Any user will be able to use any stablecoin issued by any brand at any venue.

The roster of companies that have already launched or announced one is ever-growing. From SoFi and Société Générale to Western Union and Cloudflare, etc. Stripe’s Bridge, which lets any business mint a compliant coin in a few lines of code, expects “dozens, if not hundreds” more.

The neutrality bet

Companies that offer stablecoin clearing services to any extent suffer from a self-imposed handicap. They can’t offer to facilitate the clearing of competing stablecoin pairs.

That’s why Better Money decided to remain neutral.

Sam said in a podcast, “It’s really important to us that we’re neutral infrastructure,” he says. “That’s part of why we don’t issue our own stablecoin.” Everything else is downstream of that one choice.

Look at their partner ecosystem.

Several of those are direct competitors who would never seed liquidity into each other’s pools. But they will do business with a neutral third party.

Every durable payments network has some version of this neutrality. The first clearinghouses were neutral taverns where couriers from competing banks met to settle. SWIFT and ACH followed the same logic.

Dee Hock built Visa as a member-owned cooperative for exactly this reason: no single bank could own the network and still convince the others to join, so the network had to belong to all of them and favor none.

Threat Analysis

Vertical Capture

The primary threat to Better Money is vertical capture. Payment giants with massive distribution networks are already trying to build their own systems:

• Circle is building a complete, closed stack. It controls the USDC stablecoin, the CCTP cross-chain layer, and its own Payments Network. It is also launching Arc, an institutional blockchain at a $3 billion FDV.

• Stripe owns the minting platform Bridge and recently launched Tempo, a blockchain valued at $5 billion. Stripe built this network alongside major design partners like Visa, Mastercard, and Deutsche Bank.

In theory, any of these powerful players could build their own payment interchange. Since Circle alone controls 90% of the GENIUS-compliant stablecoin market, they, for all intents and purposes, set the terms.

But with more competitors entering the market over the coming years, Circle’s unilateral grasp will come down meaningfully.

TradFi Competitors

While it’s not a direct market share battle, it does affect Better Money’s future plans peripherally.

JPMorgan, Citi, Bank of America, and Wells Fargo, with a dozen peers, are building a shared tokenized-deposit network through The Clearing House.

Citi’s Jane Fraser says there is “an overfocus on stablecoins,” and that tokenized deposits, an onchain version of bank deposits, will be the cornerstone.

Though a tokenized deposit is a different instrument, Better Money can fold tokenized deposits into the same clearinghouse. If they do move in that direction, it’d be an interesting TradFi vs Fintech battle.

Regulatory Uncertainty

The third threat is the regulator.

The GENIUS Act tells regulators to consider whether to mandate an interoperability standard, and the OCC’s rulemaking to implement the Act, asks that question.

If a standard is ever mandated, neutral clearing could turn into a public utility, causing economics to tighten further and rely on high volume over spread. But it’s quite a nuanced scenario to explore, if it ever comes to it.

What the future holds

Every credible forecaster now agrees on direction and argues only about size. Standard Chartered and the US Treasury’s own borrowing advisory committee both put stablecoin supply at $2 trillion by 2028, around seven times today’s $300 billion.

Citi’s 2030 base case is $1.9 trillion and its bull case $4 trillion. McKinsey models $2 to $4 trillion, Bernstein $4 trillion. Even JPMorgan, the house bear, calls $500 to $600 billion, still close to a doubling.

There is no serious scenario with fewer coins and less cross-issuer flow a few years out.

Cross-border B2B payments are a $56 trillion market by 2030 on FXC Intelligence’s numbers, and they still ride correspondent rails that cost north of 6% on small tickets and leave trillions parked in pre-funded accounts. Stablecoins have barely touched it.

Of the roughly $35 trillion in stablecoin volume last year, McKinsey and Artemis find only about $390 billion was real end-user payments, $226 billion of it B2B, up 733% in a single year. Juniper projects cross-border B2B stablecoin payments to climb from $13 billion in 2026 to $5 trillion by 2035, by which point it expects them to be 85% of all stablecoin value.

That is the curve Better Money is positioned across, and every dollar of it crosses issuers.

Sam thinks the same logic eventually brings in the banks. Their tokenized deposits have the same liquidity problem, and the same clearinghouse can solve it. The endgame he describes is the one where you stop thinking about any of this. You see a dollar balance, you trust it does what a dollar should, and the machinery that makes a hundred coins behave as one money fades into the background, the way no one thinks about the Suffolk Bank when they tap a card.

Today, JPMorgan moves more than $2 billion a day in tokenized dollars on its own blockchain, and is building a shared stablecoin network with three of its largest rivals.

To clarify before we start, the banks are not trying to kill stablecoins, they know they can’t. They’re trying to seize the business entirely, absorb the innovation, and shut the gates on fintech.

If you’re building in the stablecoin space, this is the most crucial context you need on your biggest competitors. This is the roadmap for the next 24 months of the bank-versus-stablecoin fight.

If you don’t take this threat seriously, you will after reading this article.

We spent months studying every major banking disruption of the last fifty years: the money market fund, the internet bank, PayPal, and the fintech wave.

We were looking for the pattern in how banks respond to threats. It always works the same way, running in six distinct stages. We have identified the stages and created a playbook that you can follow to anticipate their next move.

Several times in the last fifty years, a new technology was supposed to end banking. In each case, the banks countered it and came out stronger. Banks never compete on technology. Instead, they weaponize regulators against innovators or use powerful lobbies to grind progress to a halt.

Stablecoins are next on their list. The banks are already halfway through the same script.

Here is that script, stage by stage. Each stage has happened before, repeatedly. In this article, we break down those events in minute detail. Then we show how it is repeating in stablecoins, where we are now, and what could finally break the streak.

Stage #1: Dismiss and Ridicule

The game starts with a subterfuge. The most powerful people in finance go on television and laugh at it.

It is the opening move in every case we studied:

1. Money market funds (1970s). When funds began paying interest rates at double what banks were legally allowed to, the banks called them a gimmick that would not survive a rate cycle.

2. Ecom Banking (early 2000s). Waved off as a toy only useful on eBay, until PayPal launched an MMF.

3. Fintech (2010s). Bank executives scoffed at fintech as they frequently went on record, stating they could never handle risk, AML laws, or compliance.

The ridicule is a good early-stage lever. It is cheap, it scares away talent and capital, and it buys time. But it always runs alongside an internal study, measuring the actual threat level.

Now watch the exact same move, with the onchain dollar:

• Jamie Dimon, September 12, 2017: Bitcoin is “a fraud,” “worse than tulip bulbs,” and buyers are “stupid.”

• Larry Fink, October 2017: Bitcoin is “an index of money laundering,” the domain of “money launderers and thieves.”

• Warren Buffett, May 2018: Bitcoin is “probably rat poison squared.” Charlie Munger called the investors “idiots” and the asset “disgusting.”

But look at what they did instead of what they said.

JPMorgan shipped its first tokenized-dollar product, JPM Coin, in February 2019, while Dimon was still calling the industry a fraud. It is now called Kinexys, it has processed more than $1.5 trillion, and it clears over $2 billion a day.

By 2024, Fink’s BlackRock ran a Bitcoin ETF and the largest tokenized money market fund on the market, and Fink was calling Bitcoin “digital gold.”

They use dismissal as a cover to frontrun any serious competitors.

We’ve all seen this play in real time; this stage is over for stablecoins.

Stage #2: Fear-Frame and Invite the Regulator

When a technology can no longer be laughed off, the banks move on to the next strategy. They start calling it a threat, a threat to the public, to the system, to market stability.

The best historical parallel is the money market fund, it was the same fight over yield, four decades ago.

Wall Street introduced MMFs in the 1970s paying 9%-17% in interest, much higher than what banks were legally allowed to pay.

Between 1977 and 1982, MMFs saw their AUM balloon from $4B to $230B, while banks experienced one of their worst period of deposit outflow.

After failing to persuade the regulators to restrict money funds, they went to Congress in 1982 to pass the Garn-St Germain Act. This lets banks offer a new kind of savings account (MMDA, Money Market Deposit Account) with an uncapped interest rate.

The banks matched the interest rate the MMFs were paying, and these accounts were FDIC insured on top. Since MMFs could offer no such guarantee, deposits soon flew back to banks.

Now take a look at the 2026 headlines:

• May 8, 2026. The Bank Policy Institute, the lobby for the largest banks,

  publishes “Yield-Bearing Stablecoins Can Destroy Deposits.” It projects $3.7 trillion in destroyed deposits and a $2.7 trillion drop in lending.

• December 2025. The American Bankers Association and 52 state associations

  warn Congress that “trillions will be displaced from community lending.”

• January 12, 2026. The ABA and seven more associations cite a Treasury estimate that $6.6 trillion in deposits could be at risk. The community banks run paid advertisements.

• January 2026. PNC CEO Bill Demchak says stablecoins “must choose: be a payment tool or a money market fund.”

• May 29, 2026. Jamie Dimon, on Fox Business: “The banks will not accept it that way.” Stablecoin rewards, he says, let issuers “effectively pay interest on deposits without protection.” And then: “it will eventually blow up.”

The danger is always framed as a danger to the consumer, the community, and the economy. Never to the bank’s cheapest source of funding.

Their goal is not to be right. They only need to cry wolf loud enough to get the regulators in the room.

Stage #3: Build the Regulatory Moat

Once the regulators enter the room, the job is half done for banks. These are a few examples of how banks use regulators to kill competition.

• Money funds got re-regulated on banks’ terms. After the Reserve Primary Fund broke the buck in 2008 (they held $785 million of Lehman’s short-term debt), the SEC forced institutional funds onto a floating NAV. It killed any advantage the MMFs had over banks.

• The fintechs that were supposed to replace banks had to become the frontend. The banking lobby put enormous pressure on the regulators, calling fintech “shadow banks” that need to be regulated, making it nearly impossible to get charters. As a result, today, Cross River hosts Affirm and Coinbase. Celtic/Sutton hosts Square. Stride is behind Chime.

• The charter is unreachable: The OCC in 2018 tried to create a special National Fintech Charter. This would have allowed fintech startups to get a single federal license to operate across the entire United States without needing to partner with a traditional bank. It was a massively unpopular proposal to NYDFS and other state regulators.

  
  They sued and ran out the clock until the new administration came in and abandoned the program.

Walmart and Rakuten tried to bypass the traditional banking system by applying for their own specialized banking charters. Seeing this as an existential threat, traditional banks deployed their two most powerful lobbies, the BPI and the ICBA, the same lobbies that fight stablecoin yield today.

Both Walmart and Rakuten were forced to withdraw their banking applications.

Through their repeated success, banks have learned that they don’t have to beat the product if they can simply block the license.

The target now is the GENIUS Act. Look at the provisions carefully: compliant 1:1 reserves, regular audits, freeze-and-seize, and a ban on issuers paying yield.

Most of these rules don’t apply to banks.

Even if these compromises seem fair today, you have to remember the law is not in effect yet.

• Signed July 18, 2025. It takes effect on the earlier of two triggers: 18 months after signing, a January 18, 2027 deadline, or 120 days after the OCC, Fed, and Treasury issue final rules.

• Those rules are not final. The OCC proposed its version in March 2026, FinCEN and OFAC in April. Until they finish, no “permitted payment stablecoin issuer” can exist. The license as prescribed by the law cannot yet be applied. And the banks are trying, with all the efforts they can muster, to delay this process and push through as many last minute changes as possible.

The banks can have a significant influence on shaping the enforcement rules. Every month of delay is a month of uncertainty for stablecoin businesses.

Then there is the most hated word: yield.

• The statute bars the issuer from paying it. Non-interest-bearing deposits are historically close to a third of bank funding and the cheapest money a bank holds.

• This is the 1982 deposit-account fight in reverse. Then, banks won the right to pay yield to keep deposits. In 2025, they won a rule banning the disruptor from paying it. They somehow always win.

The whole war is now concentrated on a single line in the CLARITY Act: should the ban extend to anything that looks like an incentive? As per the current wording, rewards paid by exchanges are still safe. But not if the banks can help it.

The ABA and the bank lobbies are going to great lengths to ban yields/rewards/incentives/loyalty programs, activity-based or not.

Quick Overview on CLARITY Act’s Progress:

• The House passed its version of the Clarity Act on July 17, 2025, 294 to 134.

• Senate Banking advanced its text May 14, 2026, 15 to 9, after a compromise: yield banned on idle balances, but activity-based rewards allowed.

• Still ahead: merge with the Senate Agriculture bill, survive a 60-vote floor, reconcile with the House.

The yield ban is only one front. The other one is the bank charter.

• The OCC granted national trust charters to Circle, Paxos, BitGo, Fidelity, and Ripple in December 2025. The BPI expressed its dissatisfaction immediately and is allegedly in the process of filing suits against the OCC. To be clear, these charters are effectively empty as they can’t take deposits or lend money and have no Fed master account. Without a master account, a bank is beholden to a clearing bank like BNY Mellon or JPM paying exorbitant fees for operation.

  

  
  

• Getting a Fed master account is an even steeper uphill battle. Only a handful of non-tradition banks possess a master account. Kraken in March 2026 became the first ever crypto native company to receive a limited purpose “skinny” master account from the Kansas City Fed

The Fed has made it abundantly clear, most recently in Custodia Bank’s case, that they have unreviewable discretion to deny Fed master account even if you’re a legally charter-eligible bank.

These are just a couple of roadblocks. Here’s a list of what else the stablecoin industry should expect over the next few months:

Stage #4: Co-opt and Build In-House

While Stage 3 is still in full force, proactive banks have started laying the groundwork for Stage 4, which is co-option.

When a competitor threatens to capture the customers, banks pool into a jointly owned network to create a utility they control together.

They have done it a few times:

1. Credit cards. When Bank of America launched BankAmericard, the predecessor of Visa, a rival cartel of banks banded together in 1966 to form Mastercard.
   BofA in response had to create its own coalition with out-of-state banks. BankAmericard was later licensed into a bank-owned cooperative. They have used this tactic successfully against their own as well as against external rivals.

2. PayPal. In the early 2000s PayPal posed a real threat to bank deposits with their high yield MMF accounts that customers could directly use for online shopping. The banks countered the threat by using their regulatory instruments to bar PayPal from receiving direct deposits and forced it to rely on banks.
   
   But that wasn’t enough as by 2006, PayPal was handling nearly $40B in annual ecom volume. It threatened the banks to be relegated to being mere pipelines under PayPal’s banner. Eventually in 2011, a consortium of the big banks created ClearXchange which later became Zelle.
   
   A network owned by seven banks that came pre-installed inside hundreds of banking apps. Zelle crossed $1 trillion in volume in 2024, more than double Venmo, PayPal’s subsidiary, despite launching years later. Settlement remained bank-to-bank cutting off the outsiders.

Now watch the same thing happening with stablecoins:

• JPMorgan issued JPMD, a tokenized deposit, on Kinexys.

• Citigroup’s Jane Fraser: “We are looking at the issuance of a Citi stablecoin. This is a good opportunity for us.”

• Bank of America’s Brian Moynihan said the bank would move the moment the rules allowed.

• Société Générale launched a dollar stablecoin live on Ethereum and Solana, with BNY Mellon as reserve custodian.

• Deutsche Bank, through the AllUnity venture, is issuing a euro stablecoin.

• Ten European banks, BNP Paribas, ING, and UniCredit among them, formed a consortium called Qivalis to issue one of their own, explicitly to counter dollar-stablecoin dominance.

• US Bancorp, the fifth-largest US bank, is testing issuance on Stellar, and called the ability to freeze the coins “appealing.”

JPMorgan, Bank of America, Citi, and Wells Fargo plan to launch a tokenized deposit network, operated by The Clearing House. Their stated purpose is to keep funds inside the banking system.

The banks have made this move time and again, it’s only expected that they’d do it again.

Stage #5: Absorb the Survivors

From here, the playbook shifts to predictions, as we haven’t yet reached Stage 5. While speculative, these forecasts are grounded in recurring precedents. Our motivation at Anvesan is simply to follow this playbook to its logical conclusion.

Banks will now decide which survivors to acquire and who to starve out. Very few will remain independently competitive.

The rule for survival is simple: you survive if you hold something the bank must buy i.e. a charter, a custody moat, a regulated rail, etc.

If you compete head-on for the deposit, the banks will ensure that you can’t enter the regulated perimeter, or access rails controlled by banks. You’ll eventually be compelled to sell for pennies.

Banks have a history of buying distressed assets at a great margin:

• JPMorgan took Bear Stearns at $2 a share in March 2008, raised to $10, backed by a roughly $29 billion Fed facility.

• Bank of America took Countrywide in January 2008, then Merrill Lynch, about $50 billion, the weekend Lehman failed.

• JPMorgan took Washington Mutual in September 2008, the largest bank failure in American history, $307 billion in assets, for $1.9 billion.

• Wells Fargo took Wachovia for $15.1 billion in October 2008, outbidding Citigroup’s government-assisted offer.

• And in 2023 it happened again: JPMorgan took First Republic, booking an immediate $2.6 billion post-tax gain.

Early movers are already making strategic plays, like Stripe going after Bridge/Privy; the Mastercard/BVNK deal, etc. But the big banks are yet to make their moves.

The most likely first round buys will be infra pure plays. The likes of Rain, Conduit, Fireblocks, etc are perfect entrees for the banks.

Then the kill list, anything that threatens the bank’s business model:

• Yield Bearing Stablecoin <>Ethena’s USDe. It pays yield through a wrapper token, cannot meet GENIUS, is already barred from the European Union, and briefly broke to $0.97 in October 2025. The only way for it to survive is offshore as a DeFi instrument, without any access to the regulated rail.

• Non-compliant issuer<>Tether’s USDT. Walled out of the United States, surviving offshore while a compliant version, USAT, runs through a chartered bank. Not nearly as threatening.

• Non-compliant structure<> DAI. Decentralized by design, it cannot meet GENIUS requirements, and need to stay in the DeFi niche.

• Rented Rails <> Weak-licensed consumer apps. Most of the popular neobanks suffer from this. They are quite thin on rail/license/charter ownership. When the rail owners raise the price, they will either be bought out cheaply or get regulated out of existence.

Stage #6: The Endgame.

Every disruption only makes the biggest banks bigger.

The evidence is the whole history of bank crises:

• A Forbes study in 2014 showed 5 big banks controlled 44.4% of all US banking wealth ($6.8T out of $15.3T). They benefitted from a crisis of their own making.

• After 2023, deposits fled the regional banks to the too-big-to-fail tier, and JPMorgan absorbed the largest failure since Washington Mutual.

• Across the whole era, the number of US banks fell from roughly 14,000 in the mid-1980s to about 4,500 today. Two-thirds of America’s independent banks got swallowed by the big banks at the top.

Stablecoins pose the same threat as all the previous disruptions. They compete for non-interest-bearing deposits, the cheapest money a bank holds. Because regional and community lenders rely most heavily on these deposits, they face the capital flight first.

The giants are insulated from this threat. Every stablecoin dollar parked in t-bills at a US bank pulls foreign deposits back into the system. The system the giants already dominate.

The banks do not need to kill stablecoins. They want to be the one to issue it, custody it, and clear it. The likely outcome is stablecoins thriving, while the deposits concentrate further toward the giants while the few fintechs that survive depend on banks for the most part.

The Positives

Although big banks make formidable enemies, it’s not all doom and gloom for stablecoin companies. While the threats are real and approaching fast, a few things are different this time around.

Unlike the historical choke points faced by money market funds or PayPal, traditional banks cannot simply clone stablecoins or lock them out of clearing networks. Anyone with access to a public or bespoke blockchain possesses the independent ability to conduct stablecoin operations.

On top of that the banks and regulators have a rare conflict of interest regarding stablecoins.

The U.S. Treasury relies on stablecoins as structural buyers of debt. Stablecoin issuers currently hold $155B+ in shortdated tbills, ranking them alongside the top 20 sovereign holders of US debt.

This baseline demand has emerged as a serendipitous buffer against growing global de-dollarization trends.

Today, stablecoins act as a vital geopolitical tool that subsidises U.S. fiscal deficits while structurally enforcing digital dollarization across the internet.

Furthermore, the current agencies overseeing stablecoin regulation are the most crypto-receptive in history, actively pushing through positive regulation like the GENIUS and the CLARITY acts.

All remnants of hostility from the previous administration’s agencies that facilitated Operation Chokepoint 2.0 are gone. The regulatory landscape is ideal for rapid growth.

BUT, this does not lessen the obstacles for fintech companies. While stablecoins control the payment infrastructure, legacy institutions still have unilateral control over legal charters, regulatory orchestration, and geographic on/off-ramps.

How a stablecoin company actually wins, following in PayPal and Stripe’s footsteps, by owning the charter, the customer, and competing where the bank cannot follow, is the subject of Part 2 of this article.

Follow @anvesanorg to stay updated.

Dates to monitor

The following schedule outlines the critical hearings, petitions, and deadlines shaping stablecoin regulatory clarity. Any irregular delays, postponements, or cancellations will serve as an immediate signal that banking lobbies and captured regulatory bodies are executing the playbook. Monitoring these dates closely.

Anvesan is an independent stablecoin think tank: technical, regulatory, and policy. The content of the article is not financial advice.

Despite being the fastest payment technology on Earth, how come no one’s using it outside of crypto?

I ask myself this question often. And unfortunately, we all know the answer.

If you don’t, here’s a good way to think about it:

Imagine going to a business meeting where everyone speaks in a different language, and they all bring their own interpreter. And the interpreters don’t know all the languages, so sometimes they will have to use another interpreter to understand what someone is saying, then translate it into your language.

This is what stablecoin payments look like today. To receive/spend $100 in stablecoins, you need three to five different platforms. And those platforms don’t talk to each other.

You can use this system to move a few thousand to a few million dollars, but a company with a multi-billion-dollar treasury or AUM won’t touch it. It’s unreliable and unpredictable.

There have been multiple attempts at solving this issue with little success.

But recently, Polygon jumped into the scene with their Open Money Stack vision. It’s a new stablecoin payments framework focused on scalability. This is by far the best stablecoin infra vision I have seen from a company, so I decided to write a deep dive on it.

What is Polygon’s Goal with the Open Money Stack?

Open Money Stack (OMS) is best explained as an attempt to make stablecoin payments feel less like “using blockchains” and more like plugging into a conventional fintech payments stack.

The best stablecoin payment platforms today, like Stripe, BVNK, Fireblock, Circle, etc have mastered one particular layer of the stack, not the entire end-to-end process. Depending on what platform you use, you’ll need several of these: API for payouts, a separate wallet/custody layer, separate on/off-ramps, separate reconciliation tooling, and then a lot of integration glue to make it behave like an enterprise-grade system.

OMS’ vision is to simplify the process and build a comprehensive solution that makes the entire stablecoin payment flow seamless. It’s a vertically integrated stack that bundles the full journey—wallet infrastructure, on/off ramps, orchestration, and settlement—so a company can run stablecoin-based money movement end-to-end without having to build a custom payments platform.

It’s exactly what cloud platforms like AWS and Google solved in the early days of the internet. By removing the need for undifferentiated heavy lifting, you enable the companies to focus on the real business instead of manual hardware management.

The State of Stablecoin Payments Today

To better understand the problem OMS proposes to solve, let’s take a look at the current best-in-class stablecoin solutions, where they thrive, and the missing pieces in the current infra.

Fireblocks

Fireblocks solves two of the most critical problems in institutional crypto: treasury management and wallet infra. It manages who controls the keys, how approvals work, and how to prevent a single person from moving funds or making an irreversible mistake.

Fireblocks gives teams MPC custody, role-based permissions, multi-approver workflows, whitelisting, and policy enforcement so a treasury can move $10M, or $1B, with pinpoint accuracy.

For builders, Fireblocks offers an API layer to create and manage wallets for large user bases, including operational patterns for handling deposits and withdrawals at scale. It functions as middleware for fintech and consumer crypto platforms. 

Missing Pieces: While Fireblocks is great at its services, it is primarily a control plane, not a complete money stack. It does not natively give you the full payments experience: routing across fiat rails, embedded onboarding flows for non-crypto users, bank account primitives like vIBANs, standardized receivables workflows, or a unified ledger.

BVNK

BVNK represents the other half of the enterprise stablecoin landscape: payments orchestration, payouts, and the messy bridge between fiat and stablecoin rails. BVNK makes it possible for a business to receive, convert, and send money using a blend of bank and stablecoin rails at scale.

Merchants using BVNK can receive stablecoin payments directly in their bank account through vIBANs without ever having to touch a blockchain and vice versa.

Missing Pieces: BVNK is still not the whole stack. It is not your custody and governance core in the way Fireblocks is, and it does not unify the entire operational surface area across chains, wallets, compliance policies, treasury approvals, settlement finality, and developer integration patterns.

Stripe

Stripe’s stablecoin capability, primarily thanks to their acquisition of Bridge, is the most elegant on-ramp for a certain category of business: those who already live in Stripe’s environment and would be willing to use stablecoins if it was hassle free. And that’s exactly what’s happening.

You keep your payment workflows, dashboards, and operational specifics the same, and stablecoins become an additional rail that Stripe users can settle on.

Missing Pieces: It only serves a very specific usecase to a group of merchants in a walled garden with very little room for custom flows.

Why OMS Is the Opportunity

Marc Boiron, CEO of Polygon Labs, recently said in a podcast that Polygon’s vision is to make international payments just as seamless as paying someone down the street.

To execute this vision, Polygon needs to solve a number of obstacles:

• Sub-second finality and high throughput

• Interoperability

• Native On/Off Ramp Capabilities

• Native Wallet Orchestration

• Custom Chains

Unlike other players in the space who also list several of the above on their list of priorities, Polygon has been by far the most aggressive in pursuing its goals.

1. Settlement Layer: The foundation of any payment network is throughput and finality. The Rio upgrade has enabled Polygon to reach up to 5,000 TPS, comparable to large payment networks like Mastercard. This ensures the settlement layer has the lightning-fast capacity required for high-volume, institutional payment flows without facing chain congestion and skyrocketing gas fees like in other blockchains.

2. Access Layer: Through the strategic acquisitions of Coinme and Sequence, the OMS integrates a native access layer. This provides built-in smart wallet abstraction and licensed US-based on/off ramps, allowing applications to offer invisible crypto experiences.

Unlike standard wallets, Sequence uses intent-based orchestration. This abstracts away gas fees and chain selection entirely. Users simply express the intent to pay, and the underlying smart wallets handle the routing and fee abstraction invisibly.

And thanks to the Coinme acquisition, Polygon has secured money transmitter licenses across 48 US states. This provides a compliant, vertically integrated rail for fiat-to-stablecoin conversion that’s very rare in the industry.

3. Application Layer: At the top of the stack lies the Polygon CDK (Chain Development Kit), designed for institutions requiring customization and privacy. Instead of forcing enterprises onto a shared public ledger for all activity, the CDK allows them to spin up custom chains.

These chains will have access to all the OMS features like speed, liquidity, and wallet infrastructure while retaining the autonomy to tailor features and maintain data/transaction privacy separate from the broader ecosystem.

The Open Money Stack satisfies all the major requirements of businesses interested in using stablecoins rails; it’s simple, cheap, and technically robust. It’s entirely possible that OMS may not be the best in every single category individually, but the fact that one single provider can offer this entire stack makes them a formidable competitor.

Addressing Retail Frictions

While OMS is intent on making stablecoin easy for institutions, individual users are also part of the broader vision. Retail is often overlooked in the institutional stablecoin adoption discussion, but the fact of the matter is, they are the key that unlocks stablecoin’s $10T goal.

The crypto space in its current form is quite inaccessible to crypto non-natives, due to its unnecessary complexities, a myriad of risk factors, and a less-than-trustworthy reputation.

Without non-natives, the stablecoin industry will continue to be dependent on treasury yields and transaction fees instead of tapping into remittance flows and savings funds.

$857B+ was sent last year in remittances at an average cost of 6.4%. Stablecoin rails can substantially reduce the cost and hassle of sending money to developing countries.

The average user today uses stablecoin as a faster medium for fiat. Receive funds and redeem them, as there is nothing else to do. The vast majority of others who might benefit from stablecoin simply don’t trust it or care about it enough to learn the ropes.

The Open Money Stack is aiming to fix that.

Even for non-native crypto users, it’ll be simple to use an Agglayer-based app, send or receive funds in stablecoins without having to worry about chains or token standards, make commercial transactions with ease, invest in low-risk tokenized assets, and cash in/out using native on/off ramp features.

OMS is also modernizing crypto custody through account abstraction and smart wallet infrastructure. You no longer will have to choose between “not your keys, not your coins” and “oops, I accidentally erased my hard drive”. While the specifics aren’t available yet, the most likely options would be social recovery, guardians, multi-sig recovery, or device-based recovery embedded within the smart wallet features.

To an OMS user, fiat and stablecoin will be virtually indistinguishable in both behavior and usecases.

Conclusion

Our mission is to move all money onchain. To make it happen, we will build an open money stack to move all money seamlessly.

Today, the stablecoin ecosystem stands at an inflection point. The infrastructure that got us to a ~$300B market cap won’t take us to $5T.

The current rails are incapable of delivering the results that are needed to compete with fintech at scale. We need a cohesive stack that can settle tens of billions of dollars on chain with reliable execution at predictable cost.

This is the opportunity Polygon is trying to capture with the Open Money Stack. While OMS is still just a vision, Polygon has already started laying the groundwork in a way that most of the market hasn’t.

AggLayer is a bet on default interoperability, the CDK offers customizability within a unified layer, and the recent acquisitions will be central to building the OMS infra.

Assessing the current market landscape, it seems that Polygon is strongly positioned among all the other competitors. It’s an already established brand with proven capability and a brilliant leadership team, who are aggressively going after the next biggest opportunity in finance. Now it all depends on execution.

The arguments roughly fall into two camps:

Camp 1 argues that there is simply no demand or liquidity for non-USD stablecoins. People use USD stablecoins because of the strength of the dollar or its reliability as a store of value in weaker economies.

Whereas Camp 2 makes the case for the lack of FX infrastructure, making it impossible for non-USD stablecoins to break into the scene. AMMs are inefficient in Spot FX, and we simply have no infra for FX Swaps.

While both sides make strong arguments, they are missing the full picture.

It’s not a technical problem nor a volume problem to solve. FX doesn’t move $10T/day because it uses superior technology. The FX infrastructure has been built over seven decades through meticulous international collaboration while ensuring the safety and monetary sovereignty of nation-states.

The primary impediment for onchain FX is regulation.

You can not replace a rigid network based on trust and autonomy at the snap of the fingers.

Before I dive into the solution, a bit of context is necessary.

How the FX Network Was Built

The origin of FX goes back to the Bretton Woods conference in 1944, where 44 nations agreed to a fixed exchange rate system pegged to the US Dollar, which was in turn pegged to gold. This established the dollar as the vehicle currency for the world.

When the world moved to floating exchange rates in the 1970s, volatility skyrocketed, leading to the creation of SWIFT in 1973 to standardize messaging. But the most critical lesson came in 1974 with the collapse of Bankhaus Herstatt. The German bank failed after receiving payments in Deutsche Marks and couldn’t clear the corresponding US Dollars, leaving counterparties with massive losses. This “Herstatt Risk“ (settlement risk) traumatized the market.

Why Central Banks Are the Likely Winner

It took nearly 30 years to build a solution that a coalition of Central Banks would eventually agree on, thus the CLS system was launched in 2002.

Since its inception, CLS has added a total of 18 currencies to its network.

Major currencies (by FX turnover) like CNY (8.5%), INR (1.8%), TWD (1.2%), etc, are still missing from the CLS system.

The private stablecoin thesis assumes that central banks will sit idly by while private entities issue digital proxies of their national currencies. This ignores the geopolitical reality of monetary sovereignty, clearly reflected in existing infrastructures like CLS.

Bringing multiple central banks onto a single, permissionless ledger in its current stage is a diplomatic impossibility. No Central bank will ever relinquish its absolute control over monetary policy.

We’re already seeing significant constraints being put on stablecoins functions through MiCA, rendering pretty much all innovative solutions moot in the EU.

• Strict Authorization: EMTs (single-currency stablecoins) can only be issued by authorized credit institutions (banks) or EMIs. This bars FinTech platforms without full banking licenses from issuing Euro stablecoins.

• Capital Requirements: Issuers must hold significant capital reserves, separate from the reserve assets backing the token. This destroys the capital efficiency that made early stablecoins profitable.

• Compliance Costs: The cost of compliance, including legal fees, audits, and dedicated staff, will amount to hundreds of thousands of Euros annually.

The result is market consolidation. Only large, incumbent banks (e.g., Société Générale’s EUR CoinVertible) can afford to play. These institutions have no incentive to facilitate permissionless FX markets.

The US nipped this problem in the bud with the GENIUS Act, creating clear guidelines for private stablecoins issuers to thrive. This act essentially ensured the continued dominance of USD-denominated private stablecoins for years to come, consequently bolstering the dollar hegemony.

However, that doesn’t mean international players are sitting idly by while the US unilaterally dominates the blockchain-based payment space.

Surveys of the G20 and Financial Stability Board (FSB) members show a distinct preference for CBDCs and strict stablecoin regulation. By 2025, 62% of FSB members expect to have fully aligned crypto-asset frameworks.

For Central Banks, the choice is clear: Do you run your economy on a private, uncontrolled rail (like Ethereum) using a private token (like Tether), or do you opt for something that allows you to remain the ultimate authority? The state will always choose the state.

Here is a list of initiatives international financial authorities have undertaken (and made significant advancements) over the last few years:

1. Project Guardian

Project Guardian is one of the key initiatives undertaken by Ant International and ISDA, with contributions from MAS, OCBC, BNY Mellon, and HSBC, aiming to move toward using tokenised bank liabilities on shared ledgers to solve inefficiencies in cross-border FX settlements.

Guardian is taking an approach to address instant cross-border settlements from three fronts:

• a liquidity swap model where existing bank liabilities are settled by a designated entity (Ant) that swaps tokenised deposits from different issuing banks (e.g., swapping Tokenised SGD for Tokenised USD) to enable instant cross-border payments.

  
  The end result will be increasing the number of liquidity providers, therefore scaling up the settlement volume; essentially creating liquidity hubs for network banks to settle transactions immediately.

• Another initiative proved that two completely different private bank ledgers could interoperate. Using Hash-Time Locked Contracts (HTLC), they are aiming to process payments without needing a single shared platform, preserving the autonomy of each bank’s ledger.

The originating bank initiates a transaction as they would today, then passes a message via a bilateral connection to the beneficiary’s bank (or correspondent). The payment message will include a secret, which in turn unlocks the smart contract holding the funds in escrow. Once the funds are unlocked from escrow, they are credited to the beneficiary’s account in tokenised deposit form, and then made available for “last mile” pay-out through traditional instant payment rails.

• The final and most important initiative that Guardian has undertaken is to upgrade the ISDA framework to facilitate Onchain FX. ISDA has been asked to develop industry-standard documentation to enable FX spot/forward/swap transactions to be settled using deposit tokens under the ISDA Master Agreement, via model “Additional Provisions.”

  
  These Additional Provisions will be plugged into existing ISDA FX documentation architecture (1998 FX Definitions, and where relevant 2021 Definitions). It’ll assume a settlement setup compatible with the pilots (e.g., a liquidity provider holding pools of tokens from participating banks and facing users via FX confirmations under an ISDA Master). 

  
  ISDA will also likely consider changes such as the definition of “Business Day” for 24/7 settlement, plus explicit definitions/handling of tokenised deposits. 

Project Rialto

Project Rialto is perhaps the clearest example of TradFi co-opting crypto technology to solve fiat problems. It targets the inefficient retail remittance market by replacing correspondent banking chains with an automated layer.

Rialto is a concentrated effort led by the BIS Innovation Hub and supported by the Central Banks of France, Italy, Malaysia, and the Monetary Authority of Singapore.

Rialto is explicitly adopting the AMM model instead of relying on manual dealer quotes; it uses liquidity pools and algorithmic pricing to execute currency swaps instantly using wCBDCs.

This eliminates credit risk entirely, offering a “risk-free” settlement asset that private stablecoins cannot match. It connects domestic Instant Payment Systems (IPS) directly, allowing a sender in one country to pay instantly to a receiver in another, with the complex FX conversion handled automatically in the middle layer.

mBridge

mBridge is another international coalition of Central Banks (China, HK, Saudi Arabia, UAE, and Thailand) working towards removing frictions in Central Bank operations.

If Rialto is the retail solution, mBridge is the geopolitical wholesale solution. It represents a fundamental restructuring of how central banks interact, bypassing the traditional correspondent banking system entirely.

mBridge allows central banks to transact directly on a shared ledger. This removes the need for bridge currencies (like the USD) in regional trade, allowing for direct peer-to-peer sovereign settlement.

JP Morgan’s Kinexys (formerly Onyx)

The abovementioned initiatives are overseen by Central Banks and other monetary authorities, whereas Kinexys is owned and operated by JP Morgan.

With their $4T in AUM, JP Morgan has shown that a private centralized ledger is not only possible but extremely useful. They have so far processed $1.5T, with >$2B average daily volume, plus 10x YoY growth in payment transactions using Kinexys.

Kinexys operates as a single-bank ledger, allowing unmatched speed and efficiency because settlement occurs on the books of a single trusted entity rather than across a fragmented network.

Kinexys is now moving into Onchain FX Settlement (starting with USD and EUR). BMW became the first company to carry out an FX transaction on Kinexys last December.

Primary Constraints for Solving FX in EM Countries

Despite good intentions, one of the major misconceptions that I see plaguing the Onchain FX space is the tendency to overlook economic reality when it comes to solving FX in the EM.

It’s going to be an exercise in futility for crypto platforms to try to replace USD as the bridge currency and connect two EM currencies directly onchain.

You can’t simply enable EM currency pairs in your FX platform and hope that those countries rush in to use it. The “build it and they’ll come” model doesn’t work here.

The Gravity Model of International Trade states that trade volume is proportional to the economic size of two countries. FX liquidity is a derivative of trade. If Nigeria and Mexico only trade $20 million worth of goods per year, there is no natural demand for a market maker to hold inventory of Naira and Pesos.

You can’t create $10 billion of FX liquidity if the two countries don’t trade in billions of dollars.

Because the trade flows don’t exist, the liquidity pools on-chain will remain empty. The reason these markets rely on the USD as a bridge is not that the plumbing is broken; it is because the dollar is the only asset liquid enough to bridge the gap between two disconnected economies.

Closing Thoughts

We are witnessing a “great co-option” of crypto-native innovations. The concepts pioneered by DeFi, like AMMs, atomic settlement, and shared ledgers, are being stripped of their decentralized ideology and integrated into the sovereign machinery of global finance. Initiatives like Rialto, mBridge, and Kinexys show that the problem isn’t the technology, but controllability.

The FX market of the next decade will indeed move onchain, but it will not be as open, permissionless, or decentralized as crypto natives envisioned. It will be a highly regulated, permissioned ecosystem where central banks and GSIBs retain control, leveraging the speed of blockchain while maintaining the safety of the state.

The irony is not lost on me that the movement started by cyberpunks to create an alternative financial paradigm is now being subsumed by the same monster it was created to defeat.

But one thing hasn’t changed at all. Unsecured lending onchain.

The US unsecured loan market is a $3+ trillion leviathan. If you layer on private credit and various forms of business financing, that number swells closer to $10 trillion.

It is the largest, most inefficient capital market on the planet.

For years, the primary argument for Stablecoin adoption has been simple: Stablecoins are superior rails. They are cheaper, faster, and radically more transparent than the existing TradFi systems.

By all logic, stablecoins should have swallowed this market whole.

But they haven’t. We are not even close to making a decent claim on it.

We have built excellent casinos and robust pawn shops (over-collateralized lending platforms). But we haven’t figured out how to give a business a loan based on its reputation or its cash flow without forcing them to lock up 150% of the value in ETH.

Solving the unsecured lending problem onchain is a surefire way to onboard the next billion users on the blockchain and unlock a multi-trillion-dollar industry.

But to get there, we have to stop talking about yield farming and start answering the hard questions:

• How do we define Creditworthiness?

• What is the legal recourse when a borrower defaults?

• Who regulates this?

Addressing The Core Challenge

Interest Rate

For the last two cycles, DeFi interest rates were a disaster. Completely disconnected from reality, driven by degen demand. When you could make 100% APY going long on a meme, you didn’t care if borrowing costs were 20%.

That made onchain credit useless for a real business. No business will ever pay 20% interest onchain when they can secure the same loan for single-digit rates.

But look at the data from August 2025.

According to Visa’s onchain lending opportunity report, the spread has collapsed.

• Borrowing Rate (APR): 6.4%

• Lending Rate (APY): 5.1%

• Spread: 1.3%

At 6.4%, on-chain capital is fairly competitive with a traditional bank line of credit.

The bottleneck has shifted. The problem is no longer economic.

Subprime Borrowers

The other part of the problem is the lack of willing prime borrowers.

The unsecured lending market is riddled with subprime borrowers from high-risk trading firms or companies based in EM economies paying an interest lower than their own government bond yields.

Given the lack of clear guidelines and trust around stablecoin borrowing, prime borrowers (high revenue, high cashflow businesses) have so far stayed out.

This creates a self-perpetuated cycle of misery for lending protocols.

Lend to subprime borrowers at low rates → Borrowers default → Find out legal recourse is close to none → Pivot to secured lending or Go out of business

The ultimate goal is to bring prime borrowers into the fold and create financial incentives that align with borrowers’ expectations and lenders’ risk profile.

Business lending is risky as it is, without introducing added variables such as anonymous borrowers or unclear financials.

In this article, I analyze a few of the most notable lending protocols and their efforts on debt recovery from defaulters. And in general, how they approach unsecured lending.

Attempts at Uncollateralized Lending

The first generation of unsecured lending protocols failed because they ignored a fundamental law of finance: Lending is easy, collecting is hard.

In 2022, protocols like Maple and Goldfinch operated on a “delegate” model. They trusted third-party assessors to vouch for borrowers. But when the market turned, these protocols discovered the enforcement gap.

If a borrower defaults on Aave, the smart contract liquidates their ETH in seconds. If a borrower defaults on an unsecured loan, you are forced offchain into legal purgatory.

Faced with this reality, the market bifurcated. Players either pivoted to fully secured lending (Maple) or fully outsourced underwriting (Goldfinch).

1. Maple Finance

Maple Finance is the definitive case study on why “trust” is not a scalable strategy.

In 2022, Maple was hit by the $36 million Orthogonal Trading default. Orthogonal misrepresented their exposure to the FTX collapse, hiding losses for weeks.

The aftermath exposed the fatal flaw of unsecured DeFi.

• On-Chain: There was no kill switch to recover the funds.

• Off-Chain: Lenders were forced to hire Kroll as liquidators and fight in the British Virgin Islands High Court.

Recovering assets through a lengthy legal battle in a foreign country is simply unfeasible for a small DeFi protocol.

Maple had to shift their focus from the “trust-based” model to cope with the market. They launched Maple Direct and Syrup, moving effectively into on-chain prime brokerage.

The new model minimizes the enforcement gap by demanding strict over-collateralization. They stopped trying to fix the recovery problem and simply removed the risk.

2. Goldfinch

Goldfinch suffered a different, but equally painful, lesson. Their mission was noble: “Crypto loans for emerging markets.”

Predictably, they faced several defaults from companies in a short period of time. Most notably, Tugende ($5M), Stratos (~$7M), and Lend East. The break point was the Lend East default. A borrower with a $10.2 million loan could only repay $4.25 million.

Goldfinch realized that no amount of on-chain governance could fix a bad off-chain business model.

As a pivot from this model, in 2025, Goldfinch executed the Goldfinch Prime maneuver. They stopped trying to be the underwriter for SMEs in Kenya. Instead, they became a fund of funds.

They onboarded credit managers from BlackRock’s HPS, Crescent, and Monroe Capital. The logic is a complete admission of defeat regarding crypto-native risk assessment.

Basically adopting the attitude that since we cannot do underwriting better than BlackRock, let’s just build the rails for BlackRock to get liquidity from crypto.

It’s important to note that currently, all 8 loans in Goldfinch’s Senior Pool are in distress.

All I could find was some messages from their Chief Restructuring Officer saying they are in active negotiations with a few of the defaulters. The messages didn’t include any proof or documentation of the negotiation process. I checked their Discord to understand what steps are being taken for fund recovery/collection, as they claim the loans are backed by Real World Assets and are legally pursuable.

3. Clearpool

Clearpool, on the other hand, doubled down on market dynamics.

They introduced Dynamic Interest Rates. Borrowing from the Aave utilization curve, Clearpool’s algorithm adjusts rates based on the demand for liquidity in specific borrower pools.

This creates a fluid market. Instead of the fixed-term, fixed-rate loans that locked Maple into bad positions, Clearpool rates price risk in real-time. As of late 2025, they are facilitating loans to firms like Hyperithm, eliminating liquidation risk for borrowers (no collateral to sell) in exchange for significantly higher yields for lenders.

What I found most interesting is their debt recovery process which includes an insurance component.

Clearpool auctions off its bad debt to collection agencies who retain the right to legally pursue the defaulters just like in TradFi. On top of it, every pool has a reserved 5% insurance quota that gets distributed among lenders in the event of a default.

While this doesn’t make the lenders whole, it does add a layer of certainty that other uncollateralized lending protocols lack.

4. Credit Coop

Credit Coop has taken a different approach to solve the debt recovery problem with their Spigot smart contract.

The Spigot is basically a programmable lockbox. It acts as middleware between a borrower’s revenue source and their wallet.

How it works:

1. Escrow: The Spigot intercepts the borrower’s on-chain revenue (from payment processors, invoices, or other smart contracts).

2. Split: It automatically takes the loan repayment first.

3. Remit: The borrower only gets the remainder.

How Rain is Using Credit Coop

You can see this model in action in Credit Coop’s integration with Rain, a corporate card issuer for Web3 companies.

• The Problem: Rain owes Visa money daily for card swipes. But Rain doesn’t collect from cardholders until the end of the month. This is a massive working capital gap.

• The Solution: Rain borrows USDC from Credit Coop against their future receivables to pay Visa.

• The Security: The Spigot intercepts the future receivables from the cardholders.

By August 2025, Rain was moving $175 million monthly through this pipe. Zero defaults. This is by far the best innovation we have seen in the crypto lending landscape when it comes to default and debt recovery.

5. Huma Finance

While Credit Coop builds the plumbing, Huma Finance is building the PayFi Network.

Consider a cross-border remittance. A company in Mexico needs to pay out Pesos now, but the Dollars from the US sender haven’t settled yet. This creates a liquidity gap of perhaps 24 hours.

Huma swoops in to save the day by lending USDC to the payment processor. It’s a high velocity environment with ultra-short-term loan duration, a perfect problem for stablecoin to solve.

Huma is generating upwards of 10% yield recycling short-term (daily or even hourly) debt to high cashflow businesses.

By April 2025, Huma surpassed $4 billion in Total Transaction Volume (TTV) in partnership with Arf (a global settlement platform).

Building Onchain Credit Score

By now, you understand the primary problems with unsecured lending in crypto:

1. Creditworthiness – Lack of a reliable credit scoring system

2. Regulation – Lack of trust in the system

3. Legal Recourse – Lack of clear guidelines in the event of a default

Creditworthiness is the foremost obstacle to address. If you can analyze the borrower’s financial activities, both off and on chain, and run a risk analysis on their overall financial health, while ensuring they are in a jurisdiction suitable for legal pursuit, the decision making process gets a lot easier.

Thankfully, there are a few companies working on it.

3Jane

3Jane is attempting to bring the unsecured credit to individuals or small traders using zkTLS (Zero-Knowledge Transport Layer Security).

This addresses the “Privacy-Verification Paradox”: borrowers have data (bank balances, credit scores, trading history) that proves they are creditworthy, but they cannot put that data on a public blockchain due to privacy and security concerns.

3Jane uses zkTLS to allow users to generate a proof of their off-chain data without revealing the data itself.

1. Connection: Users connect their bank accounts or CEX accounts (like Coinbase or Binance) to their browser.

2. Proof Generation: The zkTLS protocol intercepts the TLS session between the user and the bank/exchange. It verifies the data (e.g., “This user has >$10,000 in X Bank”) and generates a Zero-Knowledge Proof.

3. On-Chain Verification: The 3Jane protocol verifies the proof on-chain. The smart contract sees only “True” or “False,” not the bank balance or login credentials.

4. Credit Issuance: Based on this verified data, the protocol issues a credit line in USD3, a stablecoin/credit token backed by the pool of loans.

Credora is another company that calculates risk scores by monitoring a borrower’s positions across CEXs and DeFi in real-time.

It allows a protocol like Morpho to say: “We will lend you money, but if your risk score on Binance drops below 600, we liquidate you automatically.” This commoditizes risk data. Credit scores are now just another oracle feed.

The Ultimate Unsecured Lending Stack

The answer to swallow the US unsecured credit market isn’t one-size-fits-all. We have to answer a number of questions and put backstops in places that allow businesses to trust crypto loans and for crypto lenders to trust the borrowers.

I have laid out the primary obstacles as I see them. To solve them, we need to deploy the Ultimate Unsecured Lending Stack.

The Stack consists of 3 layers:

• Financial incentives that align with the borrowers’ expectations and the lenders’ risk profile

• A system to analyze and verify borrowers’ creditworthiness and overall financial health.

• Favor borrowers from crypto friendly jurisdictions where a legal pursuit is feasible.

If a lending protocol satisfies all 3 layers of the stack, it radically minimizes the absurd amount of risk lenders bear in the current unsecured lending landscape.

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