After considering launching a stablecoin of its own, Meta is opting to leverage established digital asset infrastructure to enable stablecoin payouts.

Through a partnership with Stripe, Meta will now offer some creators the option to receive payouts in Circle’s USDC. These payments can be received through most crypto wallets, including MetaMask, Phantom, and Binance, across the Solana or Polygon blockchains.

“This is big news—they’re turning stablecoins into a payout mechanism at massive scale,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Creators can now get paid directly into wallets on various blockchains and bypass cross-border delays and fees. This is a big deal because Meta and Facebook have such a massive client base, and USDC and Stripe matter here because they offer enterprise-grade, compliant, and low-risk options.”

Shifting Toward Infrastructure

Meta’s shift away from issuing a proprietary stablecoin is also notable. Years ago, the company explored a branded stablecoin initiative called Libra, later renamed Diem. However, the project faced regulatory and funding challenges and was subsequently shelved.

Following the passage of the GENIUS Act last year, a growing number of companies have announced plans to issue stablecoins—the latest being Western Union. After Meta unveiled its renewed interest in stablecoin-related payments, there was speculation that the company—whose platforms include Instagram, Facebook, and WhatsApp and collectively reach roughly 3 billion users—might revive plans for its own token.

All About Distribution

Launching a propriety stablecoin could dramatically reduce the fees Meta pays to third-party issuers and intermediaries, but remaining on the sidelines of issuance may come with its own costs.

By adding stablecoin support, even through partner infrastructure, Meta could further embed itself in the surging social commerce space, while also positioning itself as a potential competitor in financial services over time.

For example, WhatsApp is already widely used for cross-border payments and remittances. Introducing stablecoin functionality could materially reduce transaction and currency conversion fees for users.

“All of this is about distribution,” Hugentobler said. “In a sense, they’re testing whether stablecoins can power global payroll across its platform with billions of users. If they can prove this out, it will put pressure on banks and traditional payment providers in the areas it is executing on: cross-border payments, payouts, remittances, and even FX.”

The post Meta Brings Stablecoin Payouts to a Massive Global Ecosystem appeared first on PaymentsJournal.

Western Union is the latest legacy financial services firm to enter the stablecoin race, revealing that its U.S. dollar-backed token, USDPT, is in the “final stages” of preparation.

Western Union is also rolling out two new services to help integrate the stablecoin into a broader ecosystem. The USD Stable Card, expected later this year, will allow consumers to hold value in Western Union stablecoins and spend it globally.

The second product, the Digital Asset Network, will leverage USDPT to connect crypto wallets with Western Union’s existing retail and agent network.

Sluggish Revenue in Consumer Transfers

While stablecoins are playing a growing part of business-to-business cross-border transactions, Western Union’s core business remains individual remittances. That segment has recently lost momentum. Consumer money-transfer revenue accounted for 87% of total revenue in 2025 but declined by 3% in the first quarter.

Even so, USDPT appears to be designed primarily for settlement within Western Union’s global agent network, rather than as a purely consumer-facing product.

Western Union could have integrated existing stablecoins into its cross-border infrastructure. Instead, by issuing its own, the company is positioning itself as a competitor to established players like Circle and Tether. This approach also allows Western Union to avoid transaction fees paid to third-party issuers and intermediaries.

Solana Plays a Key Role

Western Union has been laying the groundwork for this move for some time, with significant support from Solana, which is expanding its footprint in the stablecoin space. Earlier this year, Western Union joined the Solana Foundation’s enterprise developer program, enabling it to explore blockchain-based payment applications.

Solana’s lower costs likely made it an attractive choice. Transaction fees on Solana are typically less than a penny, compared with Ethereum, where fees can range from $1 to $50.

On top of that, Solana has introduced features like token extensions, which allow developers to create tokens with specialized functionality for specific use cases. These capabilities were a key factor in PayPal’s decision to expand its stablecoin, PYUSD, from Ethereum to Solana.

The post Western Union’s Stablecoin Is Almost Ready for the Market appeared first on PaymentsJournal.

WEBINAR

Stablecoins and the Reinvention of Remittance

May 12, 2026

1:00 pm EDT

[contact-form-7]

What Does the Future of Remittance Look Like in a Stablecoin World?

Stablecoins are fundamentally changing how remittance companies compete—not just by making transfers faster and cheaper, but by enabling an entirely new business model.

Join us on May 12 as Ran “Goldi” Goldshtein, SVP of Payments and Network at Fireblocks, Luke Tuttle, Chief Product and Technology Officer at MoneyGram, and James Wester, Director of Cryptocurrency at Javelin Strategy & Research, explore how leading remittance providers are evolving beyond transaction processing into full-fledged financial platforms—capturing value when money arrives, sits, earns yield, and moves again.

In this webinar, you will gain insights into:

• How wallet infrastructure transforms remittance companies from transaction processors into financial hubs
• How wallet-based remittance boosts customers retention
• The technical capabilities required to compete in this new landscape
• How providers capture value between transactions with stablecoins

Our Presenters

Ran “Goldi” Goldshtein

SVP of Payments and Network

Luke Tuttle

Chief Product and Technology Officer

James Wester

Co-Head of Payments

The post Stablecoins and the Reinvention of Remittance appeared first on PaymentsJournal.

The digital euro has taken a major step toward launch, as European policymakers push to reduce reliance on foreign payment networks and regain control over how money moves across the bloc.

New agreements between the European Central Bank and three standards bodies aim to ensure payments are processed smoothly and uniformly across the EU, keeping the project on track for testing in 2027 and a potential rollout in 2029. 

The move addresses a key gap. Europe currently lacks a universally available open standard across payment terminals. The EU’s existing payments ecosystem relies heavily on proprietary systems operated by international card networks and global digital wallets. By building on established European standards, policymakers hope to accelerate adoption while creating a more uniform experience for both users and merchants handling the digital euro.

Standards for Tap-to-Pay and Cash Machines

The ECB plans to build on several existing open technical standards to support the digital euro’s functionality.

These include CPACE, developed by the European Card Payment Cooperation, for secure contactless tap‑to‑pay transactions via near‑field communication; Nexo standards, which link merchants’ systems with payment service providers (PSPs) and acquirers to enable payment acceptance and ATM transactions; and the Berlin Group’s framework, which allow payments using aliases such as mobile phone numbers and supports use cases like merchant apps on smartphones.

By relying on these frameworks, the ECB aims to minimize implementation costs and encourage coordination among payment providers. It has also begun testing the digital euro’s technical and operational readiness, with PSPs participating in a pilot phase.

Is 2029 Still Realistic?

The digital euro’s path has been marked by delays since its initial announcement in 2020. Originally designed as a counterweight to the growing influence of foreign currencies and global payment networks such as Visa and Mastercard, it now also faces competition from stablecoins, which have increasingly taken on the role in cross-border payments that the digital euro was intended to fill.

While incremental progress continues, questions remain over whether the project will meet its timeline—or ultimately come to fruition at all.

“A 2029 launch is realistic on paper, but still contingent on the EU finalizing legal frameworks in 2026,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Even if legislation passes this year, rollout depends on successful pilot testing. If the pilot goes well, then it’s a matter of adoption by banks and merchants.”

“A lot needs to happen,” he said. “This is progress, but not momentum yet. Until legislation and distribution are dialed in, 2029 is anything but a certainty.”

The post ECB Sets Payment Standards for Digital Euro Rollout appeared first on PaymentsJournal.

A new bill could upend who gets to move money in the U.S., giving fintechs and crypto firms direct access to the Federal Reserve’s payment system—and potentially lowering costs for millions of users.

Known as the Payments Access and Consumer Efficiency (PACE) Act, the bill would let qualified nonbanks connect directly to Fed payment services, provided they meet strong consumer protection standards.

Currently, only traditional banks can connect directly to the Fed’s clearing and settlement systems. The bill would create a new category—Registered Covered Provider—allowing eligible nonbank payment companies to apply for Fed accounts without obtaining a full bank charter, under a supervisory framework run by the Office of the Comptroller of the Currency.

These providers would gain access to Fedwire, FedNow, and FedACH. According to the bill’s fact sheet, banks currently charge nonbank providers markups of up to 100 times the Fed’s own per-item fee. The bill’s sponsors argue the system was built for bank branches and paper checks—not digital payments—and that only traditional banks still have direct access to the Fed’s infrastructure.

More Ways to “Be Like a Bank”

Under the proposal, companies would typically need either more than 40 state money transmitter licenses or a state depository charter to qualify. The goal is to extend access to payment processors, remittance platforms, and crypto intermediaries already operating at national scale.

“It gives fintechs even more tools to be like a bank,” said Ben Danner, Senior Analyst of Debit at Javelin Strategy & Research. “It goes further than the Fed’s ‘skinny’ accounts that enable access to FedACH in addition to the real time rails. Access to FedACH is highly regulated right now, so only commercial banks have access. The law would be bad for those financial institutions that act as intermediaries for fintechs and crypto companies.”

The Effect on Crypto Firms

The bill follows news last month that crypto exchange Kraken received one of the so-called skinny accounts with the Fed—marking the first time a crypto firm secured direct access to central bank payment rails. Kraken can now hold U.S. dollar balances directly at the Federal Reserve, reducing routing complexity and streamlining settlement. The result? Faster transactions with fewer points of failure.

However, the “skinniness” of the account means it does not pay interest on balances or provide access to the Fed’s discount window. It is, in effect, a payments-only account.

“It removes one of the biggest structural disadvantages crypto firms face, which is forced reliance on banks and other intermediaries,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “That forced dependence adds costs, latency, and counterparty risk. This can also help firms like Kraken turn into payment and settlement platforms, not just trading venues. This has the potential to compress margins in banks who often charge multiples of the Fed cost.”

The bill has been endorsed by the Financial Technology Association, the Blockchain Association, and the Crypto Council for Innovation.

“For too long, digital asset payment companies have been locked out of the same financial infrastructure that their competitors have access to,” Blockchain Association CEO Summer Mersinger said in a statement.

Who Will Reap the Savings?

While sponsors Reps. Young Kim (R-Calif.) and Sam Liccardo (D-Calif.), argue the bill will ultimately reduce costs for consumers, that outcome is not guaranteed.

“It cuts out the intermediary and saves money on the transaction,” Danner said. “But will they pass that saving on to the end user? Not sure.”

Even if consumers don’t see immediate savings, the bill includes strong protections. Customer funds must be fully backed, held separate from company assets, and maintained with 1:1 reserves in safe, liquid assets. In the event of a failure, consumers would be prioritized in recovering funds.

The PACE Act now heads to committee, though it still faces a long legislative path. As it advances, traditional banks are expected to push back against any erosion of their role as payment intermediaries.

The post PACE Act Could Open Fed Payment Rails Beyond Banks appeared first on PaymentsJournal.

When Stripe launched the Tempo blockchain, its main objective was to bring significant everyday payments volume to stablecoins—a goal it is now one step closer to achieving following a deal with DoorDash.

For a blockchain that only brought its mainnet online last month, DoorDash’s participation is a signal of early traction. Tempo has also established partnerships with companies like Shopify, OpenAI, Visa, and Mastercard, all of which have the potential to introduce stablecoins to end consumers at meaningful scale.

“This is how stablecoins go mainstream. Not through retail payments but through payouts and treasury flows,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “This is less about crypto and more about fixing pain points like faster access to earnings, lower fees, and 24/7 settlement.”

A Global Challenge

These issues are part of why the gig and creator economies have become attractive to financial services firms. Over a quarter of the U.S. workforce participates in the gig economy in some capacity, yet many workers still report delayed, inconsistent, or incomplete payouts.

This is a global challenge, and one reason Visa launched a debit card for UK TikTok creators designed to help users receive virtual gifts that can be converted into income.

Second-Order Effects

Stablecoins may be better suited to many payout use cases, as they enable near real-time settlement that is secure and low-cost. Even more importantly, they avoid many of the frictions associated with cross-border payments, such as delays, transfer fees, and currency conversion costs.

These advantages have fueled demand for stablecoin-based payouts in gig economies. For example, in the Philippines, many freelancers work with foreign clients, and cross-border payment complexity often results in settlement delays of several days and processing fees as high as 10%.

While stablecoins offer a compelling solution to these challenges, gig economy payouts may ultimately represent just the tip of the iceberg.

“Thinking in second-order effects, once platforms normalize paying workers in stablecoins, I don’t think it automatically means those stablecoin balances are going back to banks in all cases,” Hugentobler said. “Instead, they get used for remittances, bill pay, or even embedded financial services. To be clear, I don’t think this will replace banks, but if more companies continue to leverage stablecoins like this, it will shift where and how money moves.”

The post DoorDash to Offer Gig Workers Stablecoin Payouts appeared first on PaymentsJournal.

The Bank for International Settlements (BIS) has raised new concerns about stablecoins, especially given that two issuers dominate the global supply. BIS General Manager Pablo Hernandez de Cos emphasized the need for stronger international coordination on regulation, warning that firms may gravitate toward jurisdictions with weaker rules.

He cautioned that inconsistent regulatory frameworks could ⁠lead to market fragmentation or regulatory arbitrage. Speaking in Japan, he also warned that stablecoin runs could trigger broader financial stress, though such risks might be reduced through mechanisms similar to deposit insurance or central bank liquidity support.

De Cos argued that major stablecoins—primarily issued by Tether and Circle, which together account for roughly 85% of the $315 billion market—behave more like securities than money, comparing them to ETFs. He noted that market concentration could introduce redemption frictions and distort asset valuations.

Many Reasons for Concern

The BIS has also been advocating for central bank digital currencies (CBDCs) as a potential alternative for cross-border payments, placing them in indirect competition with stablecoins.

“Three Nobel Prize-winning economists, Jean Tirole, Paul Krugman, and Simon Johnson, have all raised strong concerns that echo the ones raised here by the BIS,” said Hugh Thomas, Lead Analyst, Commercial and Enterprise at Javelin Strategy & Research.

To Thomas’ point, they broadly argue that stablecoins could be prone to run-like dynamics if confidence in their backing weakens, while shifting money-like functions into private hands without a clear public-interest case. They also warn that regulation may not be robust enough for the scale envisioned, that widespread adoption could create spillover risks for funding markets and financial stability, and that stablecoins open new channels for money to move outside the traditional banking system’s oversight.

Explorations of Its Own

BIS is increasingly focused on shaping the future architecture of global digital money and payments. As a coordinating platform for major central banks, it’s working to improve efficiency and interoperability of cross-border payment systems in a more digitized financial environment.

These efforts are closely tied to its broader concerns about the rapid growth of stablecoins and the risks they may pose if left unevenly regulated. By exploring how CBDCs could operate on a shared platform alongside private digital assets, the BIS is testing alternatives that could reduce reliance on dominant stablecoin issuers.

Its work on initiatives such as Project Agora, which examines how tokenized bank deposits might be used in cross-border payments, points to a potential future where regulated public and private money systems compete or coexist under tighter global coordination.

The post Why the BIS Is Worried About Stablecoins appeared first on PaymentsJournal.

Deutsche Boerse is deepening its push into digital assets with a $200 million investment in Kraken, expanding its partnership with the crypto exchange and underscoring Wall Street-style interest in crypto infrastructure.

The investment represents a strengthening of the partnership the two firms established late last year. The objective was to collaborate on areas like regulated crypto ventures and tokenized equities, as well as to improve cross-border liquidity for institutional clients.

This partnership exemplifies one of the key trends in the payments industry in recent years: traditional financial companies investing in digital assets technologies. That trend has shown no signs of slowing, as evidenced by Charles Schwab’s recent foray into crypto trading and Mastercard’s acquisition of stablecoin firm BVNK.

Growing institutional confidence in the crypto industry is also one of the main reasons Kraken secured a landmark “skinny” master account with the U.S. Federal Reserve.

“These stories show Kraken is moving closer to the center of institutional market structure,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Deutsche Boerse’s investment says major financial infrastructure players view crypto exchanges as strategic distribution and liquidity partners—not just a side bet.”

“Crypto and Kraken is entering a new spotlight here,” he said. “They must prove they can plug into traditional and sovereign infrastructure, such as Kraken’s tier 3 skinny account, while also proving they can withstand risks that come with scale.”

An Unwelcome Trend

Alongside this surge in institutional interest, however, has come another, far more unwelcome trend—a spike in cyberattacks. Kraken recently said it is being extorted by a group of bad actors who gained access to proprietary data by tricking two of the company’s staff members. The firm said it received videos purportedly showing Kraken’s internal systems with customer information visible.

The crypto exchange confirmed two instances of inappropriate access but noted that its core systems were never breached and customer funds were never at risk. Roughly 2,000 accounts may have been viewed.

The Human Layer

The decentralized and often anonymous nature of digital assets has made exchanges and users frequent targets for cybercriminals, include everything from crypto investment scams to credential theft.

The incident at Kraken also reflects another concerning trend where bad actors target an organization’s employees or contractors and attempt to bribe or manipulate them into sharing proprietary data.

Coinbase faced a similar attack last year that resulted in stolen customer data and roughly $400 million in damages. The incident occurred after a criminal ring bribed the crypto exchange’s overseas contractors into releasing customer information.

“The extortion incident is a reminder that as crypto moves up-market, the real test is the human layer,” Hugentobler said. “The custody, trading, and tech has proven itself to work, so the question becomes, ‘Are there systems and procedures in place to limit damage caused by any human, whether it is internal or external, so they can gain institutional trust?”

The post Kraken’s Success Attracts Institutional Investment, Cyber Threats appeared first on PaymentsJournal.

South Korea’s central bank is weighing whether to bring ‘circuit breaker’ style safeguards from traditional markets into the world of crypto, as regulators grapple with how to contain risks in fast-moving digital asset trading.

The discussion is informed in part by how traditional markets manage volatility. In the U.S., the stock market relies on circuit breakers to curb panic selling and stabilize trading when sharp declines threaten to spiral. These protections are designed to halt trading once predefined thresholds are breached, giving markets time to cool and preventing disorderly sell-offs.

These circuit breakers are triggered when specific thresholds are met, and the Bank of Korea may consider similar guardrails for South Korea’s digital assets market following a disastrous incident at crypto exchange Bithumb.

In February, the exchange ran a promotion offering a small cash reward. However, a Bithumb employee selected the wrong denomination and mistakenly transferred 620,000 bitcoin (valued at roughly $43 billion at the time) instead of South Korean won. The error caused bitcoin prices on Bithumb to plummet 17%, triggering widespread losses for some users.

In a recent report, the Bank of Korea argued that this incident highlights the urgent need for guardrails in crypto markets that mirror those in traditional financial systems. This could include requiring exchanges to implement stronger early-detection mechanisms, as well as circuit breakers capable of blocking anomalies and pausing trading during periods of high volatility.

Clawing Back Funds

While Bithumb identified the error within about 20 minutes, the central bank noted that the exchange failed to prevent the mistakenly distributed bitcoin from being traded or withdrawn, exacerbating user losses.

Although Bithumb was able to claw back the lion’s share of the bitcoin, it’s still working through the courts to freeze seven bitcoin that remain unrecovered.

Tech Outpaces Regulations

The rapid pace of technological innovation has consistently outstripped regulatory frameworks. For example, the open banking zeitgeist has been fueled by partnerships between fintechs and banks. Yet the collapse of Synapse—which left $265 million in consumer funds in limbo—intensified calls for tighter oversight of such arrangements.

Another challenge is that payments are far faster. Like crypto markets, real-time payment rails eliminate the settlement buffers that institutions have historically relied on to detect fraud or operational errors. As a result, some financial institutions are now exploring ways to reintroduce friction into these processes as a form of risk control.

As seen in South Korea, these vulnerabilities are likely to prompt regulators worldwide to consider implementing stronger safeguards for increasingly powerful, and instantaneous, financial systems.

The post South Korea Considers Guardrails After Crypto Transfer Error appeared first on PaymentsJournal.

Charles Schwab is slowly rolling out a platform that will allow its clients to purchase cryptocurrency directly. The brokerage firm has opened a waitlist for its Schwab Crypto accounts, which are slated to launch in the first half of 2026.

Schwab clients already have access to crypto through ETFs, futures, and other indirect vehicles, including its own Schwab Crypto Thematic Index ETF. Those products have attracted significant assets. Last July, CEO Rick Wurster said Schwab clients held more than 20% of all crypto exchange-traded products industry-wide.

The next question is whether that same client base—generally made up of individual investors—has the appetite to own crypto directly. Schwab will also need to determine whether digital assets can fit into the workflow of a mainstream brokerage customer.

Simple and Direct

Qualified clients will be able to trade Bitcoin and Ethereum through a dedicated account tied to the firm’s affiliated banking subsidiary. Schwab is separating these spot crypto holdings securities and ETFs, which offer SIPC insurance of up to $500,000. Crypto assets held through the new product will not be insured by either SIPC or FDIC.

For now, the offering is relatively limited. The accounts will not accept external crypto deposits or allow withdrawals to self-custody wallets. Features such as staking, recurring purchases, and limit orders will also be unavailable.

Those are standard features on many native crypto platforms, and their absence highlights the differences between Schwab’s approach and that of firms like Coinbase.

Slow Rolling the Offering

The rollout will be gradual. The accounts will first be tested internally with Schwab employees, followed by a limited early-access group drawn from the waitlist.

Since the SEC first approved crypto ETFs two years ago, the category has grown to $120 billion, alongside a more favorable regulatory backdrop for the industry and its investors. Shortly after the 2024 presidential election, Wurster said Schwab planned to introduce spot crypto trading once U.S. regulations eased.

Schwab isn’t the only brokerage exploring this space. E*Trade, owned by Morgan Stanley, is also preparing to offer spot trading in Bitcoin, Ether, and Solana, via a partnership with blockchain startup Zerohash.

The post Schwab Eyes Crypto Spot Trading, with Caution appeared first on PaymentsJournal.

The digital assets industry has achieved milestones at breakneck speed in its rise to mainstream prominence over the past few years. While the recent approval of Coinbase’s trust bank application may appear to be just another milestone, it has drawn pushback from the traditional banking sector.

The Independent Community Bankers of America (ICBA) went so far as to call the Office of the Comptroller of the Currency’s (OCC) conditional approval of Coinbase’s application “a grave mistake.”

At the heart of the ICBA’s concerns is the possibility that Coinbase could gain access to the federal banking system without bearing the same regulatory burdens as traditional banks. Because Coinbase wouldn’t be subject to Federal Deposit Insurance Corporation (FDIC) requirements, the group also questioned what would happen to customer assets in the event of the company’s failure.

For its part, Coinbase emphasized in a blog post that it has no intention of becoming a commercial bank. The firm stated it will neither accept retail deposits nor engage in fractional reserve banking. Instead, it aims to use the trust bank charter to bring federal oversight to its crypto custody and market infrastructure operations.

Not an Unprecedented Move

As a leader in the digital assets industry, Coinbase’s approval is significant—but not unprecedented. Circle, Ripple, Paxos, and Bridge have all received conditional trust bank approvals in recent months.

However, these firms are more focused on stablecoins and therefore fall under the oversight framework established by the GENIUS Act, which governs U.S. stablecoin issuers. Their trust bank charters allow them to issue stablecoins, hold digital assets, and manage reserves under federal supervision.

Seeking Universal Rules

As a crypto custodian, Coinbase could also become subject to the CLARITY Act if it is enacted. The bill, which targets non-stablecoin cryptocurrencies, has already passed the House of Representatives but has stalled in the Senate—largely due to opposition from Coinbase over restrictions related to tokenized equities.

Despite the pause in the CLARITY Act’s progress, Coinbase has reiterated its longstanding support for comprehensive digital asset regulation—a position widely shared across the crypto industry, in part to address lingering misconceptions about the sector.

“There was a perception for a period of time that the larger field of crypto was kind of like the wild, wild west,” James Wester, Director of Cryptocurrency and Co-Head of Payments at Javelin Strategy & Research, said in a recent PaymentsJournal podcast. “Yet, there have been companies over the last many years that saw the value of crypto, digital assets, stablecoins, blockchain, and tokenized assets—and were begging for regulatory clarity. They were saying that there’s an efficiency gain here; there are cost reductions.”

“What’s so surprising is how willing and able companies in the space were to say, ‘Now that there’s clarity, we’re happy to look at compliance; we are happy to look at regulation; we are happy to look at governance—because we were always willing to do that,” he said.

The post Community Banking Association Challenges Coinbase’s Trust Bank Approval appeared first on PaymentsJournal.

Since their advent in the early 2000s, cryptocurrency supporters have sought viable real-world use cases. While the volatility of digital assets made them as attractive as investments, it hindered their adoption in mainstream financial activity.

The development of stablecoins over a decade ago changed that. By maintaining a relatively consistent value and transcending currency exchange rates, stablecoins opened the door for digital assets to move beyond peer-to-peer (P2P) trades and gain tractions with businesses and financial institutions.

Business-to-business (B2B) payments now surpass P2P transactions as the leading use case, accounting for roughly two-thirds of the market, according to blockchain firm Artemis. The primary driver: cross-border payments.

Why Cross-Border Payments Needed an Overhaul

Just as cryptocurrency required a mainstream use case to enter the payments ecosystem, cross-border payments demanded a fundamental rethink in today’s global economy. For years, these transactions relied on the correspondent banking system, in which banks facilitated currency exchanges and settled transactions on each other’s behalf.

Handle such transactions independently is challenging due to multiple currencies, jurisdictional issues, and constantly evolving anti-money laundering regulations. Traditional processing involves multiple intermediaries—correspondent banks, clearinghouses, and more—all of whom charge fees. Combined with foreign exchange costs, this makes it difficult for businesses to achieve transparency in their payment expenses.

Despite global trade growth, the number of correspondent banks has declined by roughly 25% over the last decade. Additionally, geographic and regulatory barriers, like Know Your Customer requirements, have excluded many people from the traditional financial system.

Given all these issues, it is no surprise that correspondent banking faced significant challenges even before stablecoins entered the scene. Data from the Bank for International Settlements (BIS) shows active correspondent banking relationships declined by around 30% between 2011 and 2022.

Early Development and Usage of Stablecoins

When the first stablecoin launched in 2014, its goal was not to solve cross-border issues. BitUSD, introduced on July 21, 2014, via the decentralized exchange Bitshares, aimed to facilitate trades within cryptocurrency markets.

However, the coins’ stable value proved useful for transactions between partners using different currencies. Stablecoins also leverage key benefits of cryptocurrencies, such as programmability and blockchain traceability, making them ideal for cross-currency settlements.

“They pivoted really quickly, because once you have a wallet in place and you send it to another wallet, they realized, ‘There’s something else here,’” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It quickly became kind of the offshore digital euro dollar.”

Stablecoins gained momentum before the pandemic, as businesses accumulated excess capital and crypto adoption expanded. Post-pandemic inflation further drove demand, particularly in countries with hyperinflation like Venezuela and some African nations. Stablecoins provided a reliable alternative to unstable local currencies.

Crypto Exchanges Lead, Legacy Firms Follow

In 2014, Tether introduced the first cryptocurrency pegged to the U.S. dollar. Originally called Realcoin, it was quickly rebranded as Tether (USDT). Tether remains the market leader with roughly $184 billion in circulation, followed by Circle with around $79 billion. Today, Tether processes approximately $10 trillion in transactions annually.

The scale of these operations has prompted financial organizations to enter the stablecoin market. Visa, Fiserv, and SoFi are among the major players offering stablecoin programs.

• Visa launched a program in January 2026 allowing merchants to settle international transactions using digital assets. In partnership with stablecoin infrastructure provider BVNK, businesses can prefund payments with digital assets and pay recipients directly via digital wallets. Visa Direct handles the payouts, while BVNK manages wallet and blockchain integration, as well as compliance checks.
• Fiserv is working on its own turnkey digital assets platform and stablecoin for bank and credit union clients. Cooper Thompson, Fiserv’s Vice President of Innovation for Digital Assets told Finopotamus: “It sits inside your existing digital experiences. It provides open APIs. That way you if you have a different digital banking application, it can be integrated there. We are very much building it to sync with their existing core system to where customers can move from some kind of that deposit account directly into stablecoin.”
• SoFi is launching SoFiUSD as a white-label stablecoin for financial institutions. Initially used internally for settlement, it will debut on the Ethereum blockchain, with plans to expand to other blockchains for broader access. SoFi aims to make it usable by card networks, retailers, and businesses in countries with volatile currencies.

Other initiatives include Early Warning Services exploring a stablecoin for Zelle cross-border transactions, PayPal’s PayPal USD, and country-specific coins like South Korea’s KRW1 and South Africa’s ZARU. Wyoming issued the Frontier Stable Token (FRNT), pegged to the dollar, intended primarily for local retail use and to reduce swipe fees.

Competing with Crypto Firms?

While traditional financial institutions may appeal to those seeking regulation and security, crypto firms enjoy a first mover advantage. For younger users or those in emerging markets, crypto is often perceived as safe as fiat.

“Tether is so well-positioned globally,” said Hugentobler. “People who live in other countries see it is a no brainer. You look at Tether’s balance sheet, and they’re something like the 15th largest buyer of U.S. Treasuries at this point in the world. They also have a ton of gold on their balance sheet.”

Stablecoins have already become the predominant asset used in cross-border payments, though precise figures are scarce. And that transformation has happened without global rules that regulate their usage.

“So many people are using crypto or stablecoins as an alternative route to banking,” said Hugentobler. “It’s a double-edged sword because you want to use who you trust. Where stablecoins are regulated and transparent, that’s where people are going to go.”

Regulatory clarity is improving: In July 2025, the U.S. GENIUS Act established a framework for stablecoins, influencing how banks, B2B platforms, and remittance providers engage with digital assets. The pending Clarity Act may further shape usage, particularly regarding yield offerings. While U.S.-centric, such regulation could set a global precedent.

“Until the U.S. passes the Clarity Act into law, there’s still a lot of unanswered questions about how these other countries should go about it,” said Hugentobler. “Obviously there’s no single global rule book, but organizations like the FATF are pushing for coordination on things like licenses, issuers, transparency, and redemption rights. It’s going to take some time, but once the U.S. does pass the Clarity Act, we’ll start seeing more and more entities working together.”

The Next Frontier: Agentic AI

Stablecoins may also have play a critical role in agentic commerce, where autonomous systems conduct millions of transactions across networks. A stable, programmable digital asset could reduce friction and volatility compared with fiat. For micropayments—mere cents per transaction—stablecoins offer a scalable solution.

Stripe co-founder and President John Collison noted crypto is well-suited for autonomous software agents handling payments. Stripe supports the x402 standard, which enables agent-driven transactions.  

Similarly, Coinbase’s Payments MCP allows agents to access financial tools, with plans to implement x402 for instant stablecoin settlements. Google’s Agentic Payment Protocol (AP2) also supports x402, converting the rarely used HTTP 402 status code into a real payment layer for both human and agent clients.

“It’s cheap enough for machine-to-machine payments, especially small payments,” said Hugentobler. “I’ve been hearing that some companies are blocking agents from either scraping their website or allowing agentic payments, so those types of things need to be figured out before it really hits mass adoption. There’s still a lot that needs to be figured out, like identity and permissions, fraud controls, dispute handling. All those things need to happen before it gains adoption.”

Key Takeaway

Stablecoins have moved beyond niche cryptocurrency use to become a core tool for cross-border payments, offering speed, transparency, and stability that traditional systems lack. Financial institutions, businesses, and emerging digital platforms can’t afford to ignore stablecoins. Especially as they enable efficient global transactions and open the door to innovative applications like agentic commerce. As regulatory clarity grows and adoption expands, stablecoins are poised to become a foundational element of the future financial ecosystem.

The post How Stablecoins Emerged as a Key Element of Cross-Border Payments appeared first on PaymentsJournal.

The approval of bitcoin ETFs sent the price of bitcoin soaring to new heights last year, marking one of many milestones for the burgeoning digital assets industry.

While bitcoin has since pulled back, the financial services sector’s interest in digital assets has not waned, as evidenced by Mastercard’s recent $1.8 billion acquisition of stablecoin company BVNK.

Among the technology’s primary selling points are the efficiency and security gains enabled by blockchain infrastructure. However, recent findings from Google suggest there may be emerging vulnerabilities in the cryptocurrency ecosystem.

The tech giant’s researchers conducted quantum computing pilots and found that more advanced models could potentially crack widely used cryptocurrency encryption methods far more quickly and efficiently than previously believed.

Ramping the Urgency

According to Google, such attacks are not yet feasible, and some blockchains—including bitcoin—already have mitigation measures in place. Still, the company warned that these factors should not diminish the urgency of addressing potential vulnerabilities.

Instead, Google urged the digital assets industry to adopt stronger security standards capable of withstanding emerging threats, including a transition to post-quantum cryptography—an encryption approach designed to resist quantum-based attacks.

“I don’t think this is a ‘bitcoin is getting hacked tomorrow’ story,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “The point here is that these security upgrades will take time, possibly years, so even though it seems early on in the hardware timeline, companies need to start making the migration now for chains, wallets, and custody.”

“We’re a ways out from a full-fledged quantum computer, but if companies wait until it is out to upgrade security measures, it will be way too late,” he said.

Not Just a Crypto Threat

Like many transformative technologies, quantum computing presents a double-edged sword. By leveraging the principles of quantum mechanics, it moves beyond the limits of conventional binary and linear computing models.

The result is a model that is significantly more efficient and less resource-intensive. While quantum computing could prove to be a gamechanger for businesses—and even serve as a more effective foundation for resource-heavy AI models—regulatory and organizational constraints may slow legitimate adoption, giving bad actors a head start.

There are already signs of this shift. According to separate data from the Association of Certified Fraud Examiners and SAS, roughly 10% of respondents reported that quantum AI is already creating impacts, and most expect quantum computing to play a role in fraud prevention by 2030.

This early adoption among cybercriminals, combined with the technology’s disruptive potential, suggests that quantum computing is not just a future risk for the crypto industry, but a looming challenge for the entire financial services space.

The post Google Warns That Quantum Computing Could Soon Crack Crypto Encryption appeared first on PaymentsJournal.

Real-time payments have reshaped entire economies in markets like Brazil and India, but they are not just a domestic rail for faster account-to-account transfers.

India’s UPI, for example, has expanded beyond its borders through integrations with systems in other regions and continues to add new features at a rapid pace.

The promise of real-time payments once drove Mastercard to acquire most of European fintech Nets’ payments services for $3.2 billion, seven years ago. The deal brought Nets’ real-time payment infrastructure, bill pay, and electronic invoicing segments under Mastercard’s umbrella. At the time, the payments giant sought to move beyond card payments and expand its network.

Now, however, Mastercard is reportedly consulting investment bankers on a plan to divest the unit. According to the Financial Times, the sale is targeting private equity firms and is expected to fetch significantly less than Mastercard originally paid.

Long-Term Strategy Questions

Taken on its own, this could appear as a retreat from a deal that fell short on revenue growth. But coming just days after Mastercard’s blockbuster acquisition of stablecoin payments infrastructure firm BVNK, it raises questions about the company’s long-term strategy.

The BVNK acquisition, valued at $1.8 billion, represents the largest digital assets deal to date. It comes after nearly every major player in financial services has made a splashy stablecoin investment.

Mastercard stated that the objective of the deal is to reach markets not currently served by its card network, including cross-border remittances, business payments, and payouts in the creator and gig economies.

The Shape of Payments to Come

While stablecoins are a powerful solution in these applications—especially for freelancers and contractors—real-time payments can also be highly effective.

Indeed, the Clearing House reported that its RTP Network continues to set all-time highs in payments value and volume. While large commercial settlements account for many transactions, much of the recent growth is driven by use cases like earned wage access disbursements and gig economy payouts.

Given the growing entrenchment of real-time payments, Mastercard’s pivot from Nets to BVNK is unlikely to redefine the payments landscape. Instead, both payment types are set to thrive in an increasingly crowded market.

The post Could Mastercard’s Instant Payments Divestiture Signal a Strategy Shift? appeared first on PaymentsJournal.

Stablecoin is not synonymous with a digital U.S. dollar, despite the dominance of USD-backed assets in a rapidly expanding market.

A stablecoin’s value can be pegged to range of assets—from commodities like gold to other cryptocurrencies—but these variants are often used more as investment vehicles than as everyday payment mechanisms. Likewise, many leading USD-backed stablecoins function as yield-generating instruments or as tools for large-value settlements.

That said, there is growing evidence that the stablecoins gaining the most traction in real-world use cases are those backed by fiat currencies other than the U.S. dollar. According to a report by Visa and Dune, the non-USD stablecoin market reached $1.1 billion in February, tripling in just over three years.

More telling is that roughly half of these domestic currency-denominated stablecoins are held in institutional and individual wallets, while about a quarter sits on centralized exchanges. This distribution suggests active usage, likely in applications such as cross-border payments, remittances, and B2B settlement.

Stablecoin vs. CBDC

Within this segment, Circle’s EURC accounts for over 90% of transfer volume. That a euro-pegged stablecoin leads is unsurprising: the euro is used across 27 countries, and inefficiencies in cross-border payments have long been a lingering pain point that European policymakers are working to address.

However, these leaders have shown a preference for a central bank digital currency over privately issued stablecoins. After years of discussion, the digital euro is entering a pilot phase and is slated to launch in the latter part of next year.

One of the key motivations behind the CBDC push is the dominance of USD-backed stablecoins. Still, it remains unclear how a digital euro would coexist with euro-denominated stablecoins already in circulation.

Tough Sledding

Outside Europe, adoption of non-USD stablecoins has been more limited. Brazilian real-backed stablecoins represent the next-largest share of the segment, but they trail far behind euro-based counterparts.

Even so, new entrants continue to emerge, such as South Africa’s ZAR Universal (ZARU), a rand-pegged digital asset. These products, however, face the daunting task of unseating USD-backed stablecoins, which still account for the lion’s share of a global market valued at more than $310 billion.

The post Stablecoins Are Moving Beyond the Dollar appeared first on PaymentsJournal.

The New York Stock Exchange rings a bell to open and close each trading day—but for most of the week, it’s silent. Despite modest extensions to trading hours, investors are still confined to a market that operates just 32.5 hours per week, leaving long stretches where opportunity—and risk—continue to evolve without them.

By contrast, digital assets trade continuously. The capability has gone far beyond buying bitcoin at 2 a.m. Decentralized exchanges (DEXs) like Hyperliquid have emerged, offering traders always-on access to cryptocurrency futures as well as tokenized versions of stocks, oil, and precious metals. For example, many investors reportedly turned to Hyperliquid following geopolitical developments involving Iran to speculate on oil prices outside of traditional market hours.

While this functionality may unlock new opportunities for investors, it also offers valuable insights for financial institutions observing Hyperliquid’s rapid rise.

As noted in the Why FIs Should Use Hyperliquid’s Playbook for Crypto report by Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, Hyperliquid’s holistic approach could prove to be a gamechanger for financial services firms seeking entry into the thriving digital assets ecosystem.

Innovating on the Blueprint

The decentralized exchange model was pioneered by Uniswap, which introduced the automated market maker (AMM) paradigm. This represented a departure from the traditional order book model, where buyers and sellers post bids and offers, and trades only execute when prices align.

AMMs replaced this negotiation process with algorithms that automatically price trades. While this innovation enabled more efficient, always-on trading with minimal reliance on intermediaries, gaps in the model have since become apparent.

“They have proven to be very inefficient for price discovery and swapping assets at scale, especially when there is little liquidity,” Hugentobler said. “You can think of it as if your neighbor sells their house for $200,000 when they would be able to sell for $300,000. Then, all the houses in the neighborhood are going for $200,000 or less. They’re priced on the margin and they’re priced relatively, that’s the model Uniswap uses.”

Despite these shortcomings, Uniswap has achieved success and even secured investment from Blackrock—a testament to the viability of the DEX model and a foundation upon which Hyperliquid has continued to build.

“What Hyperliquid has done is they have incorporated a lot of different aspects, but the main one being a central limit order book (CLOB),” Hugentobler said. “It eliminates the relative pricing mechanism. It brings a centralized exchange feel to the platform while it’s all still on its own blockchain, so it’s still a decentralized exchange. The big selling point on a DEX is that you control your assets. All your assets are in your own wallet.”

Spinning Up Futures

One of Hyperliquid’s key innovations is its pricing mechanism for perpetual futures, which help keep prices closely aligned with the underlying asset. Unlike traditional future contracts, perpetual futures do not expire.

In addition to this flexibility, DEX platforms often offer substantially higher leverage than traditional markets, amplifying both potential returns and risks. One of Hyperliquid’s most ambitious features, however, is its approach to market making—placing it squarely in the hands of users.

“Hyperliquid has something called HIP-3, it’s their code base that allows validated developers to spin up a perpetual future to be traded on the exchange,” Hugentobler said. “What this enables Hyperliquid to do is to bring perpetual futures of traditional assets, to bring that tokenization aspect to its market.”

This means that any user who stakes 500,000 HYPE tokens (roughly just under $20 million, depending on market conditions), can create their own perpetual futures market tied to a wide range of assets. Notably, many leading HIP-3 markets are not tied to cryptocurrencies, which have long been associated with DEXs.

Instead, a large share of these markets track traditional financial instruments such as the S&P 500 and NASDAQ, as well as individual stocks. Others are linked to commodities like gold, silver, and crude oil.

A key driver of their popularity is simple; these markets are accessible 24/7, offering one of the few ways to trade continuously across asset classes.

“On January 30, gold was down almost 40% in a day,” Hugentobler said. “After the futures market closed and was done trading for the weekend, Hyperliquid spun up perpetual futures for silver. And within 24 hours it had several hundred million worth of volume being traded.”

“That’s not a mind-boggling amount, but the fact that they were able to spin that up and so quickly have volume over the weekend when traditional futures don’t, that is a big aspect to where this is heading,” he said.

The Liquidity Key

This underscores the dynamic capabilities of digital assets technologies. In traditional markets, over-the-counter desks facilitate large trades, alternative trading systems match orders, and market makers provide liquidity—alongside many other specialized intermediaries.

By contrast, Hyperliquid integrates these functions within a single blockchain-based system.

“A big thing that FIs need to take away is that liquidity concentration becomes the default,” Hugentobler said. “If they can build or partner with someone that can leverage this type of model and they own the model—or even part-own the model—they own that distribution. Then, they benefit from the fees and the coverage and every aspect of the trade lifecycle.”

Hyperliquid has taken this integrated approach through the launch of its proprietary stablecoin, USDH. While many institutions have embraced stablecoins in recent years, a stablecoin can be especially powerful for a DEX—allowing it to operate independently from external assets like Circle’s USDC and Tether’s USDT.

“It transitions them from a trading venue to a settlement hub,” Hugentobler said. “By having its own stablecoin, Hyperliquid can be the routing engine for payments. FIs can take that same approach by starting with trading, seeing what takes on the trading side as far as volume goes, and then leverage their own stablecoin or stablecoin partner and reap those same benefits of owning the platform and the distribution.”

“The key here is focusing on and leveraging different aspects of liquidity,” he said. “Whether that is issuance or launching a product or getting market makers, settlement partners, or custodians on board, liquidity is key at the end of the day.”

The post What Hyperliquid Reveals About the Future of Trading appeared first on PaymentsJournal.

Amid a flood of stablecoin launches, many of the world’s leading financial services firms continue to champion tokenization.

Robinhood’s CEO highlighted the technology’s industry-transforming potential last year, and now Blackrock CEO Larry Fink has echoed that enthusiasm with similarly strong remarks. Fink noted that the global proliferation of digital wallets has created the ideal conditions for tokenization, which can enable near-real-time settlement, lower transaction costs, and always-on operations.

While Fink was mainly referring to the tokenization of traditional assets like stocks and bonds, these same advantages extend to tokenized cash and bank deposits. This is one reason the Bank of Montreal (BMO) is moving ahead with plans to roll out tokenized cash, enabled by Google Cloud Universal Ledger (GCUL) and CME Group.

“It’s less about crypto payments and more about rebuilding the plumbing between banking, collateral, and financial market infrastructures,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “BMO is basically saying that if markets are heading toward longer operating hours and continuous trading, then the money layer has to become continuous.”

“What is important here is that with the use of tokenized cash, CME clearing will allow firms to meet margin calls and settlement obligations in real time,” he said. “This should reduce idle capital and liquidity, and the need to post excess cash just to survive mismatches within banking hours.”

An Agnostic Blockchain

The initiative is also notable as one of the largest deployments of GCUL to date. Google designed the platform as a neutral, global infrastructure for the financial services industry.

Unlike many blockchain networks built around a specific cryptocurrency or corporate ecosystem, GCUL is designed to be blockchain-agnostic and capable of integrating with Google’s broader technology stack.

Tokenizing Security

BMO’s tokenized cash capabilities are expected to go live by the end of the year, alongside the launch of tokenized deposits.

Tokenized deposits are often compared to stablecoins because both can be pegged to fiat currencies. However, the key distinction is that while stablecoins are backed by an issuer’s reserves, tokenized deposits represent direct claims on funds held within the banking system.

This difference is important, as it gives banks a way to differentiate their offerings in a crowded digital landscape.

“This is aimed at institutions who want the benefits of tokenization without jumping into an open and permissionless rail from day one,” Hugentobler said. “If tokenized cash wins in financial markets, such as derivatives, collateral, and settlement, then adoption may come from capital operations before merchant checkout or consumer wallets.”

“If this were to be the case, it could make commercial bank deposits more competitive and kill the argument of ‘stablecoins will disintermediate banks,’” he said. “Other effects down the line like capital efficiency, banking hour risks, and more will change for the better.”

The post BMO Brings Tokenized Cash to Google’s Blockchain appeared first on PaymentsJournal.

Stripe is betting that the next evolution of payments won’t be drive by humans, but by autonomous AI agents transacting on blockchain rails.

Blockchain has become a core component of the financial services infrastructure, underpinning everything from stablecoins to artificial intelligence models—and increasingly serving as the foundation for programmable, always-on commerce.

Stripe has been an avid investor across these areas, including the acquisition of stablecoin infrastructure firm Bridge and its expansion into agentic commerce through integrations with buy now, pay later leaders in recent years.

Last year, the payments firm unveiled Tempo, a blockchain effort launched in a collaboration with digital assets firm Paradigm. Tempo was built to facilitate high volumes of payments, and as the blockchain brings its mainnet online, there are reportedly over 100 services integrated.

Stripe highlighted Tempo’s capability to reshape cross-border payouts, payments, and remittances, and the blockchain could even play a role in embedded finance and tokenized deposits. Stablecoins are expected to serve as the workhorses facilitating many of these functions, and Stipe has highlighted its objective to bring “real payment workloads” to digital assets.

Sessions with an Agent

Stablecoins will also likely factor into the operations of the newly launched Machine Payments Protocol (MPP) an open agentic commerce standard designed to provide the infrastructure for AI agents to transact autonomously.

Stripe and OpenAI first unveiled plans for the protocol last year after partnering to bring direct payments to ChatGPT. While the protocol runs on Tempo’s blockchain, MPP was designed to integrate with other payments rails, including digital wallets and cryptocurrencies.

One of the key features of the protocol is that it supports “sessions,” where after funds and instructions are determined upfront, allowing agents to carry out multiple transactions with no further interaction.

Sorting the Shared Language

While the session capability is notable, there are still lingering doubts about consumer and business appetite for agentic commerce. Data from Coinbase’s agentic commerce protocol suggests that most transactions on the platform still consist of pilots and trials.

Still, this hasn’t stopped leading payments firms from developing their own agentic commerce protocols, including platforms from Google, Visa, Klarna, and others. Because these protocols are intended to function as a shared language for agentic commerce, the increasingly fragmented landscape could create challenges for merchants, financial institutions, and consumers seeking to develop cohesive strategies.

The post Stripe Launches Tempo Blockchain to Power AI-Driven Payments appeared first on PaymentsJournal.

Many credit unions are grappling with the differences between cryptocurrency, stablecoins and tokenized deposits—and whether these innovations fit into their business model. It’s important to take a step back and allow strategic evaluation, rather than urgency, to drive decisions around digital assets.

Velera and its Digital Asset Lab are helping credit unions overcome the “fear of missing out” that often accompanies emerging technologies like crypto. In a PaymentsJournal Podcast, Velera’s Vlad Jovanovic, Vice President of Innovation, and Nathan Meyer, Senior Innovation Strategist, as well as James Wester, Director of Cryptocurrency at Javelin Strategy & Research, discussed what credit unions are doing—and should be doing—in the digital assets space.

Three Primary Categories of Crypto

The concept of digital assets now encompasses stablecoins, tokenized deposits and a range of cryptocurrencies such as Bitcoin, Ethereum and Solana. Cryptocurrency itself has evolved into a speculative asset class that consumers can buy, sell, trade and hold. Its volatility makes it risky, but people are using it to grow wealth, diversify portfolios and explore the broader digital assets landscape.

Regulatory guidance on crypto is still incomplete. The CLARITY Act, which aims to provide a clear regulatory framework for digital assets, is still progressing through Congress. For these reasons, most credit unions are approaching crypto cautiously.

“Do you want to create a connection point that allows your members to be able to transact with Bitcoin or Ethereum or Solana?” said Meyer. “That creates more risk exposure for the member, as well as concerns around what type and level of trading you’re allowing them to do. Because there is volatility, it can have significant impacts on them—both positive and negative.”

Stablecoins and Tokenized Deposits

Stablecoins function primarily as a payment instrument, designed to provide liquidity and trading within the crypto market. They are typically backed by secure assets, most often U.S. dollar-backed assets, such as short-term Treasurys.

Stablecoins can be thought of as a new payment rail—just as FedNow and RTP provide speed for real-time payments, stablecoins offer similar capabilities. The first step for a credit union considering stablecoins is to assess whether member demand exists. Without demand, creating additional infrastructure is unnecessary. But for organizations with members engaged in remittance, stablecoins can move money more efficiently and at lower cost than traditional wires.

Another important type of digital asset is tokenized deposits. This infrastructure enables credit unions and banks to tokenize existing balance sheets and bring them into the digital realm. Tokenized deposits can remain internal to a credit union’s ecosystem, but some institutions are exploring them for intraday settlement or liquidity pools.

“We’ve seen a lot of VC dollars enter the space and a lot of start-ups are creating hype around their technology,” said Jovanovic. “That in itself is going to create a bit of a FOMO effect within the credit union industry. Am I doing enough? Should I be doing more?”

The Coming Regulatory Impact

Rules governing digital assets are still evolving. The GENIUS Act, passed in July 2025, provides a framework for exploring use cases and applications of this technology. NCUA has issued proposals outlining constraints related to crypto, which credit unions should review carefully before moving forward.

Credit unions should also monitor the CLARITY Act as it moves through Congress to inform decisions around partnerships and exposure to digital assets. One immediate opportunity is engaging with regulators to help them understand credit unions’ needs—shaping regulations in a way that benefits both institutions and their members.

“Stablecoins and crypto to some extent have been wrapped up politically in ways I haven’t seen with other technology,” said Meyer. “I never had to worry about thinking through cloud migrations and worrying that as soon as an administration changed, the dynamic around that technology was going to deflate or inflate. There is a lot related to crypto that has tie-ins politically, and that is feeding some of this movement versus the actual problem it solves or demand.”

“It’s important for credit unions to understand both the CLARITY and GENIUS Act, but also understand if you get out over your skis in this space and a different administration comes in, regardless if it’s Republican or Democrat, you could see a very different perspective on privatization of stablecoins and money in general,” he said.

What Should Credit Unions Do Now?

For most credit unions, the first step is education—learning both the technology and the regulatory landscape of stablecoins. Bringing in digital assets experts, participating in industry consortiums, and collaborating with peers can accelerate this process.

Ultimately, the most important questions revolve around members’ needs and the organization’s strategic objectives.

“One of the best ways to cut through hype is to ask why,” said Wester. “How does that support the mission of my bank, my credit union, my product? That’s a really important question, because if you have somebody coming to you from either the vendor side or the crypto and digital asset space, it feels like hype.”

Meyer added: “If you truly know who you are and what role you play in the community for your members, it allows you to avoid false signals. You can point to that strategic structure of who you are and very clearly articulate where this fits within that umbrella.”

The post What Should Credit Unions Be Doing with Crypto? appeared first on PaymentsJournal.

In a long-awaited announcement, the Securities and Exchange Commission has adopted a largely hands-off approach to regulating cryptocurrency. In coordination with the Commodity Futures Trading Commission (CFTC), the SEC declared that most digital assets will not be considered securities under federal law, including stablecoins and major crypto assets like Bitcoin, Ethereum, and Solana.

The SEC said the new guidance is intended to support innovation in the crypto sector, marking a shift from the agencies’ approach under the previous administration. Under the Biden administration, the SEC focused primarily on enforcement in the crypto space. Then-SEC Chair Gary Gensler had maintained that most cryptocurrencies qualified as securities.

The New Taxonomy

The new framework divides crypto assets into five categories:

• Digital commodities
• Digital collectibles
• Digital tools
• Stablecoins
• Digital securities, which SEC chair Paul Atkins defined as traditional securities using new technology

Only the final category will be treated as securities and subject to the SEC’s full regulatory scrutiny.

“This is good news,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Despite the ETFs and the growing participation in crypto investments over the last few years, most investors—especially at the institutional level—do not want to get involved a potential investment that doesn’t have a clear regulatory framework.”

Further Defining a Security

The guidance also allows certain assets to lose their status as regulated securities under specific conditions. A digital asset may be deemed a security when it is offered as an investment with an expectation of profits derived from the efforts of others. However, the existence of an investment contract involving a non-security crypto asset doesn’t, by itself, convert the asset into a security. According to the guidance, such investment contracts conclude when the issuer has either satisfied its stated obligations or failed to meet them.

The framework further clarifies the division of authority between the SEC and the CFTC. The SEC will oversee investment contracts and tokenized securities, while the CFTC will regulate digital commodities and crypto-based derivatives.

While the crypto industry has largely welcomed the guidance, the outcome was widely anticipated given the Trump administration’s generally crypto-friendly stance.

“It’s been expected that most, if not all, won’t be classified as securities,” said Hugentobler. “That’s probably why markets aren’t moving on it, since it’s priced in. Had it been the other way around, we’d see a bigger selloff and have more challenges to deal with.”

The post In a Hands-Off Move, the SEC Says Most Crypto Is Not a Security appeared first on PaymentsJournal.

Sending money across borders has traditionally meant navigating delays, fees, and uncertainty. Digital assets are rewriting that experience. They reduce reliance on currency conversions, provide greater visibility into transactions, and drastically lower fees and settlement times.

These same advantages extend to consumers travel abroad. Bolstering inbound tourism is a key driver behind Crypto.com’s partnership with KG Inicis, a payment platform that commands roughly 40% of South Korea’s payments market.

“This is significant, plugging Crypto.com Pay into South Korea’s largest payment gateway network,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “This enables faster, cheaper cross-border transactions and it aims to boost adoption. For Crypto.com to be successful, they need to ensure smooth and seamless point-of-sale integration and user experience, in addition to working with regulators.”

“I’d imagine stablecoins will be used more than a typical cryptocurrency, but providing optionality is key at the end of the day,” he said. “From my understanding, the crypto payments will be instantly converted to KRW (South Korean won) and merchants are paid immediately in KRW. So the volatility is already removed on the back end.”

Managing Volatility

The growing demand for payment flexibility is also fueling the rise of payment gateways. Although crypto gateways initially emerged as a way to enable crypto at checkout, they have rapidly shifted into full-scale payment orchestration platforms.

This has been due in part by the expanding digital asset ecosystem—including cryptocurrencies, wallets, stablecoins, and supporting infrastructure. At the same time, crypto gateways address one of the most persistent barriers to merchant adoption: volatility.

While direct crypto gateways allow merchants to accept and hold digital assets, many prefer an indirect method in which transactions are automatically converted into fiat currency by the gateway provider.

Giving Tourism a Lift

By mitigating volatility risk, these solutions have made crypto acceptance more accessible. Although lower transaction costs, faster settlement, and enhanced security are compelling benefits, rising customer demand remains the primary driver of adoption.

According to a survey by PayPal and the National Cryptocurrency Association, merchants frequently receive inquiries about crypto payments, especially from millennial and Gen Z customers.

As younger consumers prioritize experiences—from dining to travel—integrating crypto payment options is a natural step for businesses and destinations looking to boost tourism.

The post Crypto.com Brings Crypto Payments to Tourists Visiting South Korea appeared first on PaymentsJournal.

The capabilities of artificial intelligence have improved exponentially, and AI agents are being delegated increasingly complex tasks every day. However, data from Coinbase’s protocol suggests consumers may not be on board with agentic commerce yet.

The crypto giant launched the x402 protocol last year, designed to use the existing HTTP “402 Payment Required” status code to facilitate instant stablecoin payments. The objective was to give AI agents a mechanism to exchange digital assets as seamlessly as they exchange data.

However, as CoinDesk notes, reports on last month’s usage of the x402 platform found average daily transactions of approximately 131,000, with average daily payment volume of roughly $28,000. Notably, even on the highest-volume day, the activity appeared to consist entirely of testing and trial runs.

Not a Referendum

At first glance, the data runs counter to the prevailing narrative that agentic commerce will soon reshape the retail landscape. In reality, it likely reflects less a referendum on the technology and more a reminder that agentic commerce remains in its early stages.

That point can be easy to lose sight of as examples of agentic-driven transactions become more frequent. Mastercard, for instance, recently facilitated two transactions that expanded both the global reach of agentic commerce and the scope of ongoing pilots.

The Tech Will Have Its Day

As agentic commerce platforms began emerging last year, companies like Google and Visa developed protocols designed not only to power AI agents but also to establish guardrails ensuring those agents operate within defined parameters.

While many of these platforms reached the market last year, transaction volume has yet to materialize. This makes this year pivotal, as merchants, financial institutions, and consumers begin exploring the technology and ironing out any wrinkles.

Given the hype surrounding these platforms, their adoption will be closely scrutinized—as Coinbase has already experienced.

“The potential is still there, I just think the AI integration at scale is what’s holding back adoption.” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It’s going to take some time for most FIs to adopt agents and therefore use Coinbase’s agentic solution. This tech will have its day but might just take some time to adopt.”

The post Agentic Commerce Traffic on Coinbase’s Protocol Has Yet to Accelerate appeared first on PaymentsJournal.

Consumers expect to pay seamlessly across any experience—from social media platforms to small business e-commerce checkouts. They also want choices, including buy now, pay later services, real-time payments, and digital assets.

Supporting these options requires payment gateways capable of bridging the gaps between payments processors and merchants. But a crypto gateway can do far more than simply add a “Pay with Crypto” button at checkout.

As Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, detailed in the Crypto Gateways: Digital Money Routers report, crypto gateways are complex solutions that take many forms. More importantly, all of these models function as powerful payments orchestration platforms, optimizing payment routing and settlement while ensuring compliance.

Eliminating the Infrastructure Expert

The expanding role of crypto gateways is driven in part by the sheer number of digital assets technologies—including cryptocurrencies, wallets, integrations, and infrastructure layers. These platforms also address a key barrier to mainstream adoption: the volatility of cryptocurrencies like bitcoin and Ethereum.

For example, bitcoin reached an all-time high of $126,000 in October, only to fall to around $67,000 less than six months later.

“There have been developments going down the route of direct crypto acceptance versus indirect,” Hugentobler said. “There are third parties involved with the indirect side because at the end of the day, all the indirect crypto gateway method is that you can pay with crypto at checkout. But whoever’s accepting that payment on the other end doesn’t want crypto, so they have that third party swap it out.”

Despite short-term swings, many cryptocurrencies remain highly lucrative investments. Companies like Strategy have even made bitcoin investment central to their business models. Organizations with a similar focus might consider a direct crypto gateway, allowing them to accept crypto and actively manage it.

For most business owners, however, the complexities of treasury management and digital assets make an indirect gateway more appealing, where a partner handles crypto conversions. It is possible, though, to achieve a hybrid approach that combines the benefits of both models.

“With a hybrid method, it solves the issue of why merchants haven’t adopted crypto,” Hugentobler said. “Merchants can use a stablecoin or accept a stablecoin if they want, but if they don’t want it as-is, they can use this product and leverage this instant finality, this instant settlement, the cheaper method of sending fees without even really knowing they’re using stablecoins.”

“That’s where we’re headed and that’s been the issue with crypto payments for the longest time,” he said. “If you have to become an infrastructure expert, this stuff isn’t going to scale.”

The Demand for Digital Assets

Interest in crypto acceptance among merchants is growing, driven in part by consumer demand for payments flexibility. A recent survey by PayPal and the National Cryptocurrency Association found that inquiries about crypto payments are common—especially from millennial and Gen Z customers.

Merchants also cite lower transaction fees compared with credit cards as a major advantage. Speed and security are additional benefits, with crypto payments typically settle in near real-time on transparent blockchain networks.

These benefits extend to cross-border payments, which historically have been costly and slow. Cryptocurrencies, and particularly stablecoins, dramatically reduce fees, delays, and foreign exchange challenges.

A hybrid crypto gateway that leverages stablecoins is an attractive option for most merchants. However, there are still some wrinkles to be ironed out.

“There are issues like chargebacks, where I think everyone has been so used to the traditional chargeback method. It has to be a whole new leg with crypto, that’s just the way it is,” Hugentobler said. “However, stablecoins are a little bit different than bitcoin or Ethereum Blockchain where it’s immutable; there’s just some discretion that issuers have.”

The fact that stablecoins are privately issued by companies like Tether and Circle has been a point of concern because these issuers must maintain sufficient fiat reserves to redeem the tokens, even during high-volume periods. To date, these concerns have largely proven unfounded.

“What it comes down to is—is this simple and easy to use?” Hugentobler said. “Does it do what it says it does—settle instantly, reduce my cost, and reduce my overhead? Is the consumer happy? Is the end user happy? Can I have fiat in my bank account or wallet? That’s what they want. I think when you start adding layers though is where you get additional risk.”

Addressing the Uncertainty

Despite the risks, digital assets offer clear benefits to both merchants and consumers. Financial institutions and payments processors should consider crypto gateways as a practical entry point into crypto transactions.

While regulatory uncertainty has made some U.S. organizations hesitant to adopt digital assets, these concerns are no longer a significant barrier.

“Financial institutions need to figure out what they want to do to participate, and they need to commit,” Hugentobler said. “From there, you can build roadmaps of who do I need to get involved—third parties, compliance, exchanges, whatever it is—that’s the biggest thing.”

“But it’s also realizing that with the GENIUS Act and the CLARITY Act coming down the pipe, there is a push to leverage private digital money to exert dollar dominance,” he said. “From a bigger picture standpoint, this type of stuff is just going to continue to proliferate and those that wait on the sidelines for any more regulation to hit the market are just going to lose market share.”

The post Crypto Gateways Offer Access at an Inflection Point for Digital Assets appeared first on PaymentsJournal.

Just a few years ago, more than one hundred countries were exploring central bank digital currency (CBDC) projects. Many of those initiatives were later shelved as privately issued stablecoins rose to prominence.

However, there are signs that CBDCs are gaining momentum again. One of the most notable examples is China’s digital yuan (e-CNY), which has processed roughly $2.37 trillion in transactions over the past two years.

Several factors are driving this growth. Chiefly, the CBDC has the full support of China’s government. Authorities have gone so far as to ban cryptocurrencies and tokenized assets, including stablecoins backed by the yuan.

China has also positioned the digital yuan at the center of Project mBridge, a cross-border payments platform. The initiative was launched in 2022 by a consortium of central banks led by the Bank for International Settlements (BIS), though the BIS stepped away from the projects two years later.

The revamped Project mBridge now includes UAE, Thailand, Saudi Arabia, Hong Kong, and China. Earlier this year, transaction volumes on the platform surpassed $55 billion, with the digital yuan accounting for over 95% of that total.

Reprioritizing Programs

A central goal behind these efforts is to strengthen the yuan’s role in global trade and challenge the dominance of the U.S. dollar and dollar-backed stablecoins. This objective has become a common theme in the renewed push for CBDCs elsewhere, including South Korea’s revived trials of the digital won.

Lawmakers in the European Union have also reprioritized their focus on the digital euro, recently asking payments firms to guide the CBDC through its pilot phase. This marks an important step forward: despite years of debate and delays, the digital euro now appears to be on track for a potential launch late next year.

Overcoming Retail Inertia

Concerns around privacy, security, and infrastructure have slowed progress, and the European payments market is already saturated with alternatives—including card networks, crypto, and domestic real-time payments systems.

Government mandates mean the digital yuan is likely to face a smoother road to consumer adoption. To hasten the pace, China has recently introduced the ability for e-CNY balances to earn interest and has confirmed that digital yuan holdings are protected under the country’s deposit insurance system.

Despite strong government backing, the digital yuan still faces a formidable challenge. China’s retail payments landscape is dominated by super apps like Alipay and WeChat Pay—an entrenched ecosystem that may prove difficult to displace.

The post Government Backing and Cross-Border Payments Fuel Digital Yuan appeared first on PaymentsJournal.

The European Central Bank has invited licensed payment service providers (PSPs) to help shape the long-awaited digital euro as it enters its pilot phase—a chance to prove the currency still has a role in the global payments landscape.

Participating PSPs will test the technical and operational readiness, evaluate the user experience, and experiment with communication, branding, and marketing approaches. The digital euro is expected to launch in the second half of 2027.

What PSPs Should Look For

Feedback from PSPs will influence the asset’s technical development, helping to identify and avoid potential pain points before its official rollout.

“If PSPs have to rebuild plumbing every time a spec or nuanced change is made, this won’t work, so it needs to have solid API and software development kits for integration,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It needs to be simple and easy to use and integrate. They need to push for a credible, banking type commercial model.”

“The liability and fraud part is going to be tricky, so they need to ask for clear and specific rules for these types of situations,” he said. “They also need a ‘standardized integration’ stack or package to enable seamless integration and greater adoption. No one participating should be reinventing the wheel here, but a solid framework needs to be in place or it won’t gain traction.”

One drawback of the pilot is that PSPs are expected to build, onboard, certify, and operate the digital euro at their own expense. As a result, participation is likely to be limited to the largest players. 

A Difficult Path

The digital euro’s journey has been challenging since its inception in 2020. Originally designed to counter the growing influence of foreign currencies and global payment networks such as Visa and Mastercard, it now faces competition from stablecoins, which have assumed a key role in cross-border payments—one the digital euro was meant to fill.

The pilot may be the final test to determine whether the digital euro can carve out a meaningful place in payments. But the question remains: does it still have a future?

“There are a lot of nuances there, but the short answer is no,” Hugentobler said. “I think what the current administration is doing and pushing for will strengthen stablecoins and the U.S. dollar even more, potentially squeezing out others.”

The post Digital Euro Enters Pilot Phase, with Questions Around Its Viability appeared first on PaymentsJournal.

The idea of a limited-scope, or “skinny,” master account for fintechs has gone from abstraction to reality in just a few short months.

In October, Federal Reserve Governor Christopher Waller proposed a model that would allow fintechs to directly access certain services from the central bank. Until now, many of these companies have relied on licensed banks’ master accounts to operate payment services—a workaround that can become cumbersome and costly as companies scale.

According to the Wall Street Journal, crypto exchange Kraken has secured approval for a limited master account, marking a landmark development for the digital assets industry.

“This is a big deal because it connects directly to Fedwire and reduces reliance on correspondent banks,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “The second order effect is that it proves other non-FDIC insured institutions can be approved—with constraints for now—which will steepen competition for on-ramps, settlement, and potentially stablecoin and fiat management.”

“One step further from there, the third order effects would probably be that banks feel pressure in their ‘gatekeeper roles,’” he said. “There will be further debates about deposit disintermediation if more crypto companies like Kraken get direct access to the Fed’s rails.”

The Bailiwick of Banks

Banks have already voiced concerns. Master accounts at the Fed have traditionally been reserved for insured depository institutions deemed low risk. In exchange for access to the central bank’s rails, those institutions assume substantial compliance burdens and regulatory constraints.

Some financial institutions argue that extending similar access to fintechs—even in a limited capacity—could impact banks’ revenue and market share. Others contend that skinny accounts may not go far enough in safeguarding against fraud and money laundering risks.

Ramping Up the Comfort Level

Kraken will serve as an early test case for this framework. The Fed retains the authority to impose restrictions if necessary, and the exchange will not be permitted to earn interest on reserves or tap the central bank’s emergency lending.

Still, the approval represents a watershed moment for an industry that has grappled with regulatory uncertainty for years.

“Even though this is phased access for Kraken, it’s a good starting point for them to prove it has adequate controls and resilience and adheres to other compliance areas. Aand if all goes well, other services or platforms are likely to scale,” Hugentobler said.

The post Kraken’s Master Account Approval Is a Watershed Moment for Crypto appeared first on PaymentsJournal.

Over a quarter of the U.S. workforce now participates in the gig economy in some capacity. As these platforms have grown, payouts have become a central operational concern: timely, reliable payments are essential to attracting and retaining freelancers and gig workers.

The Philippines is experiencing a similar shift, with nearly a quarter of employed workers engaged in gig work. Unlike their U.S. counterparts, however, many Filipino freelancers work on projects for foreign clients.

That dynamic has created a pain point. Cross-border payouts are often slowed by intermediary banks, weighed down by transfer fees, and subject to foreign exchange costs. Payments can take days to settle and may shrink by as much as 10% by the time they reach the recipient.

These frictions are pushing many gig workers in the Philippines toward stablecoin payouts. Stablecoins like USDC and USDT can settle in seconds, whether the transaction is domestic or international. Since they are pegged to the U.S. dollar, recipients can avoid immediate currency conversions, and blockchain-based transfers bypass many of the fees embedded in the traditional correspondent bank model.

Ramping Up the Comfort Level

While some companies have hesitated to add stablecoins to their payment repertoire due to regulatory uncertainty, those concerns have begun to ease. The implementation of the EU’s Markets in Crypto-Assets (MiCA) framework and the proposed GENIUS Act in the U.S. have helped ramp up global comfort with regulated stablecoin usage.

User expectations are another powerful driver. As consumer payments move closer to real-time settlement, that expectation is bleeding into commercial payments and platform payouts.

Unlocking the Digital Economy

Stablecoins are well positioned to meet these demands across a range of use cases. Payouts in particular—whether marketplaces paying sellers, gaming platforms issuing winnings, or YouTube paying its creators—represents a strong fit.

In countries such as the Philippines, where a growing share of the workforce is reliant on cross-border income, stablecoins are about more than speed and lower fees. For many workers, they offer a direct on-ramp to the global digital economy.

The post Stablecoins Power Philippines’ Thriving Gig Economy appeared first on PaymentsJournal.

TikTok Shop has been at the forefront of the social commerce surge, where influencers’ live streams and product videos link directly to checkout. As a result, social platforms have become one of the fast-growing segments in e-commerce.

A key driver of this growth is frictionless payments. Platforms that let users buy directly see higher engagement and conversions, and a stablecoin could make transactions faster, cheaper, and more seamless—connecting social media with financial services in real time.

Recognizing this potential, Meta, which reaches roughly 3 billion users across Instagram, Facebook, and WhatsApp, is reviving its plans to introduce a stablecoin within its ecosystem. Such a launch could deepen the company’s role in social commerce while also positioning it as a major player in financial services.

“WhatsApp is essentially the communication layer for a large portion of cross-border payments, commerce, and even remittances—so stablecoins could become the settlement layer and significantly reduce fees for users,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “My guess would be that the UX mostly hides the crypto rails, so it’s all handled on the backend. The simpler the experience for the user, the better.”

“This will reduce payout delays, bank transfer and other intermediary frictions, and even FX complexities,” he said. “Meta will have the decision to pass savings to merchants, keep savings to add to margins and increase revenue, and/or potentially subsidize early on to drive adoption.”

Shifting the Strategy

All these benefits are reasons why Meta has long pursued a stablecoin. The tech giant first introduced its Libra stablecoin, later rebranded as Diem, in 2019. However, regulatory challenges and high costs forced Meta to shelve the project.

Following last year’s passage of the GENIUS Act, Meta revisited the idea, but with a new approach. Instead of issuing a proprietary stablecoin itself, the company released a request for proposals (RFP) to third-party firms, seeking a partner to handle stablecoin issuance and wallet operations.

“Meta is going to be one of many notable players entering the space,” Hugentobler said. “There’s no evidence that they are going to issue their own stablecoin this time, but it wouldn’t surprise me if they did at some point down the road. For now, I think their focus is distribution, wallet integration, and user experience—and they will let the regulated issuers focus on what they do best.”

Becoming the Default

One leading contender is Bridge, the stablecoin infrastructure firm recently acquired by Stripe. Bridge has quickly established itself as a major crypto player and even recently gained approval as a national trust bank.

Regardless of which partner wins the bid, Meta is targeting a launch later this year—a signal that digital payments are central to its social commerce strategy. its stablecoin by the latter part of the year. If successful, the move could strengthen the link between social media and fintech, bringing Meta closer to the super app model, and expand the mainstream adoption of digital assets.

“This is a big deal,” Hugentobler said. “With Meta making stablecoins a native payment inside these applications, the networks are big enough to push stablecoins and crypto rails for payments into the mainstream, and to become the default.”

The post Meta Seeks Third-Party Firm for Stablecoin and Wallet Ambitions appeared first on PaymentsJournal.

Daiso has become South Korea’s leading discount retailer by offering a wide array of goods, many priced at an attractive 1,000 won (approximately $0.69). This approach has made the chain a mainstay for millennial and Gen Z consumers, as well as a popular tourist destination.

Now, Daiso is joining the next phase of trials for the digital won, a critical step in testing South Korea’s central bank digital currency (CBDC). In this model, the Bank of Korea issues the CBDC to participating banks, which act as intermediaries.

These banks then create deposit tokens that customers can add to digital wallets. When a user makes a purchase at Daiso, the bank deducts tokens from the customer’s wallet, and the Bank of Korea transfers the corresponding amount of digital won from the bank to Daiso via blockchain.

Lacking Consumer Fervor

The Daiso integration marks a milestone for a CBDC that has faced its share of challenges. The first trials of the digital won were conducted at brick-and-mortar stores like Kyobo Book Centre, 7-Eleven, and Ediya Coffee, as well as through the Ddangyo delivery app. Seven major banks participated in the pilot, including KB Kookmin Bank, Shinhan Bank, Hana Bank, and Woori Bank.

However, only about 42% of converted deposit tokens were used during this initial trial, and roughly half of those transactions occurred via Shinhan Bank’s Ddangyo platform. This limited  consumer uptake, combined with the costs of running the trial, led the Bank of Korea to pause further CBDC pilots and explore issuing a won-backed stablecoin instead.

Understanding the Flows

Globally, the rollout of CBDCs has often been hampered by similar challenges. The rapid adoption of stablecoins has offered a faster, cheaper alternative, though these are typically issued by private companies like Circle and Tether and backed by the U.S. dollar. This reliance on foreign-backed private stablecoins has prompted many countries to explore ways to strengthen their own currencies.

South Korea, in particular, has raised concerns about private stablecoin issuance, including the potential for money laundering or abuse. The central bank has suggested that any won-backed stablecoin should only be issued by licensed domestic banks. Regulatory disputes over this model have delayed its approval—likely contributing to the renewed interest in a CBDC.

If participation in the new round increases, the Daiso trials could provide regulators with a better understanding of CBDC usage. Bank of Korea officials noted that the frequent, small-ticket purchases at Daiso may offer valuable insights into deposit token flows and consumer behavior.

The post South Korea Reignites CBDC Program with Daiso’s Buy-In appeared first on PaymentsJournal.

While stablecoin usage in payments is expanding quickly, most current activity is still concentrated in internal use cases rather than external payments. Although total stablecoin transaction volume is estimated at roughly $35 trillion annually, the portion tied specifically to payments is closer to $390 billion.

That’s according to data from McKinsey, in collaboration with blockchain analytics provider Artemis Analytics, which found that the vast majority of that transfer volume reflects trading activity, internal treasury movements, and automated blockchain transactions rather than real-world payments.

“They’ve been an outstanding internal product because they let players like exchanges, custodians, market makers, and even protocols rebalance liquidity and settle transactions 24/7 and near instantly,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “No waiting for banks to reopen over night or during the weekend—they’re an ‘always on’ digital cash. This also reduces friction between parties, enables greater capital efficiency, and allows for programmable controls.”

External Use Cases

At the same time, stablecoin payment activity more than doubled between 2024 and 2025. B2B payments dominate the segment, totaling about $226 billion—roughly 60% of global stablecoin payment volume. The study found that B2B usage increased 733% year over year.

Consumer-to-consumer payments accounted for another $77 billion. Stablecoins enable peer-to-peer transfers that can settle almost instantly and often at lower cost than traditional methods.

A comparable amount, about $76 billion, was tied to consumer-to-business payments. Stablecoin-linked cards have played a significant role in this area, allowing consumers to spend stablecoins directly with merchants worldwide without first converting funds through exchanges or banks. Spending via stablecoin-linked cards reached $4.5 billion in 2025, up 673% from the prior year.

Global payroll and remittances conducted in stablecoins now total roughly $90 billion annually.

Further Incentives Needed

They key question is whether these predominantly internal uses will ultimately translate into broader adoption for external payments. For that shift to occur, digital assets will need to offer a more seamless user experience and stronger incentives for both merchants and end users.

“The cost savings and speed with faster settlement are clear advantages, but the incentives aren’t quite there for a multi-trillion-dollar payment landscape to fully make that jump,” said Hugentobler. “But we are seeing compliance efforts and partnerships with wallet and card providers, so things are coming down the pike pushing it in that direction.”

The post Stablecoins Expand in Payments, Yet Most Activity Remains Internal appeared first on PaymentsJournal.

For years, compliance and security concerns kept many financial institutions on the sidelines of the digital asset market. Now, that hesitation is giving way to cautious optimism—and, increasingly, active participation.

That shift is due in part to the passage of the GENIUS Act in the U.S., which established clear ground rules for stablecoin issuers. Since then, leading digital assets firms like Circle, Ripple, and Paxos have received conditional approval from the U.S. Office of the Comptroller of the Currency to establish national trust banks.

These charters allow the companies to issue stablecoins, hold digital assets, and manage reserves—all under the purview of federal regulators. The latest company to receive this approval is stablecoin infrastructure provider Bridge, which was acquired by Stripe two years ago in what was one of the largest crypto-related acquisitions at the time.

Expanding Use Cases

Like Stripe, many of the world’s leading financial services firms have made significant investments in crypto ventures in recent years. Now, these companies are expanding their programs into new use cases. For example, YouTube recently added functionality enabling creators to receive payouts in PayPal’s PYUSD stablecoin.

While additional consumer-facing applications are on the horizon, including a Sony-backed stablecoin targeting the U.S. gaming market, the most dynamic use cases for digital assets may emerge in commercial payments.

The traditional B2B payments cycle has long revolved around extended settlement timelines designed for paper checks, making treasury management unnecessarily complex. Many of these processes remain manual and time-consuming, increasing the risks of errors and fraud.

Revitalizing the Landscape

These challenges are magnified in cross-border payments. International transactions often rely on chains of intermediary banks, resulting in delays, higher fees, and limited visibility into payment status.

By contrast, stablecoins have the potential to revitalize both domestic and cross-border commercial payments. Transactions can settle near-instantly on blockchain networks, with greater visibility for all parties and potentially reduced costs. In addition to operational efficiencies, organizations can optimize working capital by retaining cash longer and initiating payments at the last possible moment.

As more stablecoin companies, including Bridge, operate under U.S. regulatory oversight, businesses are likely to grow more confident in integrating digital assets into their operations. That momentum could further accelerate growth  the already red-hot stablecoin market, which now exceeds $310 billion.

The post Stripe’s Crypto Segment Bridge Gets Greenlit as National Trust Bank appeared first on PaymentsJournal.

Visa has been the sole card provider for the Olympic Games for roughly 40 years, but its dominant positioning has become a point of concern at this year’s Winter Olympics.

The main issue is that all official souvenir stores at the Milano Cortina games only accept Visa or cash. With cash usage declining across Europe, many visitors without Visa cards have faced long ATM queues to access funds.

While such logistical challenges are not unusual at major events, they highlight Europe’s resilience on foreign payment providers—a dependence that has disquieted many EU leaders. This has fueled increasing calls for a stronger, independent payments infrastructure to reinforce the EU’s standing as a global financial services hub.

“The Olympics has been Visa-only since that marketing deal started way back when, but now they’re shoved into the spotlight because of global affairs, so they are scrambling to install ATMs and let people use cash,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “Banks in the EU issue Visa- and Mastercard-branded credit and debit cards just like they do in the U.S; Visa and Mastercard are global brands but are headquartered in the U.S.”

“With everything that’s been happening with NATO, Ukraine, Greenland, etc., now the EU is wondering if their payments system could be at risk if the U.S. does something that makes Visa and Mastercard unavailable to the EU, or at a minimum less desirable for EU banks and consumers,” he said.

A Digital Alternative

Although there is no indication that changes to card networks are imminent, financial services are increasingly a focus for EU lawmakers. The rapid rise of U.S.-dollar-backed stablecoins has also raised concerns about the euro’s role in global transactions.

The emergence of stablecoins has intensified discussions around a central bank digital currency (CBDC). However, progress toward a digital euro has been arduous, with ongoing debates about security and the necessity of the digital asset.

Despite these challenges, the European Central Bank plans to launch a digital euro by 2029, contingent on establishing an appropriate regulatory framework. If successful, the CBDC could debut just ahead of the 2030 Winter Olympics in France.

Protecting from the Splatter

The EU’s concerns extend beyond Olympic souvenir payments. Lawmakers recently met to discuss a comprehensive payments plan that would include a euro-backed stablecoin, tokenized deposits, and a focus on ensuring that all lending and aid efforts are denominated in euros.

These discussions followed a landmark trade deal with India that carried significant financial services implications. Collectively, these initiatives signal that payments stability is a top priority for EU leaders.

“There’s also nervousness in the EU about U.S. debt at $31 trillion and growing fast, based on tax cuts and spending in the U.S. right now,” Apgar said. “Many U.S. bondholders are EU countries who are unwinding their U.S. investment positions. Combined with tariffs, Iran, Venezuela, and Gaza, some EU economists are becoming bearish on the U.S., and if our economy hits the deck, the EU is trying to protect themselves from the splatter.”

The post Olympics Payments Hurdles Are a Microcosm of EU Challenges appeared first on PaymentsJournal.

The next phase of agentic commerce may not be about browsing or checkout, it may be about control of the wallet. Coinbase is introducing agentic wallets designed to function as full-service, autonomous money management tools, enabling AI agents to make payments, trade tokens, and earn yield on investments without constant human oversight.

The objective is to add financial functionalities to any AI agent through a plug-and-play wallet solution. One of the main benefits for users is that AI agents never sleep, allowing them to constantly search for opportunities and respond in real time.

“This is a big deal because it lets AI agents hold and spend money on-chain autonomously, and it even offers spending limits and features like risk screening,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “What this really will do is increase stablecoin activity dramatically and has the ability to automate DeFi activity and other on-chain transactions.”

“This will draw a lot of volume to Coinbase’s native chain Base as well,” he said. “On the flip side, if agents get compromised, mistakes and losses can add up quickly. So adoption of this tech will depend on of they have strong enough controls for developers and institutions.”

Minimal Human Intervention

Security and accuracy have been top of mind since the emergence of the nascent agentic commerce paradigm, as AI agents are designed to make decisions with minimal human intervention. As a result, there are many ways agentic AI could disrupt the current retail landscape—especially if these systems are exploited or misused.

For its part, Coinbase has implemented guardrails within its agentic wallets to ensure agents stay on task, including programmable spending limits and session-level controls. Users will also have access to a streamlined interface to monitor their agent’s status, fund wallets, and issue new prompts.

Building the Shared Language

Developing stable infrastructure to support AI agents has become a top priority for many of the world’s leading financial players in recent months. Google, Visa, and others have launched agentic commerce protocols designed to serve as a shared language among merchants, financial services providers, consumers, and AI agents.

Coinbase has also launched its x402 protocol, which leverages the previously unused HTTP “402 Payment Required” status code to facilitate instant stablecoin payments. The company’s agentic wallet launch is an offshoot of x402, which has reportedly gained significant traction. According to Coinbase, the protocol has facilitated 50 million transactions since its launch last year.

The post Coinbase Unveils Agentic Wallets to Power Autonomous AI Spending and Investing appeared first on PaymentsJournal.

The euro is the world’s second-largest reserve currency, though it still lags far behind the U.S. dollar. Many European Union leaders believe that a stronger global role for the euro would enhance regional stability and create more opportunities for member states.

In upcoming talks, EU leaders have laid out an ambitious agenda to elevate the euro’s international standing. This includes issuing euro-backed digital assets such as stablecoins, tokenized deposits, and a central bank digital currency (CBDC). Another priority is to expand euro-denominated lending, including joint issuance by multiple countries, and to that aid and loans provided to other regions are denominated in euros.

Leaders are also exploring the creation of a regional payments network to rival the infrastructure established by Visa and Mastercard within the EU.

Reaching a Crescendo

Calls for more euro-backed digital assets have intensified in recent years, as stablecoins from Circle and Tether now move trillions of U.S. dollars globally. Stablecoins have proliferated across  banks, retailers, and social media companies, with use cases continuing to expand.

While euro-backed stablecoins exist, they account for only a small fraction of the market. This has fueled calls for a digital euro, though the CBDC faces pushback from banks and lawmakers. Banks worry it could compete with their products, while some policymakers question its privacy and financial stability implications.

A Global Financial Force                                              

Beyond digital assets, the EU is working to strengthen its real-time payments systems. Efforts include integrating domestic mobile payments platforms under a single umbrella and connecting to real-time payment networks abroad.

To this end, the EU recently unveiled plans to connect its instant payments infrastructure with India’s UPI system, unlocking a significant global payments corridor. India and the EU also signed a landmark Free Trade Agreement, aligning the two economies in multiple areas, especially financial services.

Ultimately, these efforts aim to position the EU as a stronger global financial force—a challenging task given the established global positioning of U.S. stablecoins, card networks, and cross-border payment rails.

The post EU Leaders Consider Comprehensive Payments Plan for the Euro appeared first on PaymentsJournal.

South Africa has entered the digital currency arena with the launch of a new stablecoin, ZAR Universal (ZARU), pegged to the rand rather than the U.S. dollar, which dominates the global stablecoin market. The initiative aims to make the rand “internet-native,” but history suggests its appeal beyond South Africa may be limited.

ZARU is a collaboration among several South African companies, including crypto investment firm Luno, asset manager Sanlam Specialised Asset Management, investment platform EasyEquities, and fintech Lesaka. The stablecoin is deployed on the Solana blockchain and is positioned as an alternative to dominant currencies such as the dollar and the euro in digital finance.

The stablecoin is backed by rand-denominated assets, including South African government bonds. By keeping the reserve assets within the domestic financial system, the consortium aims to drive demand for rand-based assets.

For the moment, ZARU is available only to institutional investors via the Luno and EasyEquities trading desks. Both platforms have indicated that access for retail investors is planned for a later stage.

Little Advantage Outside of South Africa

One clear advantage of ZARU is its potential to simplify cross-border transactions for South African businesses. Using a rand-pegged stablecoin could reduce reliance on the U.S. dollar for settlement, potentially lowering costs and shortening transaction times.

Beyond these domestic use cases, however, prospects for wider international adoption appear uncertain.

“Other than a policy angle of offering something other than the U.S. dollar, which follows the larger macro trend of de-dollarization and de globalization, I don’t see other people or countries using it all that much due to lack of liquidity and potentially higher volatility exposure,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “This will be mainly used for South Africa-based transactions like imports and exports, and remittances.”

Euro-Backed Stablecoins Struggle

According to a report from the Brookings Institute, approximately 99% of stablecoins in use are pegged to the U.S. dollar. Even euro-denominated stablecoins, backed by a far more widely used currency than the rand, have struggled to find a market.

French bank Société Générale, for example, spent two years trying to launch a euro-backed stablecoin. After achieving circulation of roughly $47 million, the bank announced last June it would instead pursue a stablecoin pegged to the U.S. dollar.

The post Rand vs. Dollar: South Africa’s Bet on a New Stablecoin appeared first on PaymentsJournal.

The store most known for home décor could soon offer tokenized home equity loans, after Bed, Bath & Beyond unveiled plans to acquire Tokens.com.

The big-box retailer has leaned heavily into the “beyond” portion of its name since emerging from bankruptcy two years ago. Its subsequent restructuring has included significant investments in blockchain and digital assets—for example when the company offered tokens representing shares of its Overstock and BuyBuy Baby brands’ profits and intellectual properties.

The acquisition of Tokens.com gives the retailer a direct pathway into the tokenization of real-world assets (RWA). In practice, this could allow consumers to bypass traditional bank application and tap directly into their home equity through Bed, Bath, & Beyond’s new platform, which could be operational as soon as July.

The broader goal is to build a unified ecosystem in which homeowners can both purchase goods and secure financing.

Seizing the Limelight

While the tokenization of cash—such as stablecoins and tokenized deposits—has attracted most of the limelight so far, RWA tokenization could prove just as impactful. This is partly because it can represent nearly any physical asset, from property deeds to artwork to stocks.

Once tokenized, these assets can be transferred across blockchains in a secure, transparent, near-real-time manner. They can also be easily fractionalized and sold to multiple buyers, with transactions that are typically faster and less costly than traditional alternatives.

These capabilities mean Bed, Bath, & Beyond customers could soon gain visibility into their home equity and the ability to convert it into cash or tradable digital tokens.

No Signs of Slowing Down

The disruptive potential of tokenization is why Robinhood CEO Vlad Tenev recently spotlighted the technology, going so far as to say that tokenization was an imminent “freight train” that would reshape the financial services industry.

“It’s not out of the ordinary to see huge compound annual growth rate (CAGR) numbers for early-stage companies or new technology like this,” Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, told PaymentsJournal. “But depending on how you calculate it, tokenization’s projected CAGRs range anywhere from 400% to 4000%. It’s pretty impressive and there are no signs of slowing down. The number of companies that have launched funds on chain has seen like a 10X in just a couple of years.”

The post Bed, Bath, & Beyond Turns to Tokenization in Digital Assets Push appeared first on PaymentsJournal.

In the 17 years since the first bitcoin was mined, cryptocurrencies have been labeled everything from a passing fad to the next big thing. In recent years, latter view has gained traction, driven largely by the rise of stablecoins and increased institutional investment.

And yet, widespread crypto payments at retail points of sale have remained elusive. That may be starting to change, according to research by PayPal and the National Cryptocurrency Association. The study found that around 39% of merchants already accept crypto, including roughly half of businesses generating more than $500 million in annual revenue.

“Merchants, especially the large enterprise retail brands, are always looking for ways to improve their customer experience and drive incremental sales, and customer payments are an important part of that process,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “Crypto continues to become more popular with consumers, and in turn that will continue to drive its popularity with merchants.”

Attracting Sought-After Customers

Customer interest has played a key role in this growing acceptance. Most merchants surveyed said inquiries about crypto payments were common, and those questions often came from highly sought-after younger customers in the millennial and Gen Z demographics.

Beyond attracting and engaging younger customers, merchants cited transaction speed and security as key benefits of crypto payments, which typically settle in near real-time on transparent blockchain networks. These advantages extend to cross-border payments as well, potentially opening up meaningful new markets for merchants.

Given these benefits, roughly 84% of respondents believe crypto payments will become common in the next five years.

Doing the Heavy Lifting

One reason crypto payments haven’t seen broader adoption to date is concern over the volatility of many digital assets. However, as major payments players have built out crypto infrastructure in recent years, they have increasingly removed conversion and volatility management from merchants’ responsibilities.

For example, Visa recently launched a stablecoin acceptance platform that allows merchants to accept cross-border stablecoin payments without handling tokens directly. PayPal has also launched a crypto platform that does the heavy lifting for merchants, allowing them to accept payments in over 100 cryptocurrencies from leading wallets like Coinbase Wallet, MetaMask, and Kraken.

With strong demand from consumers and growing enablement on the merchant side, mainstream adoption of digital asset payments at retail appears closer than ever.

The post Customer Interest and Efficiency Attract More Merchants to Crypto appeared first on PaymentsJournal.

After years of uncertainty, crypto and digital assets have finally reached mainstream acceptance. However, growing pains continue.

Research from the UK Cryptoasset Business Council (UKCBC) found that 40% of transfers between UK crypto exchanges and bank accounts are often blocked or delayed.

These issues frequently arise due to blanket bans or transaction caps that financial institutions have implemented to protect against fraud. Yet, these problems still occur even when customers use crypto platforms licensed by the UK’s Financial Conduct Authority.

As crypto adoption grows, the issue appears to be worsening. After analyzing transactions at 10 of the UK’s largest exchanges, UKCBC found that eight firms reported a measurable increase in customers experiencing blocked or limited transfers last year, while none saw a decrease.

Stymied Innovation

While fraud is a persistent concern for financial institutions worldwide, crypto advocates argue that blanket blocks and limits could stifle innovation and reduce the competitiveness of UK banks.

Thanks to the capabilities of digital assets, many leading financial institutions have invested in technologies like blockchain, tokenization, and stablecoins to varying degrees.

For example, top UK bank Barclays recently acquired a substantial stake in U.S.-based stablecoin settlement platform Ubyx, a move designed to integrate digital assets with the financial services industry’s regulatory standards.

Mirroring Obligations

This is just one example of the substantial institutional investment in crypto and digital assets in recent years. In response, many crypto companies have overhauled their compliance standards and fraud defenses to align with the obligations of their banking partners.

As crypto exchanges and fintech companies assume a greater role in the industry, the U.S. Federal Reserve has even considered creating dedicated “skinny” master accounts that would give these firms direct access to Federal Reserve services without requiring a bank intermediary.

This growing acceptance of crypto platforms by banks, fintechs, and regulators suggests that imposing broad limits and blocks on crypto companies is counterproductive. At minimum, the UKCBC recommends that UK banks adjust their policies to differentiate between licensed and unlicensed crypto companies.

The post Crypto Transfers to UK Financial Institutions Often Face Settlement Issues appeared first on PaymentsJournal.

Objections from Coinbase helped scuttle the Senate’s consideration of the Clarity Act, a landmark crypto infrastructure bill. After Coinbase CEO Brian Armstrong said the bill would amount to a “de facto ban” on tokenized equity offerings, the Senate canceled its markup session, which is now expected to be rescheduled in the coming months.

The bill, which has already passed the House, seeks to ending regulatory uncertainty around digital assets by clarifying which assets fall under securities law and which qualify as commodities, dividing oversight between the SEC and the Commodity Futures Trading Commission.   

Armstrong has also argued that the bill would prevent crypto exchanges from offering customers interest on stablecoins. While the GENIUS Act prohibits such rewards, some exchanges have relied on a loophole allowing stablecoin issuers to indirectly fund payments to holders.

The American Bankers Association has warned that allowing crypto to offer interest-like rewards “will siphon trillions from local lending, leaving less money available for car loans, agricultural loans, mortgages, and small business borrowing that drive local economies.”

Crypto Execs Demur

Other crypto executives disagreed with Coinbase’s position.

“We don’t interpret the CLARITY draft as a ‘de facto ban’ on tokenized equities,” Gabe Otte, co-founder and CEO of Dinari, told CoinDesk. “What it does do is reaffirm that tokenized equities remain securities and should operate within existing securities laws and investor protection standards.”

Citron Research went so far as to publicly accuse Coinbase of opposing the Senate’s draft CLARITY Act out of fear of competition.

“Coming This Year”

Coinbase certainly has the clout to pursue legislation that advances its core objectives. Given the pushback from other corners of the crypto community, it’s clear that no single bill can satisfy everyone.

“The decision to pull support for the market structure bill was not made lightly,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It came from multiple areas including tokenized equities, DeFi issues, and the role of the SEC. Armstrong wants 100% or dang close to it, but there are other solid representatives working on this bill that will continue to move forward and get a solid piece of legislation passed.

“The act has the potential to be good for the industry,” Hugentobler added. “Traditional finance won’t fully embrace this tech until there’s a solid regulatory framework. This is a complex industry with a lot of moving parts, so it may take some time, but I think it’s coming this year. 

The post Coinbase Delays Vote on Clarity Act appeared first on PaymentsJournal.

Visa is bringing stablecoins into the mainstream of global payments, launching a program that lets merchants settle international transactions without ever touching a digital asset.

Under the partnership between Visa and stablecoin infrastructure provider BVNK, businesses in certain markets will be able to pre-fund payments using digital assets and send payouts directly to recipients’ digital wallets. The payouts will run on Visa Direct, Visa’s real-time transfer network, which operates continuously, including on weekends and holidays. BVNK will provide the infrastructure connecting wallets and blockchains, as well as conduct compliance checks.

The new offering builds on a pilot program Visa launched last October, marking the first time a major payment rail—one that already processes the lion’s share of cross-border transactions—has adopted stablecoins.

Getting Ahead of the Fintechs

Other payment services like Stripe and Shopify offer similar stablecoin settlement capabilities. But Visa’s prominence in the global payments industry is likely to make merchants far more comfortable adopting the model at scale.

“The way Visa and BVNK have it set up, their service permits merchants to accept fiat payment just like normal payments, where stablecoins are being used to settle on the other side,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Essentially, with the indirect method that Visa is leveraging, merchants won’t have to touch stablecoins or cryptocurrencies if they don’t want. This eliminates price volatility, treasury management associated with typical cryptocurrencies, and several other things that retailers don’t want to deal with.” 

Aggressive Moves in the Space

The new offering should further strengthen Visa’s foothold in the cross-border payments market. It already processes more than $4.5 billion in annualized stablecoin settlement volume. Still, that’s just a drop in the bucket for Visa Direct, which has handled nearly $1.7 trillion annually in payments.

Visa has made several aggressive moves in the stablecoin market within the past year. Last May, the company invested in BVNK, which processes over $30 billion in stablecoin payments annually, through its venture arm.

Last month, Visa launched a new advisory service to help banks, credit unions, and other enterprises implement their own stablecoin strategies. Offered under the Visa Consulting & Analytics umbrella, the Stablecoin Advisory Practice provides training, market analysis, strategy development, use-case sizing, and technical support for organizations exploring digital assets.

The post Visa Eases Stablecoin Payment Settlement for Merchants appeared first on PaymentsJournal.

PhotonPay, a leading stablecoin-centric global digital financial infrastructure, today announced the successful completion of its tens of millions of USD Series B funding round.

This round was led by IDG Capital, with participation from Hillhouse Investment, Enlight Capital, Lightspeed Faction, and Shoplazza. Blacksheep Technology acted as the exclusive financial advisor for this round. The funds will enable PhotonPay to accelerate the expansion of its next-generation stablecoin financial rails, hire key talent, and broaden its global regulatory footprint.

As a core enabler of the global digital economy, PhotonPay is dedicated to empowering businesses with a secure, compliant, and frictionless financial operating system. Operating from 11 global hubs with a team of over 300 experts, PhotonPay powers a vast and diverse ecosystem—supporting both established and emerging markets across core industries like e-commerce & marketplaces, B2B trade, OTAs, and logistics, while deeply penetrating high-growth digital frontiers such as AI, SaaS, and Digital Entertainment globally.

Built on a rapidly scaling stablecoin-native clearing infrastructure, PhotonPay now processes over $30 billion in annualized payment volume. The platform helps tens of thousands of businesses reduce global fund transfer costs by more than 75% and boost operational efficiency by 60%, paving the way for seamless global expansion. 

Building a Next-Generation Financial Infrastructure Future

“Global payments are experiencing a once-in-a-generation structural revolution: moving from slow, siloed legacy interbank networks to a unified, digital-asset-native system built for real-time liquidity and intelligent treasury,” said Lewison Chen, Founder & CEO of PhotonPay.

“We fundamentally believe the future payment stack will be stablecoin-ready, and we are building it now. Stablecoins are not just a new settlement tool, they are the foundation for moving value globally at the speed of photon—zero friction, zero latency. This Series B is not a validation of what we’ve done; it’s the fuel that accelerates our mission to connect the global digital economy and defines our role in re-architecting the next decade of global payments infrastructure.”

The newly raised capital will strategically propel our vision of powering the next generation of global finance, focused on four key pillars:

1.Fortifying Global Financial Infrastructure 

Leveraging its strong partnerships with leading financial institutions such as J.P. Morgan, Circle, Standard Chartered Bank, DBS Bank, and Mastercard, PhotonPay will further deepen its direct connection to global payment networks. This move aims to enhance capability in account issuance, acquiring, and FX, delivering bank-grade stability while ensuring frictionless, real-time global settlements.

2.Broadening the Product Ecosystem

PhotonPay is poised to launch its second wave of growth, centered on “Enterprise Value-Added Services.” In addition to cementing its leading position in embedded finance, the company will expand its end-to-end “Collect, Manage, and Pay” ecosystem. By 2026, PhotonPay plans to roll out flexible treasury solutions designed to generate yield on idles funds, alongside agile credit facilities, empowering clients to maximize liquidity and capital efficiency.

3.Driving an Intelligent Architectural Evolution

The company will spearhead a comprehensive upgrade of its core technology stack:

• Risk Intelligence: Shifting from passive defense to “predictive precision,” PhotonPay will deploy proprietary AI models to redefine AML and anti-fraud risk management, ensuring bank-grade compliance at fintech speed.
• Next-Gen Settlement: Integrating stablecoin payment rails to modernize global clearing. By bridging traditional banking infrastructure with stablecoin liquidity, PhotonPay enables 24/7 instant settlement and automated payment workflows. This hybrid approach overcomes the limitations of legacy banking windows, significantly reducing transaction friction and capital costs for global businesses.

4.Expanding Global Compliance & Local Footprint

Prioritizing development in the U.S. and key emerging markets, PhotonPay will accelerate its acquisition of regulatory licenses to expand its competitive advantages. Simultaneously, the company will scale its local operations teams, building a highly adaptive infrastructure that combines global regulatory rigor with deep local market expertise.

Commenting on the investment, IDG Capital noted: “Global commerce is undergoing a fundamental shift, and PhotonPay is building the financial operating system for this new era. What stands out most is the team’s ability to abstract the complexity of global compliance and liquidity into a seamless, intelligent infrastructure. By tackling payments at the infrastructure layer, PhotonPay is re-architecting how global payment systems operate through AI-driven intelligence and stablecoin-native capabilities. IDG Capital is excited to back a category-defining company that’s setting the standard for the future of digital finance.” 

Anthony Zhu, Founding Partner of Enlight Capital, added: “Innovative technologies such as AI and blockchain will reshape the global financial system. What we are backing are not incremental products or services built on top of traditional finance, but fundamentally new technological paradigms and solutions that rearchitect core financial processes – making finance more accessible, inclusive, and transparent on a global scale. We see tremendous potential in PhotonPay to become a foundational financial services provider in a future digitalized and AI-native world. We also see in its founder, Lewison, the defining qualities of a next-generation fintech entrepreneur: a technology-driven mindset, a proactive approach to change, a strong can-do attitude in the face of competition, and a truly global vision.”

The post PhotonPay Raises Tens of Millions in Series B to Pioneer Stablecoin-Centric Financial Infrastructure appeared first on PaymentsJournal.

After introducing it as a product for business transactions last August, Wyoming is making its stablecoin available to the general public this week. The next question for the Frontier Stable Token (FRNT) is whether a broader market will emerge for the asset.

The token is available for purchase via Kraken on the Solana blockchain and through Rain, the Visa-powered integrated card platform, on the Avalanche blockchain. Its holdings will be invested exclusively in U.S. dollars and short-duration U.S. Treasuries.

Wyoming has emerged as a leading state in crypto adoption, having passed roughly 30 laws to encourage innovation in digital assets. Kraken moved its headquarters from San Francisco to Cheyenne, Wyoming, last June—a move that likely played a role in securing the rights to trade FRNT.

Looking for Private Use Cases

Wyoming has pushed the notion that FRNT is intended for retail use. The coin settles in seconds, carries fees of less than one cent per transaction, and is available to anyone with an internet connection. The state has even suggested that consumers use the stablecoin to make government payments.

“Last year my office took in about $3.4 million in credit card transactions, which cost our constituents about $70,000 in fees that our processors collected,” Converse County Treasurer Joel Schell noted in a prepared statement. “We’re anxious to get out of that climate and to move into something else. Electronic payments, especially the stable token, would let us get more efficient.”

There’s still more the state could do to promote adoption.

“Until Wyoming either integrates the FRNT stablecoin directly into state and county online portals with a one-click pay user experience, offer clear incentives like waiving surcharges or adding discounts, or just make it feel as easy as a card checkout, it won’t hit that adoption curve,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research.

Yield on Tap?

To further encourage private use, some state officials are considering the possibility of offering yield to investors holding FRNT. Wyoming State Senator Chris Rothfuss has made the case that the state should be able to do this because it is not a private business, unlike other stablecoin issuers.

For now, interest generated from the reserves will help fund Wyoming schools. But Anthony Apollo, the Executive Director of the Wyoming Stable Token Commission, has spoken out in favor of distributing a portion of the token’s Treasury interest directly to individual holders.

The post Wyoming’s Stablecoin Debuts for the General Public appeared first on PaymentsJournal.

As more financial institutions expand into digital assets, UK banking giant Barclays has invested in newly launched Ubyx, a platform that facilitates the transfer of stablecoins and tokenized deposits.

Although the size of the investment was not disclosed, Barclays said it marked the bank’s first investment in a stablecoin company. However, it was not the first vote of confidence for Ubyx, which has already attracted backing from Coinbase and Galaxy Digital, among others.

Barclays said its objective is to bring digital assets under the financial services industry’s regulatory umbrella.

“This is an interesting move on Barclays’ end,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “This is more of a payment network infrastructure play rather than a ‘bet on crypto.’ If stablecoins and tokenized deposits are going to function as regulated digital/tokenized cash, redemption needs to become predictable and issuer agnostic.”

Moving Incrementally

Institutional investments in digital assets has accelerated following the proposal and passage of the GENIUS Act in the U.S., which regulates stablecoins. Previously, many financial institutions were reluctant to pursue stablecoin strategies due to compliance concerns.

Now, nearly all leading U.S. banks are moving forward with stablecoin plans, albeit incrementally. For example, JPMorgan Chase recently launched JPMCoin, though the stablecoin is primarily designed for transfers among institutional clients.

Similarly, Citi said it’s exploring a stablecoin but considers tokenized deposits as more promising for its use cases.

Redeeming at Par

Although traditional banks have taken a more measured approach to stablecoins, many other organizations are forging ahead. This includes companies as diverse as Sony, which plans to launch a stablecoin for its gaming ecosystem, and buy now, pay later leader Klarna.

Early discussions around stablecoins focused on Circle and Tether, and on which stablecoin would ultimately prevail. However, it is becoming clear that the stablecoin market is likely to be highly fragmented.

This fragmentation is what makes a platform like Ubyx particularly intriguing to investors, as it could potentially serve as a central hub connecting these various offerings.

“Anyone can issue a token,” Hugentobler said. “The winners here are those that can redeem them at par at any time within the banking ecosystem. They won’t be treated as cash unless this aspect of redeemability is 100% reliable. At the end of the day, FIs will require interoperability between tokenized deposits and stablecoins. Barclays understands this, and that’s why they allocated.”

The post Barclays Takes Stake in U.S. Stablecoin Settlement Platform Ubyx appeared first on PaymentsJournal.

Morgan Stanley has filed with the SEC to launch its own spot bitcoin and Solana exchange-traded funds (ETFs). While somewhat late to the party, the firm—an asset manager with a wealth management division—is well suited to develop its own crypto-focused vehicles. It would become the first major U.S. bank to issue an ETF tied to bitcoin.

The new funds would be called the Morgan Stanley Bitcoin Trust and the Morgan Stanley Solana Trust. They are designed to hold the crypto assets directly, rather than using derivatives or leverage, and will operate as passive investments rather than making trades based on market conditions.

Bringing the Revenue In-House

Morgan Stanley has been distributing third-party crypto products to its wealth management customers for some time. Initially, financial advisors were allowed to offer crypto investments only to clients with at least $1.5 million in assets. Last October, the bank expanded access, making crypto products available to all clients across all account types, including retirement plans.

The current expansion suggests the strategy was successful. By creating its own crypto investment vehicles, Morgan Stanley can vertically integrate these products into client portfolios, keeping management fees in-house rather than paying them to outside firms like Coinbase.

Since the SEC first approved crypto ETFs two years ago, the category has grown to $120 billion. BlackRock’s spot bitcoin ETFs have become a top revenue source, with allocations exceeding $70 billion. With its wealth management division positioned to help drive sales, Morgan Stanley could compete with these numbers and potentially pave the way for other banks to offer their own crypto products.

Betting on Solana

Morgan Stanley is also betting big on Solana, a blockchain, that, while less well-known than bitcoin, is poised for growth. Solana funds have grown to more than $1 billion in total net assets, aided by technical improvements that have expanded its use cases beyond bitcoin.

Last year, Solana upgraded its blockchain, making it much faster than bitcoin and 10-15 times faster than credit card rails like Visa and Mastercard. The combination of speed, security, and low transaction costs make Solana an attractive option for financial services applications. PayPal, for example, chose to transfer its stablecoin from Ethereum, the leading blockchain provider, to Solana. 

The post Morgan Stanley Is Building Its Own Crypto ETFs appeared first on PaymentsJournal.

China is stepping up its push for digital currency adoption. Starting January 1, users of the e-CNY—the country’s central bank digital currency (CBDC)—will be able to earn interest, and their holdings will be protected under the country’s deposit insurance system, giving consumers more confidence in embracing the digital yuan.

The move is intended to spark wider use, from payroll and loans to investments, and could be a game-changer for underbanked populations. By making the e-CNY a staple of everyday transactions, the government not only hopes to modernize payments but also gain tighter control over monetary policy and track currency flows.

A Battle Against the Payment Apps

China’s CBDC is already the most widely used in the world. As of November, the government had processed more than 3.4 billion transactions worth nearly 16.7 trillion yuan, or about $2.38 trillion.

However, adoption of the e-CNY has been frustratingly slow, as traditional payment apps continue to dominate the market. WeChat Pay, one of the two leading platforms alongside AliPay, processed $15.4 trillion in transactions in 2024.

Chinese officials have pushed WeChat to integrating the digital yuan into its platform, aiming to boost consumer usage. The government has also asked WeChat to reduce its share of the mobile payments market to create more room for the digital currency.

China is positioning the CBDC as a tool to bring people into the economy. Holders of the e-CNY can earn interest even without a traditional bank account. Officials are also hoping that adoption will spread beyond urban centers to rural areas of the country.

Reaching Across Borders

In the B2B landscape, the Chinese government has been exploring the use of its CBDC for cross-border payments. Last month, China and the United Arab Emirates completed their first-ever cross-border payment using a CBDC. The government also announced that South Africa’s Standard Bank had become the first institution in Africa to join its CIPS payment network.

Meanwhile, China’s government has continued cracking down on the use of stablecoins, encouraging businesses to adopt the digital currency instead. Several financial entities in the region, like Ant Group and JD.com, had planned to launch stablecoins for use in Hong Kong but ultimately reversed their plans under regulatory pressure.

The post Why China Is Offering Interest on Its CBDC appeared first on PaymentsJournal.

In a proposal that has drawn both interest and concern, the Federal Reserve is exploring whether crypto exchanges and fintechs should be granted limited access to its payments system through a type of “skinny” master account.

Currently, these companies rely on intermediary banks that already hold master accounts at Federal Reserve Banks to process transactions on their behalf. The Fed is accepting public comments on the proposal through the end of January.

The strongest argument in favor of the accounts is that they would allow for a faster approval process, enabling transactions to settle more quickly. Payments would be settled following a streamlined review, while safeguards imposed by the Fed would aim to reduce risks to the broader payment system.

Useful in Stablecoin Transactions

At the Payments Innovation Conference in October, Fed Governor Christopher Waller floated the idea of a skinny account as a way to give payment services companies more direct access to the Federal Reserve’s payment rails. The accounts could be especially useful for the growing number of stablecoin issuers involved in cross-border payments.

Fintech platforms like Stripe or Block, which currently rely on partner banks for access to the payment system, could also streamline their operations and transaction processing through these accounts.

The skinny accounts would not earn interest or have access to the Fed’s credit facilities. They would also be capped at overnight balances, limited to the lesser of $500 million or 10% of an institution’s total assets.

Concerns and Challenges

Master accounts at the Fed have traditionally been the sole domain of banks, which could lose business if the proposal is adopted—particularly given their intermediary role in processing stablecoin and fintech transactions.

In addition, faster clearing times raise concerns about fraud. Critics have also voiced worries about money laundering, noting that the proposal doesn’t spell out detailed  safeguards to prevent the accounts from being used for illicit activity by institutions the Fed does not supervise.

Those concerns are partly mitigated by the fact that the Fed would retain discretion to impose restrictions and risk controls on a case-by-case basis. It could also require periodic reporting from account holders. Moreover, the proposal limits the accounts to settling only the holder’s own transactions, barring firms from offering correspondent banking services or settling payments on behalf of third parties.

The post Who Would Benefit from the Fed’s “Skinny” Crypto Accounts? appeared first on PaymentsJournal.

The holiday season has increasingly revolved around gift cards, as more consumers prefer spending power over physical gifts. Although gift cards are an enduring offering, the prepaid industry has evolved to include an array of products that are as much about self-use as they are about handing out gifts.

As Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research, detailed in the 2026 Prepaid Payments Trends report, the reimagining of prepaid could even go further than stored-value accounts and digital payment cards. New technologies like digital assets have the potential to turn the prepaid model on its head and shift the course of the industry.

Blending Toward Equilibrium

As digitalization has accelerated, speculation has held that the workhorse of the prepaid industry, physical gift cards, could be phased out. However,  a strong demand for these products persists, even if consumers have new preferences for how to leverage them.

“You need physical gift cards because they are a point-of-sale item,” Hirschfield said. “In general, consumers still like physical cards—you go to a store, and you could tap your phone, but people still like to pull their card out. But especially on the consumer side, both with open-loop cards and closed-loop cards, the ability to digitize a physical card is a critical step that a lot of companies and programs have taken.”

The capability to digitize a physical card is important because it can bridge a single-use gift card and a recurring-use account. This makes it critical for companies to consider their card program holistically, regardless of a card’s initial form factor, and identify ways that their prepaid products can work symbiotically.

For example, with a physical card, a merchant could incentivize a customer with loyalty and rewards tools to digitize their card and reuse it. When developing their prepaid strategies, organizations should also understand that digital and physical cards are essential tools.

“It takes away that talk track—that I think was getting stale—of ‘Digital is what you have to do,’ because it’s just not happening like that,” Hirchfield said. “As much as digital is happening and is critical, the physical step is going to remain important.

“You have to be engaged in a digital program if you’re in prepaid, both from a closed-loop retail gift card type environment and in an open-loop. But where I think the market is headed this year is, ‘How do you blend this omnichannel program into an equilibrium?’”

Filling the Slush Fund

As an extension of this big-picture mindset, more prepaid growth this year will be driven by self-use. While the term “gift card” has become entrenched in the lexicon, many products are better classified as stored-value accounts.

When consumers have this digital account that is tied into rewards and loyalty, it can be a powerful driver to self-use these products. This can deliver significant ongoing advantages for merchants and customers.

“If you are a retailer and people are beginning to load money into their account, you’re saving on transaction fees,” Hirschfield said. “Those are pennies at a time, but those pennies add up. Instead of five transactions of $5, it’s one of $25—and that’s five times less on transaction fees. That’s a big deal.

“For consumers, you reward them by having loyalty points, rewards, and offers, be it a quick-serve restaurant where you might get a free drink or a free side dish. But even when you look at other retail dollars, it might be a $10 reward, and usually that $10 reward creates—and our research shows it—$20 or $30 more in spending. You’re going to be incented to spend even more than you would have just by giving that $10 off.”

Prepaid cards are also often superior to many coupons and discounts because they represent a fixed dollar amount, whereas many coupons offer a percentage discount that could be more costly in the long run.

The promise of these programs has attracted the attention of many organizations, particularly in the peer-to-peer space. Many P2P companies like Venmo and Cash App have prepaid cards that are tied to P2P accounts. These products are designed to give customers incentives to spend their balances in-store.

“They’re going to use that P2P account more because they’re holding that money, so there’s a lot of opportunity,” Hirschfield said. “You’re seeing a lot of growth in Venmo and PayPal commercials for their cards because they’re seeing the benefit of that self-use.

“Sometimes it’s a slush fund account, they want to have that money on the side, and they’re using this to treat themselves or whatever it may be. Those are critical growth engines to make sure that the individual is engaged for the long term with prepaid cards.”

The Promise of Digital Assets

Another prepaid growth engine is just beginning to gear up: digital assets and crypto. In fundamental terms, there are now gift cards that allow users to purchase cryptocurrencies and stablecoins. However, the potential use cases go far beyond these simple transactions.

“Prepaid is a liability on the balance sheet where we owe you this money,” Hirschfield said. “But if you shift that—and there’s regulatory issues that will need to be worked through and a lot of what-ifs and hypotheticals—instead of buying a gift card that is a liability, you buy a digital asset. You then start to create an asset class that people can work from.

“It has the potential to be actualized cross-border much easier. If you have an account at Starbucks—as an example—that has a cross-border presence, you have to have separate accounts for different currencies. In a digital asset environment, you could pull from that, and they could convert it for you.”

Leveraging digital assets could also give program managers running multiple prepaid programs a valuable alternative when dealing with at-risk retailers. Now, if a retailer goes out of business, their gift cards are unsecured liabilities that are valued at zero.

However, if the prepaid cards are backed by assets the program manager holds, these assets could simply be transferred to another program.

“There’s a lot of hypotheticals and potential uses,” Hirschfield said. “This year, you’re going to start to see planning for it, and you’re going to start to see acceptance that there is potential for digital assets to play a role in the prepaid ecosystem as a shift from a liability to an asset. I think it’s something where you can’t ignore digital assets anymore, in any aspect of the payment space.”

The post In a Pivotal Year for Prepaid Products, Digital Assets Emerge appeared first on PaymentsJournal.

SoFi is launching its own stablecoin, SoFiUSD, providing open access to its digital asset infrastructure. The offering will allow banks, fintechs, and enterprise partners to leverage SoFi’s operational framework to issue their own white-label stablecoins.

The stablecoin is already in use for internal settlement activities, with a rollout to SoFi members expected in the coming months. According to Decrypt, SoFi will initially launch the stablecoin on the Ethereum blockchain, with plans to expand to multiple blockchains over time for broader accessibility.

A Variety of Use Cases

The initiative gives SoFi’s partners and customers a much easier path to offer their own branded crypto solutions. They can integrate a white-label stablecoin into their settlement and payment flows using the company’s infrastructure. SoFi is targeting the stablecoin for use by card networks, retailers, and other businesses seeking faster, lower-cost payments.

The stablecoin could also enable cross-border and near-instant transactions, improving availability while reducing costs. For companies operating in countries with volatile currencies, SoFi plans to offer the coin as a dollar-denominated asset designed to mitigate currency fluctuations.

Is a Bank Necessary?

Past attempts at introducing white-label stablecoin have largely come from crypto-focused entities, including Paxos and BitGo. Around the same time as SoFi’s announcement, Coinbase launched a white-label service, allowing companies to issue branded stablecoins. For organizations exploring their own stablecoin, a full-service bank can offer a familiar, regulated option with a range of additional services already in place.

“Partners get a branded coin while SoFi provides regulatory, operations and reserves frameworks behind the scenes,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “The low-hanging fruit for this service are payment players like fintechs, PSPs, merchant acquirers, banks and credit unions, and remittance payout-type companies.”

That said, that sense of institutional comfort doesn’t necessarily mean a stronger value proposition for SoFi’s white-label customers.

“They may be more comfortable that way because that’s what they’re used to,” Hugentobler said. “But they’re kind of missing the whole point if they think that’s their first or best option. You don’t need a bank for all of this.”

The post SoFi Unveils White-Label Stablecoin appeared first on PaymentsJournal.

With its own stablecoin business gaining momentum, Visa is launching a new advisory service aimed at helping banks, credit unions, and other enterprises implement their own stablecoin strategies.

Housed within Visa Consulting & Analytics, the Stablecoin Advisory Practice will offer training, market analysis, strategy development, use-case sizing, and technical support for organizations looking to explore the use of digital assets. The service’s clients already include Pathward, VyStar Credit Union, and Navy Federal Credit Union.

“Stablecoins may represent an opportunity to enhance speed and lower cost in payments,” Matt Freeman, Senior Vice President at Navy Federal Credit Union, said in a prepared statement. “So with the support of Visa, we are evaluating how this technology could fit into our broader strategy to deliver meaningful value to our 15 million members worldwide.”

Who Benefits?

While the service is being marketed to organizations of all types, it may be best suited for entities that are still exploring the possibility of expanding their cross-border capabilities and business-to-business transactions.

“Small to mid-size financial institutions should benefit the most, especially institutions that are member-focused, cost sensitive, and can benefit from stablecoins’ benefits of reducing payment costs,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Large FIs will just do their own thing rather than going to a direct competitor, like Mastercard or Visa.

“But at the end of the day, if any size customer is asking themselves: How does this integrate in our existing stack and compliance? Do we build, partner, or buy? Which stablecoin use case is actually worth pursuing? They could benefit from Visa’s experience.”

Visa Jumps into Stablecoins

Visa has aggressively moved into the stablecoin business this year, with annual settlement volume reaching $3.5 billion in the digital asset. Since becoming one of the first major payments networks to pilot stablecoin settlement, Visa now rolled out more than 130 stablecoin-linked card issuing programs across more than 40 countries.

Roughly two months ago, it became the first major payment rail to adopt stablecoins as a means for international transactions, allowing businesses to prefund Visa Direct transactions using stablecoins rather than fiat currency. The payments giant has positioned its stablecoin offering not merely as a convenience, but as a tool to improve liquidity management.

“FIs and banks should take note—stablecoins aren’t just for cross-border payments,” Hugentobler said. “They’re for treasury and cash management, liquidity management, FX operations, and 24/7 settlement. If a financial institution or bank isn’t exploring stablecoin integration at this point, they’re behind the curve.”

The post Visa’s Stablecoin Advisory Practice Aims to Open Up the Market appeared first on PaymentsJournal.

Most of the buzz around stablecoins has focused on payment acceptance, but payouts are the lifeblood of many businesses. In a major step for the industry, YouTube will now allow creators to receive their payouts in PayPal’s PYUSD stablecoin.

Stablecoins are well-suited to meet the growing demand for faster, more efficient payouts because they provide real-time, secure transactions. Some of the most compelling use cases include marketplaces paying sellers, gig platforms paying workers, online gaming platforms issuing winnings, and insurance companies delivering claim payments.

As the largest video sharing platform in the world, YouTube’s adoption of stablecoin payouts marks an important milestone for digital assets. The option to receive PYUSD payouts is now live for U.S.-based creators earning revenue from the platform.

A Particular Draw

While YouTube’s PYUSD payouts may be limited to stateside creators for now, the strongest benefits of stablecoin payouts will be felt by companies with global reach. International payouts are often costly and slow for the same reasons cross-border payments are challenging today.

For merchants that need to send payouts across many currencies and regions, stablecoins offer an attractive alternative. Funds can be sent directly to a creator’s wallet, a major advantage for gig workers and creators who often face long wait times for traditional payouts. Faster access to earnings can in turn drive loyalty and engagement in the highly competitive gig economy.

Stablecoin payouts are also especially compelling for workers and creators in regions with volatile local currencies, or for underbanked and unbanked individuals who may not have access to traditional financial services but do have access to a digital wallet.

An Established Relationship

With PayPal’s wallet, payout recipients can earn yield on their stablecoins. To drive adoption of PYUSD, PayPal recently introduced a 3.7% interest rate for users who hold the stablecoin in their PayPal or Venmo accounts.

Since launching the stablecoin two years ago, PayPal has made many moves to entrench its stablecoin in a market dominated by Circle and Tether. One of PYUSD’s key differentiators is its tight integration with PayPal’s broader ecosystem. That connection also helped pave the way for YouTube’s decision to enable stablecoin payouts, as the two companies already had an established working relationship.

The post YouTube to Launch PayPal Stablecoin Payouts for Creators appeared first on PaymentsJournal.

Cross-border payments are entering a new phase, where traditional rails meet digital asset innovation. In a major step forward, Ant International and HSBC have teamed up to pilot tokenized deposit transfers over the Swift network using the ISO 20022 protocol.

ISO 20022 is a messaging standard that allows organizations to exchange significantly larger payments data than current standards allow. Although ISO 20022 has existed for decades, this pilot marks the first time the protocol and the Swift network have been used together to send tokenized deposits across borders.

In the initial trial, Ant International’s blockchain was integrated with HSBC’s tokenized deposit service to complete a transfer between Singapore and Hong Kong.

Struggling to Overcome Complexity

The Swift network has connected financial institutions around the world. While it has played an integral role in making the cross-border payments model more efficient, international transactions continue to face significant issues.

Historically, cross-border payments have relied on the correspondent banking model, in which each bank establishes partnerships with foreign institutions, creating an intricate web of intermediaries. This complicated structure often leads to delays, high transaction fees, and limited transparency.

Despite coordinated efforts by various organizations to improve international payment systems, there have been less-than-stellar results. According to a recent progress report from the Financial Stability Board (FSB), key performance indicators for cross-border payments have shown only marginal improvement over the past two years.

FSB identified two major challenges: the complexity of coordinating across different regions and the persistent hurdles that arise from outdated, legacy payment infrastructures.

A Proponent of the Standard

These challenges are among the reasons why Swift, along with others, has been a strong proponent of ISO 20022 as a messaging standard. The format’s data capabilities can make cross-border payments more efficient by reducing manual interventions and their associated costs.

When a cross-border payment is delayed, financial institutions often must embark on extensive investigations to determine the root cause. Swift recently noted that delayed payments cost financial institutions more than $1.6 billion annually due to these investigations, which can take days to resolve.

Beyond reducing delays and costs in the cross-border payments system, ISO 20022 also gives financial services companies insights they can leverage to identify fraud and money laundering activities. This is why the U.S. Federal Reserve recently transitioned its Fedwire Funds Service to ISO 20022. After longtime use of the format, Swift has now officially mandated ISO 20022 as the standard for cross-border payments on its network.

Underpinning Payments

Swift has been pushing to streamline its operations through digital asset technologies.

The network said it’s creating a blockchain to underpin its transactions. In a collaborative effort with 30 global financial institutions, Swift said it would develop a shared digital ledger that is interoperable with blockchains supporting stablecoins, tokenized deposits, and central bank digital currency transactions.

The platform is designed to serve as a secure, real-time record of bank transactions, leveraging smart contract capabilities to enforce compliance. Swift’s goal is to enable real-time cross-border payments.

The Rise of Tokenized Deposits

Although this blockchain may still be in its early stages, Swift’s collaboration with Ant International and HSBC could add powerful capabilities to its already formidable network.

Stablecoins may be the digital asset du jour, but tokenized deposits have been gaining substantial traction. Stablecoins are issued by private or public entities and backed by reserves managed by those organizations.

Tokenized deposits, by contrast, are digital representations of bank deposits held by regulated institutions. Therefore, they are backed by FDIC insurance and are often better suited for use by highly regulated financial institutions.

The use cases for tokenized deposits—including cross-border payments—have attracted interest from financial services players as diverse as Citigroup and the Bank of England. BNY Mellon, the world’s largest custodian by assets, has also explored using tokenized deposits to enable institutional clients to make blockchain-based payments.

“The use cases for a company like BNY are many,” Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research told PaymentsJournal. “There’s the potential for automation on unlocking liquidity once certain obligations and conditions are met, and for 24/7 cash sweeps that reduce intraday borrowing or overdraft risk. Tokenized deposits could reduce failed-trade risk in fund redemptions due to instant settlement. They have the potential to be programmable coupon or dividend disbursements. Repo transactions and clearing are a huge part of banks operations, so this could reduce the timelines and move collateral instantly.”

The post Ant International and HSBC Pilot Cross-Border Tokenized Deposit Transfers on Swift appeared first on PaymentsJournal.

Although financial institutions are more engaged with digital assets than ever, many remain cautious due to compliance and privacy obligations. In response to the growing need for privacy-focused options, Circle is introducing a new iteration of its signature stablecoin.

USDCx will be issued on the Aleo network, a blockchain designed with privacy in mind. The goal is to support confidential transactions using zero-knowledge proofs.

“The fact that most public blockchains are totally transparent means that anyone can scrape addresses and trace flows, track and cluster wallets, and essentially infer business relationships,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research.

“In the case of Aleo, they don’t mint a new unbacked token,” he said. “It uses USDC held in a contract controlled by Circle as reserves. This is a big step since the tokens can be swapped for one another without the use of a bridge, which eliminates the additional risks associated with that.”

Purpose-Built Solutions

One of the most powerful features of blockchain technology is the transparency it provides. This can be a game changer for use cases like cross-border payments, where the path of a payment is often difficult to trace.

Despite the benefits stablecoins offer, financial institutions require more stringent guardrails. While a public blockchain like Solana could still be the answer, more purpose-built financial services blockchains have emerged.

For example, Google recently unveiled its neutral, global blockchain for the industry, which is designed to an agnostic solution. Additionally, Stripe and Coinbase are among many players that have launched private blockchain alternatives.

A Mainstay at Main Street

These developments follow a surge in institutional interest in crypto and digital assets in recent years. Still, significant hurdles remain before stablecoin transfers can become a mainstream feature at traditional banks.

“No company wants 100% of their flows and positioning visible on chain as a competitive advantage, so this will solve a lot of issues for FIs,” Hugentobler said. “At its core, USDCx is trying to restore the default confidentiality FIs have and are used to in existing account-based systems, but on programmable, interoperable stablecoin rails.”

The post Circle to Launch Privacy-Focused Stablecoin Iteration appeared first on PaymentsJournal.

The lion’s share of cross-border stablecoin transactions now flow from advanced economies into emerging nations—a shift that may be undermining those nations’ local currencies. New data from the IMF warns that the growing embrace of stablecoins comes with under-acknowledged risks.

According to the IMF, stablecoins have revolutionized cross-border payments by reducing friction and making transactions more seamless, particularly in poorer countries. Total stablecoin total volume has more than doubled over the past two years to roughly $312 billion. The passage of the GENIUS Act accelerated this trend: U.S. stablecoin usage rose from $6 billion in February to $10 billion in August.

But the surge in adoption is having an outsized effect on developing economies. The IMF found that stablecoin flows between emerging market and developing economies now account for the largest share of the market by value—a stark departure from traditional cross-border transfers routed through systems such as SWIFT, where most activity occurs between advanced economies.

Warning Signs

The use of dollar-backed stablecoins—which constitute roughly 97% of all stablecoins in circulation—has surged especially in countries facing high inflation, such as Lebanon, Nigeria, Turkey, and Argentina. This currency substitution, in which businesses and individuals forego their national currency in favor of a foreign one, is a rational response for those operating in an environment of inflation or broader economic instability.

However, the influx of U.S. dollar-denominated digital currencies has had the unintended result of further weakening local currencies. In the past, so-called dollarization required physical cash or bank accounts denominated in U.S. Today, foreign currency can enter an economy instantly via the internet and smartphones. This shift also reduces a country’s central bank ability to conduct effective monetary policy, per the IMF.

Cooperative Regulatory Efforts

Overall, there is pressing need for more cooperative global regulation of stablecoin usage. The issue extends beyond just safeguarding the ability of weaker nations to control their currencies. Without international standards, issuers have begun exploiting arbitrage opportunities, digging into the gaps between jurisdictions by domiciling their stablecoins in regions with weaker oversight.

The European Union has already taken steps in this direction, implementing the Markets in Crypto Assets (MICA) regulations earlier this year. The EU has expressed increasingly concern that the growing dominance of dollar-backed stablecoins could heighten the region’s dependence on foreign currencies and companies.

The post Are Stablecoins Weakening Emerging-Market Currencies? appeared first on PaymentsJournal.

Through its banking arm, Sony plans to launch a U.S. dollar-backed stablecoin that could play a significant role in the company’s gaming and entertainment ecosystem.

This launch represents one of the few direct USD stablecoin initiatives by a Japanese company and is being facilitated through a partnership with digital assets firm Bastion. The U.S.-based firm will oversee stablecoin issuance, reserve management, and custody, while Sony Bank will support stablecoin services across Sony’s network of affiliates.

The stablecoin could debut as early 2026, with plans to integrate the token into Sony’s gaming, streaming, and anime platforms. The move would give users an alternative to credit cards for subscriptions, in-game purchases, and digital content.

Significant Bottom-Line Impacts

Reducing credit card payments would also minimize the substantial transaction fees that Sony currently incurs. What’s more, stablecoin payments could mitigate the costs and processing delays that have long plagued cross-border transactions. This could have significant impact on the bottom line, as roughly a third of Sony’s global revenue originates from the United States.

A similar rationale was cited by Klarna when it unveiled its stablecoin, KlarnaUSD. Since cross-border transactions generate more than $120 billion in annual fees, Klarna noted that a stablecoin would allow it to move money far more efficiently than under the current system.

Validating the Narrative

The instant settlement and minimal volatility of stablecoins have driven a flood of new launches in recent months. As many of the largest financial players release their own iterations, other companies have followed suit—including potentially Walmart and Amazon.

While Klarna has historically taken an unabashedly standoffish approach to crypto and digital assets, Sony has been far more active in the space. After last year’s launch of its Soneium layer-2 blockchain, the company collaborated with stablecoin leader Circle to make the USDC stablecoin a primary token on the blockchain. However, it’s unclear how Sony’s new stablecoin will interact with Soneium, if at all.

Still, Sony’s launch reflects the broader surge in confidence that stablecoins have enjoyed since the GENIUS Act was proposed and passed. That framework also established new compliance requirements for stablecoin issuers. To support its stablecoin, Sony Bank has applied for a U.S. banking license and may establish a branch to manage issuance and regulatory oversight.

Compliance, however, is only one challenge facing Sony’s stablecoin as it enters an extremely crowded market.

“I think this could have a lot of promise in the longer run, but it has a lot of headwinds to gain traction—like liquidity, user adoption, and user experience (UX) is a big part of it,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Sony jumping in validates the stablecoin narrative as going mainstream, but just because they’re launching a stablecoin product doesn’t mean they’re out of the woods quite yet.”

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As the race to compete in cross-border payments increasingly shifts toward stablecoins, Klarna has announced its own version, the KlarnaUSD. Despite Klarna’s CEO previously saying the company would be the last major fintech to enter crypto, it appears Klarna felt it had little choice if it wanted to keep pace with competitors in the cross-border arena.

Best known for its buy now, pay later offerings, Klarna will issue the new token on a blockchain developed by Stripe. For now, KlarnaUSD will be used solely for the company’s settlement flows. The stablecoin is expected to be available for both merchant and consumer payments sometime next year.

Klarna said the move to a stablecoin will allow it to send money more cheaply by avoiding intermediaries like Swift. Cross-border transactions currently incur more than $120 billion in fees annually.

The partnership builds on an already extensive relationship between Klarna and Stripe, which provides payment infrastructure for Klarna in 26 global markets. Klarna will become the first bank to use Stripe’s stablecoin stack to power blockchain-based payments. The company also said it expects to bring on additional crypto partners in the coming weeks.

An About-Face on Crypto

Klarna had long resisted entering the world of cryptocurrency, but its CEO Sebastian Siemiatkowski relented in July when the company announced it would let customers pay with Bitcoin and other cryptocurrencies.

“Ok. I give up. Klarna and me will embrace crypto! More to come,” Siemiatkowski posted on X at the time. “Someone had to be last. And that’s a milestone as well of some sort.”

Siematkowski returned to X this week following the announcement of the Klarna stablecoin, posting: “We were wrong on crypto and on bitcoin, must rethink!”

Keeping Up with the Major Players

Earlier resistance in the payments sector has become untenable as even legacy providers have moved into stablecoins. PayPal issued its stablecoin last year, stating that it intended to use the asset to accelerate cross-border transactions. In October, the venerable Western Union rolled out a stablecoin on the Solana network in connection with Anchorage Digital.

More significantly, Visa launched a pilot program last month that allows businesses to prefund Visa Direct transactions in stablecoins rather than fiat currency. This marked the first adoption of a stablecoin by a major payment rail that already handles the lion’s share of international transactions—potentially signaling a point of no return for the industry.

The post Once a Crypto Skeptic, Klarna Announces Its Own Stablecoin appeared first on PaymentsJournal.

As digital assets and crypto have moved from the edges of financial services to take their place as a core technology, the leading entities involved are also taking greater control of the industry’s development. Coupled with the hands-off regulatory approach of the current administration, what comes next will be defined not by the government but by the decisions of the financial institutions themselves.

The new 2026 Digital Assets and Crypto Trends report from Javelin Strategy & Research focuses on the most important shifts that will affect the industry in the coming year. With the Digital Assets Market Clarity Act now making its way through Congress, the landscape is expected to get much smoother.

Regulatory Easing

The first major shift is the result of the green light regulators have given to major institutions, which can now focus on the underlying infrastructure that makes digital assets safe rather than trying to decide if crypto is reputationally acceptable. The industry has made significant progress in building out its extensive plumbing mechanisms, but room remains for regulators to step in to provide even more clarity. That would bolster confidence and gain even more participation from the major crypto players.

“The next area of infrastructure focus should be partnering with or building out solutions that can trade from or send payments from one blockchain to another,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin and a co-author of the report. “Right now, they can’t really speak to each other. They’re running in parallel. If you send Solana, you have to have a Solana address on the receiving point as well. Having interoperability, where they can send Solana to somebody’s wallet, who can cash out in XYZ token, will alleviate a lot of headaches.”

Many of the players remain narrowly focused on a single rail. Visa and PayPal have integrated stablecoins into their payment processes, and they’re focusing on the specific network that carries those individual assets. It’s still too early to say which blockchain will win the day, but there is plenty of room—and even the need—for multiple rails.

“It’s going to be a world of many blockchains,” Hugentobler said. “They all offer different perks, such as different throughput and governance models. At the end of the day, one bank might prefer to use Solana because it’s so cheap, and another one might prefer Avalanche for its byzantine fault-tolerant consensus mechanism. It’s going to be tricky, but it needs to be done for these seamless transactions.”

Challenges for Custody Holders

Custody is another area seeing dramatic shifts, especially with the explosive growth of crypto ETFs in the past two years. Most of the Bitcoin ETFs get custodian services fromCoinbase, which has dominated the field with its extensive tooling and wire product suite. But given the reduction in reputational risk, more financial institutions are likely to get involved as custodians of their own.

“The custodians have to offer more services, rather than just be a wallet type of service to hold on to assets for safekeeping,” Hugentobler said. “There are many other applications that they will need to start building out.”

The next stage for the crypto industry is embedded delivery. That means not just safeguarding assets held in custody but also integrating with other networks or platforms, such as trading exchanges, payment networks, and settlement through a variety of mechanisms. Custody solution providers that don’t adapt and expand their product suite will fall behind.

Several financial institutions and hedge funds are looking for new opportunities in decentralized finance. They will be dependent on a custody provider to integrate seamless solutions to help them get involved in those markets. The most important needs include payout methods, stablecoin swaps, methods of getting yields, and other offerings that extend beyond just safekeeping Bitcoin.

Dangers of Falling Behind

If custodians don’t look to these new opportunities and integrate other solutions as well, they are likely to become a thing of the past. Hugentobler offered the example of NYDIG, which became a leader by offering custody solutions for Bitcoin but hasn’t really advanced its offerings since then. Meanwhile, other companies are offering custody solutions for at least the top 100 tokens, if not more.

“Coinbase is clearly the leader in this, offering a whole trading suite for futures,” Hugentobler said. “They bought out Darabit, which is an options platform, so people can trade to hedge or speculatively option contracts. They’re starting to integrate solutions with their base Layer 2, called Base Network. They’re definitely ahead of everybody else, but there are others, like Fireblocks, starting to get involved on the tokenization side.”

Digital asset treasury companies (DATS) are imitating Micro Strategy, loading up on Bitcoin and Ethereum and Solana to put on their balance sheet. The new accounting rules let them hold crypto as an appreciable asset. They have become able to send and receive digital assets, although most of their transactions are to and from custody.

The Rocketship Moment

Despite the crypto-friendly nature of the regulatory apparatus, Hugentobler thinks some reputational risk remains for more established financial institutions.

“It’s a newer technology,” he said. “There are a lot of challenges when you introduce new technology. But I think toward the end of next year, if we were to have this same conversation, I would say the reputational risk concerns are all in the past.”

If the Digital Asset Market Clarity Act passes, that will not only help with the reputational issues but also pave the way for even more growth. The draft currently circulating would establish a comprehensive, top-down regulatory framework for digital assets. It’s part of a growing bipartisan desire for clear oversight of the digital asset industry, one that should accelerate the participation of mainstream financial institutions in this market.

“The Clarity Act is all about market structure and consumer protections,” Hugentobler said. “Once that’s passed, that’s going to be the rocketship point, when a lot more financial institutions get involved.”

The post Crypto Heads Into 2026 Awaiting Its ‘Rocketship Point’ appeared first on PaymentsJournal.

The market correction in bitcoin this month has been fueled by a retreat from exchange-traded fund (ETF) investors, who have pulled billions of dollars from their funds as the asset’s price has fallen. The pullback suggests that investors are now treating crypto ETFs less like a meme and more like any other long-term investment vehicle.

Roughly $4 billion has been withdrawn from digital asset ETFs so far this month—a record amount. BlackRock’s IBIT ETF, the most popular U.S. bitcoin ETF, saw a single-day outflow of more than half a billion dollars.

According to The Block, JPMorgan analysts noted that the continuation of the crypto market correction in November appears to have been driven primarily by non-crypto investors—mostly retail participants—who tend to use spot bitcoin and Ethereum ETFs as their entry point into the market.

Going Underwater

After peaking above $125,000 in October, bitcoin’s recent decline has pushed it below JPMorgan’s support level of $94,000. Short-term holders—defined as those holding the asset for fewer than 155 days—are almost entirely underwater on their recent purchases, according to CoinDesk.

Investors new to digital assets tend to trade them much like equities, showing little patience for price dips. As bitcoin has fallen, retail investors have nonetheless poured nearly $100 billion into equity ETFs in November. Analysis from JPMorgan notes that this group has behaved similarly in the past, selling off crypto assets while heavily buying stocks in February and March.

Knocking on the Door

Still, the recent outflows are only a fraction of the total capital allocated to crypto funds. Net inflows still stand at nearly $60 billion.

The crypto fund industry is less than two years old, since the SEC approved 11 bitcoin-based funds in January 2024, followed a few months later by the authorization of five ether-based funds.

Many more funds are hoping to gain access to this market. As of last month, 92 additional crypto funds remained in the approval pipeline, many of them tied to lesser-known assets like Avalanche and Bonk. The SEC has already approved Grayscale’s multi-asset crypto exchange-traded product, Digital Large Cap Fund (GDLC)—the crypto world’s first equivalent of a mutual fund. 

The post Investors Pulling Back on ETFs Are Fueling the Bitcoin Rout appeared first on PaymentsJournal.

Much has been made of the potential efficiencies that stablecoins and other cryptocurrencies could bring to cross-border payments, but Brazil’s government also believes their use creates a tax loophole.

According to Reuters, Brazil’s ‌Finance Ministry is considering expanding the scope of its financial transaction tax to include certain cross-border payments made with digital assets. Under rules taking effect in February, Brazil classified stablecoin transfers as foreign exchange transactions. This classification also applies to international payments made with digital assets as well as  transfers to and from self-custody wallets.

Although capital gains from crypto trades above prescribed limits have been taxable in Brazil, crypto-based payments have not. Officials say this gap has opened the door for digital assets to be used in nefarious activities like money laundering. There are also concerns that some organizations may use cryptocurrencies to falsify the amounts they declare for import taxes.

“I think money laundering is a bit of an over-exaggeration here–I think it mainly pertains to businesses and B2B or B2C payments,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “I’m sure at the end of the day who the government is actually targeting is these businesses who aren’t laundering money, but they may be underreporting these numbers.”

A Demonstrable Boost

While these concerns likely have merit, taxing crypto transactions could also provide a demonstrable revenue boost for Brazil. The nation’s crypto market has surged ⁠in recent years, driven in large part by increased stablecoin usage.

Tax data shows that crypto transactions reached 227 billion reais (‍roughly $42.8 billion) in the first half of 2025, a 20% year-over-year gain. Tether’s USDT stablecoin accounts for approximately two-thirds of that volume, while bitcoin represents around 11% ​of the transactions.

“It’s a double-edged sword,” Hugentobler said. “The industry needs regulations to grow adoption and use cases, but if regulations are too strict, businesses and other users could revert back to traditional methods. I think this is a long ways away from that, but if they stifle use from too strict regulations it will negate the revenue side of the equation. If companies treat these payment options like any other payment options, they have nothing to worry about.”

Increasing Financial Inclusion

In addition to cross-border payments efficiency, stablecoins have gained ground in many regions because they markedly increase financial inclusion. In areas with currency instability, leading U.S. dollar-backed stablecoins like USDT and Circle’s USDC can offer a more reliable alternative.

This reliability has made stablecoins far more viable for payments than cryptocurrencies such as bitcoin or Ether. This sentiment was echoed by Brazil’s central bank, which found that stablecoins were largely used in the region as an inexpensive way to hold and spend USD.

Central bank officials believe that taxing these transactions would provide greater visibility into digital asset usage and help mitigate misuse. However, the proposal still requires approval from Brazil’s federal tax authority.

“Brazil is one of the world’s largest stablecoin markets by transaction volume, so this could become a live case study for stablecoins with FX-type regulations where others follow suit,” Hugentobler said. “But the fact that Brazil’s government is releasing regulations around stablecoins means it is accepting them, which is a step in the right direction overall. Whether or not growth or volumes decrease in the short term is yet to be seen, but I think as long as businesses and other users adhere to the regulation and fees aren’t too steep, it should be good for growth in the longer term.”

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Alibaba is gearing up to supercharge its vast business-to-business ecosystem by tapping JPMorgan’s tokenization infrastructure, laying the groundwork for a new kind of cross-border value network.

The network will center on tokenized fiat currencies that function similarly to stablecoins. According to CBNC, Alibaba is already experimenting with tokenized U.S. dollars and euros, with plans to support additional currencies over time.

Alibaba expects to launch the network by the end of the year, and the system would represent a milestone for tokenization. Given Alibaba’s substantial ecosystem, the platform could ultimately process billions in annual volume.

Participating in a Payment

For Alibaba, the benefits of this system are clear. It would allow the company to move money across borders and between currencies without relying on multiple banks or crypto exchanges.

Although technology has brought businesses and consumers closer together around the world, payments have not kept pace. The current cross-border model still depends on a correspondent banking network, where several banks may be involved in processing a single transaction.

This often results in delays, higher costs, and limited visibility into money movement. These issues have persisted despite efforts by regulators and the launch of various cross-border payment solutions.

The Leading Contender

Digital assets are emerging as one of the leading contenders to streamline this process. Company-issued stablecoins like Circle’s USDC and Tether’s USDT are tied to the value of the U.S. dollar and backed by the issuing company’s reserves. Tokenized deposits operate similarly, except they are issued and backed by financial institutions.

JPMorgan has been active in both tokenization and stablecoin deployments through its Kinexys digital assets brand. Among other projects, the company recently launched its JPM Coin on Coinbase’s Base network—a token built for use by institutional clients.

While it’s not yet clear whether the JPM Coin will play a role in the Alibaba partnership, the launch of the latter’s system represents a step toward broader tokenization adoption in real-world B2B applications.

Alibaba’s business segment has also seen rapid growth in its supplier base. The brand’s number of active suppliers worldwide has grown by 50% year-over-year during the March-October period.

The post Alibaba Taps Tokenization Tech for Cross-Border B2B Payments appeared first on PaymentsJournal.

Visa has launched a pilot program allowing freelancers and gig economy workers to receive payments in stablecoins. Building on Visa’s stablecoin cross-border project introduced last month, this initiative will test whether such payments are viable.

The Visa Direct pilot lets businesses fund payouts in fiat currency while disbursing earnings directly to workers’ stablecoin wallets. It follows a previous Visa Direct program that allowed entities to pre-fund accounts in local currencies for cross-border stablecoin payouts

Lower Costs for Businesses

Stablecoin usage for domestic payments remains less explored, but the Visa project builds on a few emerging trends. The low transaction costs associated with stablecoins make them useful for high-frequency, low-value payouts, such as those a gig company might make to its workers.

The state of Wyoming introduced its own stablecoin in August with similar ambitions, hoping that contractors would use it to pay workers. However, the benefits for freelance workers in the U.S. are less clear.

“The use cases for gig workers are probably for solutions like Upwork, Fiverr, Guru and the like, where U.S. firms outsource work like coding to resources in India and other locations where labor costs are lower,” said Hugh Thomas, Lead Analyst, Commercial and Enterprise at Javelin Strategy & Research. “I see no real need for this when it comes to U.S.-to-U.S. gig work.”

Visa may see more traction in Latin America, where transaction costs are especially high. According to Mastercard, the average cost of sending remittances in Latin America is 6.3%, so the program could lower costs for gig-economy companies there.

Seeking Faster Payments

On the other hand, Visa’s data suggests that these workers are looking for more reliable and faster payment methods. More than half of creators surveyed said they prioritize instant access when choosing payment methods, and 86% have had to use personal funds or credit cards to finance their work.

Visa also found that these workers are already being paid through digital processors and platforms. It hopes this indicates both their comfort with modern payment technologies and a potential pathway toward wider stablecoin adoption.

The post Visa Aims to Expand Stablecoin Usage to Gig Workers appeared first on PaymentsJournal.

The Senate has moved one step closer to regulating cryptocurrencies as commodities rather than securities—a shift that would open the door to spot trading. The move aligns with the broader trend, accelerated under the Trump administration, toward easing restrictions on crypto.

A new bipartisan discussion draft from the Senate Agriculture Committee would grant the Commodity Futures Trading Commission (CFTC), rather than the Securities and Exchange Commission (SEC), explicit authority to regulate spot market trading in digital commodities.

“It would, for the first time, create a federal regulatory regime for trading spot non-security crypto assets, define boundaries between CFTC and SEC, enhance consumer protection as it builds on the CLARITY Act, and would provide clarity and certainty to exchanges and investors,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It also has a focus on self-custody protections, developers, and infrastructure providers. Everyone knows they’re not money transmitters, so this classification would be accurate.”

The Move to Spot Trading

While crypto exchange-traded funds (ETFs) have been available for nearly two years, regulators have yet to approve spot trading, which would allow investors to buy and sell individual digital assets on the open market. Acting CFTC Chair Caroline Pham has said the agency is pushing to allow leveraged spot crypto trading, and U.S. crypto exchanges could be able to launch leveraged crypto spot products as early as next month.

Until now, the SEC has played the primary role in overseeing crypto trading, including approving and supervising ETFs that hold digital assets. However, the crypto industry has argued that digital assets are commodities—like gold and other precious metals—and should be regulated as such.

“Because the SEC has been so hostile towards the industry over the last administration’s four years, I think it provides the industry with a big sigh of relief,” said Hugentobler.

Approved by the House

The House of Representatives had already designated the CFTC as the leading regulator of digital assets in the U.S. last year. At the time, the Democrats controlled the Senate, and their skepticism toward the crypto industry meant that the bill never advanced.

With the Republicans now controlling the Senate, the draft legislation appears more likely to pass. New Jersey Democrat Cory Booker, one of the co-authors of the draft, may also bring other Democrats on board.

The post What the CFTC Has in Store for the Crypto Industry appeared first on PaymentsJournal.

The digital euro has faced a difficult path to fruition, with many of Europe’s leading financial institutions questioning whether a central bank digital currency (CBDC) can deliver real value to EU citizens.

Discussions around the project began in 2020, as lawmakers explored ways to provide EU consumers with a digital alternative to cash. The initiative also aimed to counter the growing influence of foreign currencies and payment systems, including the extensive global networks established by Visa and Mastercard.

In response, several major EU banks banded together to launch Wero, a payments rail designed to enable consumers to pay-by-bank across the region. Now, this same group of lenders—including Deutsche Bank, BNP Paribas, and ING—are voicing concerns that the digital euro could ultimately undermine private sector payment systems like Wero.

A Rocky Road

This challenge is only the latest in what has been a rocky road for the digital euro. After the European Central Bank (ECB) began a preparation phase for the CBDC two years ago, there was speculation that the digital euro could be launched as soon as this year. However, that timeline has since been revised, with a pilot program now expected in 2027 and a full launch projected for 2029.

As the program has been delayed, concerns about privacy and security have grown. Because the EU government would have the ability to track transactions made with digital euros, many member states have questioned whether officials might misuse this functionality to surveil citizens.

Adding to the tension, a recent ECB system outage left trillions of euros in limbo, raising further doubts about the initiative’s security and reliability. EU nations have also struggled to reach consensus on key details, including how the digital euro should be issued and how many tokens each resident should be allowed to hold.

A Moot Point

One of the most damning critiques of the digital euro is that it is superfluous. In a statement to the ECB, the group of financial institutions that backed Wero argued that the CBDC largely replicates existing private solutions without offering any additional value to consumers.

While a government-backed digital currency could offer certain advantages, the long runup to the digital euro’s launch gives private sector companies ample time to develop products that could make the CBDC a moot point.

The post EU Institutions Challenge the Merits of the Digital Euro appeared first on PaymentsJournal.

In another sign of open banking’s growing role in crypto, Coinbase and Tink have launched direct bank-to-crypto transfers in Germany.

The new capability lets users move funds instantly from their bank accounts into crypto, authenticating the transaction through their bank’s interface. The underlying account-to-account payment rails are powered by Tink’s infrastructure—acquired by Visa three years ago and now integrated into platforms such as PayPal and Revolut.

The Coinbase integration is currently limited to Germany, but there is potential for broader expansion, as Tink’s network spans multiple European Union countries including Spain, France, and Sweden.

The Open Banking Drive

This collaboration was made possible by the EU’s ongoing drive for open banking, which enables third-party providers to connect with banks through APIs. These connections give consumers greater flexibility to switch financial institutions while allowing banks and credit unions to integrate with a wider array of digital services.

To govern these developments, the EU introduced its revised Payments Services Directive (PSD2)—a regulatory framework designed to secure customer data and increase competitiveness among the region’s banks.

Leveraging Interest

One way banks can deliver greater payments optionality to customers is by supporting cryptocurrencies. After an exceptional year of growth last year, crypto initiatives have become top of mind for nearly every financial institution worldwide.

Coinbase has capitalized on this momentum to forge new partnerships and expand its offerings. It launched a stablecoin acceptance platform for merchants through a collaboration with Shopify and gave app developers the ability to integrate crypto purchases via Apple Pay—streamlining a process that was once complex and costly.

Perhaps more notably, Coinbase recently launches was its x402 payments agentic commerce protocol, a platform which allows APIs, apps, and AI agents to conduct transactions during web interactions with minimal code integration. This opens the door for AI agents to autonomously perform stablecoin transactions.

While these integrations have expanded both Coinbase’s footprint and digital assets adoption, they also—and perhaps more importantly—represent progress toward an API-driven open banking model.

The post Coinbase and Tink Merge Pay-By-Bank and Crypto appeared first on PaymentsJournal.

In what could be a blockbuster acquisition, Mastercard is reportedly closing in on a deal to acquire Zerohash.

Zerohash provides financial institutions with technology to offer crypto and stablecoin trading and tokenization services. As demand for these capabilities has surged in recent years, Zerohash has garnered significant attention and investment from major firms, including Morgan Stanley and SoFi.

One of Zerohash’s most notable partnerships is its recent deal with OnePay, a fintech majority-owned by Walmart. Under the arrangement, Zerohash will facilitate crypto trading within OnePay’s app, opening the door for crypto purchases at the world’s largest retailer.

Mastercard is reportedly set to acquire the company for between $1.5 billion and $2 billion.

“This is a solid example of Mastercard’s forward-thinking strategy,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It’s a shift from partnerships to owning the infrastructure which should enable them to provide an in-house crypto or stablecoin as a service-type product (e.g. on and off ramps, custody, settlement, and staking).”

“Zerohash brings licensing—a U.S. money transmitter and a BitLicense—and clients,” he said. “From my understanding, they were going to be the company behind Morgan Stanley-owned E-Trade’s crypto product rollout next year, in addition to providing B2B infrastructure.”

Signaling Momentum

Mastercard’s move comes as U.S. stablecoin transactions surge, driven largely by the passage of stablecoin regulations. The use of stablecoins is also gaining significant traction in business-to-business and cross-border payments.

“This also signals momentum in the industry,” Hugentobler said. “This is one of the bigger deals, if not the biggest acquisitions that we’ve seen. All the embedded crypto rails that we picture are happening right in front of us.”

The Continuing Zeitgeist

In this zeitgeist, more companies than ever are expanding into digital assets. Notably, Visa recently piloted a program allowing businesses to prefund transactions via stablecoins on its Visa Direct cross-border payments platform.

As these companies race to add new functionalities, acquisitions are likely to continue. For example, Stripe acquired stablecoin company Bridge for roughly $1.1 billion in what was then one of the largest crypto-related deals to date. If Mastercard completes its acquisition of Zerohash, it would represent a continuation of this trend—rather than the end of it.

The post Mastercard Nears Zerohash Acquisition to Expand Stablecoin Reach appeared first on PaymentsJournal.

Total stablecoin transactions reached $10 billion in August, up from $6 billion in February.

In July, the United States passed the GENIUS act, a bipartisan bill establishing a federal framework for the issuance, trading, and custody of stablecoins. The legislation set off a flurry of new stablecoin launches from leading financial services firms, as well as potential launches from a wide range of companies and government agencies.

A report from Artemis, a blockchain firm, highlighted the connection between the passage of the GENIUS act and the resulting surge in stablecoin activity. However, the report also noted that stablecoin usage had already been on a steady upward trajectory. According to Artemis, stablecoin payment volumes in August more than doubled year-over-year, and could reach $122 billion annually if current trends continue.

Increasing Business Adoption

One of the most notable findings from the Artemis study was that business-to-business (B2B) payments have surpassed peer-to-peer (P2P) transactions as the leading use case for stablecoins. B2B payments have surged 113% since February and now account for roughly two-thirds of the stablecoin market.

This surge in B2B activity is also likely linked to the passage of the GENIUS act, as a better-regulated U.S. stablecoin market is proving attractive to many organizations. In a separate study from Ripple, many financial leaders indicated they are open to using stablecoins within the next three years, and roughly a third said they already use them in their day-to-day operations.

The top three use cases cited were cross-border payments, trade settlement, and serving as a traditional bank alternative.

Adding Cross-Border Functionality

Stablecoins have long been touted as a solution to the inefficiencies of cross-border payments. These digital assets offer immediate settlement, low fees, full visibility, and stable value—a strong alternative to the correspondent banking system, where payments are often delayed in a multi-step process that can be both risky and expensive.

This cross-border capability is one of the main reasons why many financial services organizations have launched or considered launching stablecoins. For example, Zelle, which is owned by seven major U.S. banks, recently floated its plans to launch a stablecoin.

While Zelle is currently the largest P2P platform in the U.S., its users must have a bank account to send funds. Adding a stablecoin to its product list could allow the platform to expand its footprint beyond U.S. borders.

The post Stablecoin Usage Surges After GENIUS Act Passage appeared first on PaymentsJournal.

Cryptocurrency has been talked about as the future of money for more than a decade. But talk and everyday behavior are not the same thing. While headlines often focus on price swings and speculation, a quieter question matters more for payments: are consumers actually using crypto to pay for things?

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Javelin Strategy & Research’s Report: Digital Money Comes to Payments, but the Crypto Has Disappeared

Percentage of U.S. Consumers Using Cryptocurrency to Make Any Type of Purchase

• Past 7 days – 13% of consumers have used cryptocurrency to make a purchase.
• Past 30 days – 13% of consumers have used cryptocurrency to make a purchase.
• Past 90 days – 8% of consumers have used cryptocurrency to make a purchase.
• Past 12 months – 3% of consumers have used cryptocurrency to make a purchase.
• More than 12 months ago – 3% of consumers have used cryptocurrency to make a purchase.
• Never – 59% of consumers have never used cryptocurrency to make a purchase.

Source: Javelin Strategy & Research, North American PaymentsInsights

About Report

Digital money is already part of the U.S. payments landscape, but it looks very different from what early cryptocurrency advocates imagined. The focus is shifting away from the term “cryptocurrency” itself and toward practical value transfer through digital assets, especially stablecoins. Adoption is accelerating on the commercial side, and over the next three to five years, blockchain-based tools are likely to be embedded across organizations of all sizes. For most employees and customers, that technology will operate quietly in the background. Digital money won’t feel new or novel. It will simply work.

This report from Javelin Strategy & Research examines how definitions of digital money are evolving, how payment infrastructure is being built to stay largely out of sight, and what that means for organizations evaluating real-world use cases for digital assets.

The post Are Consumers Paying with Cryptocurrency? appeared first on PaymentsJournal.

The legacy asset management and mutual fund company T. Rowe Price is jumping into the crypto landscape with the launch of the first actively managed exchange-traded fund (ETF) focused on digital assets.

Whereas most existing crypto ETFs invest in a single asset—typically bitcoin—the T. Rowe Price Active Crypto ETF will hold a diversified basket of five to fifteen cryptocurrencies, including ether, Solana, XRP, and Cardano, among others. To maintain liquidity, the fund will also allocate a portion of its assets to cash, stablecoins, or U.S. Treasury bills.

Firms like Grayscale have applied to the SEC for approval of crypto index ETFs that hold multiple cryptocurrencies. However, the T. Rowe Price fund would go a step further by moving in and out of positions based on market conditions, requiring constant analysis and management. Other established asset managers, including BlackRock and Fidelity, have already entered the crypto ETF space, but with passive funds that track a single asset or index.

The Challenge of Active Management

T. Rowe Price is fairly new to ETFs, having marketed its first such fund in 2020, though active management has been its bread and butter for decades.

“The highly successful launch of several spot bitcoin exchange‑traded funds (ETFs) in early 2024 has shown that traditional investor interest in [digital assets] is substantial,” T. Rowe Price noted in a paper published earlier this year. “For us, the key question is whether the investment returns potentially available to passive DA holders merit their inclusion in diversified portfolios.”

The T. Rowe Price Active Crypto ETF answers that question by asserting that the best way to hold crypto within a diversified portfolio is through an actively changeable basket of cryptocurrencies. The question now is whether a legacy mutual fund firm has the analytical chops to make consistently profitable trades in and out of digital assets.

The Road to the Market

The product could reach the market fairly quickly. The SEC recently approved new listing standards that effectively shorten the timeline for crypto ETFs to begin trading. At that time, nearly 100 crypto ETF applications were awaiting regulatory approval.

However, the processing of these applications is currently on hold while the U.S. government remains shut down. The SEC is unlikely to review or approve any new crypto ETF filings until the government reopens.

The post T. Rowe Price Proposes First Actively Managed Crypto ETF appeared first on PaymentsJournal.

Master accounts with the U.S. Federal Reserve have traditionally been the sole domain of banks, but Fed Governor Christopher Waller has proposed a new model that could also accommodate fintechs.

At the Fed’s inaugural Payments Innovation Conference, Waller suggested that payment services companies might be able to obtain a payment account, or a “skinny” master account, that would give them access to the services they need.

For example, the account could provide access to the Federal Reserve payment rails while including safeguards such as balance caps, no interest on balances, and no daylight overdraft privileges.

Eliminating the Workaround

These accounts target fintechs that rely on banks’ master accounts to operate payment services. This workaround becomes a pain point as fintechs scale, and it has pushed many companies to seek bank charters of their own.

For example, merchant payments platform Checkout.com was recently granted a bank charter by the state of Georgia. Checkout.com’s main objective was to gain direct access to U.S. card networks like Visa and Mastercard, allowing the company to act as its own acquirer.

Looking for a Green Light

Expanding access has been a primary reason why digital assets companies like Ripple and Circle have applied for bank charters with the Federal Reserve. Ripple has also applied for a master account, which would allow the firm to hold reserves of its RLUSD stablecoin directly with the Federal Reserve, providing an added layer of security.

While Ripple’s master account has not yet been approved, Waller’s remarks could signal a potential path forward for the company and its peers. He emphasized the importance of innovations involving emerging technologies such as stablecoins, tokenization, and artificial intelligence, and highlighted the increasing role of digital assets in traditional finance.

However, any changes to the current model will take time to implement.

“If these ‘payment accounts’ become real, banks and other financial institutions can access Fed rails directly, which has been a friction point for crypto firms since the 2023 bank fiasco,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It’s not necessarily a green light for every crypto company, but I think it will be good for crypto exchanges and stablecoins—and eventually tokenization.”

“As the optionality for payments continues to grow, the Fed is recognizing that access to these tools needs potential oversight and better plug-in options for FIs,” he said. “It could come with some nuances like no interest on balances or capping balances, but even with those types of guardrails it could be a step in the right direction.”

The post Federal Reserve Governor Posits Master Account Model for Payments Firms appeared first on PaymentsJournal.

Ant Group and JD.com, among others, had been gearing up to launch stablecoins in Hong Kong, but those plans are now on hold.

The tech giants had intended to move forward after Hong Kong’s legislature passed a stablecoin bill in May. The framework governs fiat-backed stablecoin issuers in Hong Kong, requiring these companies to obtain a license from the Hong Kong Monetary Authority.

Initially, Chinese regulators viewed the program as a springboard to expand the reach of yuan-backed stablecoins, and Hong Kong began accepting applications for stablecoin issuers as recently as August. However, the Financial Times reported that now the People’s Bank of China (PBOC) and Cyberspace Administration of China had instructed Ant Group and JD.com to suspend their stablecoin plans.

Leveraging the Hype

After the passage of the stablecoin bill, concerns were raised about stablecoins’ heightened potential for fraud. Ye Zhiheng, Executive Director of the Intermediaries Division at the Hong Kong Securities and Futures Commission, said that many companies appeared to have leveraged the hype around stablecoins for financial gain.

Zhiheng emphasized that organizations often saw their stock prices soar after posting any stablecoin-related news on social media, such as announcing plans to apply for a license.

Questioning the Coinage

The potential for fraud and manipulation isn’t the sole reason PBOC officials are now suspending Hong Kong stablecoin launches. One of China’s main concerns is the growing influence of private companies in the financial sector, and whether tech firms like Ant Group or JD.com should even have the authority to issue currencies.

Some argue that this should remain the domain of central banks, and that central bank digital currencies (CBDCs) backed by the government would be more regulated and stable than company-issued stablecoins.

China has already made strides in piloting its digital yuan. However, like many CBDCs, the token has yet to gain traction because its use cases are limited and it doesn’t accrue interest like other funds.

Still, China continues to promote the digital yuan as an alternative to stablecoins. For example, regulators recently asked Tencent to reduce WeChat Pay’s substantial mobile payments market share to make room for the digital yuan.

The post China Asks Tech Firms to Suspend Hong Kong Stablecoin Plans appeared first on PaymentsJournal.

A Compass Coffee location in Washington, D.C. became the first store to accept a bitcoin payment using Square’s new point-of-sale system.

Square Bitcoin enables merchants to accept bitcoin payments with zero processing fees and also allows them to convert traditional card sales into bitcoin within the included wallet. Compass Coffee tested Square’s platform and successfully completed transactions from 10 different wallets over the Lightning Network.

These payments were processed using the standard Square device—a mainstay for many small businesses. While the coffee purchase itself may have been small, it represents another meaningful step forward for bitcoin and the broader adoption of digital assets.

“This is super cool, and it lines up with everything we’ve been talking about here at Javelin—Layer 2’s, Lightning Network, and reward programs,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Square continues to be a leader in payments by providing optionality. It’s pretty awesome to see this stuff unfold right in front of us, and I think more companies will follow.”

Gaining Mainstream Traction

For over a decade, there has been ongoing discussion about when bitcoin payments would finally achieve mainstream adoption. One of the concerns surrounding bitcoin and other cryptocurrencies has been their volatility. Yet, despite short-term fluctuations, bitcoin has continued to surge to new heights, largely driven by increased adoption among leading financial institutions.

In addition, broader platforms are emerging to facilitate bitcoin transactions. For example, Walmart-backed OnePay recently added crypto functionality, and PayPal launched a crypto platform enabling merchants to accept payments in over 100 cryptocurrencies while allowing consumers to connect wallets from platforms like Coinbase Wallet, MetaMask, and Kraken.

Copying the Strategy

One of the key factors across these platforms is flexibility. Accepting payments in crypto doesn’t mean merchants are required to hold digital assets. For example, Square’s business owners can choose to either accept crypto payments or hold digital assets as a store of value.

Given bitcoin’s success, the latter option can be a game changer. Many companies have integrated bitcoin investments into their business models—a strategy most notably employed by MicroStrategy, which later rebranded as Strategy.

“There have been dozens of digital asset treasury companies trying to copy Strategy’s strategy hitting the market,” Hugentobler said. “It shows there is a demand for institutions to hold this stuff on their balance sheets—and this process allows for them to do it in a different way.”

The post Square’s Platform Sees First Bitcoin Payment at Coffee Shop appeared first on PaymentsJournal.

The new Layer 1 networks being rolled out by organizations like Stripe and Circle are the first blockchain networks that settle natively on stablecoins rather than cryptocurrencies like bitcoin or ether. They remove the need for entities to hold a volatile token to pay for blockchain transfers, and this could have a huge impact on these transactions.

A new report, Stablecoin-Focused Networks: Another Step Toward the Mainstream, looks at how financial institutions can take advantage of these emerging blockchain networks. “One of the biggest things about these stablecoin Layer 1s is that they remove the need to hold a volatile token,” said Joel Hugentobler, Cryptocurrency Analyst for Javelin Strategy & Research and the lead author of the report. “That’s huge. I don’t think that can be overstated.”

Tamping Down the Volatility

If a company like American Express wants to send a payment on a public blockchain like the Solana network now, it has to hold assets in Solana. One major concern with this is the volatility of Solana’s price—it could be worth $200 today and $100 tomorrow. Because of this volatility, many financial institutions have resisted adopting blockchain transactions.

The new Layer 1 networks instead employ a network settled with stablecoins. Instead of using Solana or Ethereum or another type of cryptocurrency whose value can fluctuate wildly, they’re using stablecoins.

“The elimination of volatility is important from a balance sheet perspective,” Hugentobler said. “You’re looking at hundreds of billions of dollars being transferred from any given set of companies in a day. That adds up.”

Capacity Concerns

There are other problems with the existing blockchain networks. Solana, for example, has had its Firedancer upgrade set to come out for a while, which is supposed to increase its throughput to a million transactions per second. That has yet to happen, leaving the existing blockchains with fairly limited throughput.

“When you use Ethereum or Bitcoin, you still run into the same issue, especially during periods of high volatility, which is network congestion,” Hugentobler said. “What the market has been saying is that there’s an issue with holding volatile tokens and not enough throughput. The market has been saying we need Stripe and Circle and likely the others to follow.”

Solana’s network, for example, now processes roughly the equivalent of what Visa has been doing, around 60,000 transactions per second. For a long time, Solana has been expected to unlock the Firedancer upgrade, which upgrades the validator set and has the potential to increase throughput to 1 million transactions per second.

‘It was supposed to come out in Q3, but they keep pushing it back,” Hugentobler said. “Obviously, there’s some issues there, but that high of throughput would solve a lot of issues. But there are still issues on the side of compliance, knowing your customer, and dealing with issues that you can’t really undo on a blockchain.”

Issues to be Overcome

Another issue is limits for the financial institutions using them, aspects that they need to conduct their business. As with other blockchain transactions, the transfers of money are irrevocable on a Layer 1 network.

“If you send a payment to a wrong address, you can’t just call them and say, ‘Hey, I need help,’” Hugentobler said. “There’s limited tooling for compliance or know-your-customer applications. It can be done, but it’s just a lot more developer work on the company side.”

The need for privacy opt-in optionality and other functions for financial use cases is clear, and without those functions, Layer 1s will simply not be used by financial institutions. A payments-focused or stablecoin-focused blockchain allows entities to leverage the public or decentralized blockchain as it’s built from the ground up. But it also has hybrid characteristics, like the private network type of characteristics that can help alleviate KYC concerns. These limit the privacy capabilities in areas where financial institutions may not want pertinent information made public. These new Layer 1s aim to increase not only throughput but also tooling and optionality, right from the outset.

Tempo, Stripe’s entry into this business, is an attempt to solve these issues while offering the extremely high throughput necessary for payments. The design is combined with a stablecoin-native design, which means that instead of having a blockchain’s native token, a stablecoin pegged to a fiat currency will be used, eliminating the price fluctuation issues.

What FIs Should Do Now

There are real benefits to financial institutions that move into Layer 1 networks early. As the industry heads down the road of tokenization, companies that aim to use and leverage Layer 1 networks stand to gain a greater understanding of how the networks work together with all their moving parts. Hugentobler recommends that financial institutions employ a hands-on approach, which could entail using a Layer 1 network directly or setting up nodes to validate networks.

He also urges financial institutions to pay attention to their developer communities. Layer 1s that create and maintain their developer communities are likely to have more robust security protocols, throughput execution, and institutional-grade solutions. In evaluating new Layer 1s, entities should consider the communities that use them to help determine which layer or product to use.

“Getting in early and being fully involved doesn’t just give the corporation a better understanding of the process,” Hugentobler said. “Whether it’s collaborating with or even just building relationships with some of these infrastructure players, companies stand to have a voice in how the network can be developed or how it will evolve.

“It can put them in a position to influence development, and affect the regulatory fronts, all that sort of thing. At the end of the day, companies need to have skin in the game.”

The post How Layer 1 Networks Could Transform Stablecoin Transactions appeared first on PaymentsJournal.

As more small businesses feel the pressure to adopt emerging technologies, Square is expanding its offerings with bitcoin payment capabilities and enhanced artificial intelligence tools for merchants.

Square Bitcoin enables merchants to accept bitcoin payments with zero processing fees and also allows them to convert card sales into bitcoin. The service includes a built-in wallet, giving business owners the ability to manage their crypto holdings alongside their other financial activities—all within the same dashboard.

Additionally, Square is upgrading its AI assistant to deliver more targeted insights—such as data on weather, news, and customer reviews. For example, the AI assistant could suggest inventory adjustments for a clothing store based on upcoming weather trends.

Leveraging the Tech

The continued integration of AI into organizations has become a priority for many leaders looking to harness the technology’s potential. Yet even as small businesses increasingly adopted AI, many are still uncertain about how to use it to its fullest advantage.

While business insights and fraud protection are common applications, , one of the most impactful ways merchants can leverage AI is by integrating it into their customer service operations. To that end, Square’s AI solution is built to answer all incoming calls—even during peak hours—streamlining the ordering process and enhancing the customer experience.

The Best of Both Worlds

While Square’s AI platform is designed to deliver efficiency gains, its bitcoin platform is focused on improving the customer experience through greater payment flexibility.

According to Square, the number of U.S. shoppers using cryptocurrency payments is expected to grow by 82% over the next two years. This comes after a banner year for digital assets, during which bitcoin soared to new heights and blockchain technologies became increasingly entrenched in mainstream finance.

While stablecoins have captured much of the limelight in recent months—thanks to high-profile launches and the recent passage of stablecoin-specific legislation in the U.S.—bitcoin continues to hold strong. The flagship cryptocurrency has gained momentum following its inclusion in multiple bitcoin exchange-traded funds (ETFs) in the U.S. and similar investment vehicles abroad.

Despite its success, one of the main criticisms of using bitcoin in retail payments remains its volatility. However, with solutions such as Square’s, business owners can choose to either hold or convert their bitcoin directly within the platform. This flexibility gives merchants the best of both worlds—allowing them to use crypto both as a store of value and as a payment mechanism.

The post Square Adds Bitcoin Payments and Upgrades AI for Small Businesses appeared first on PaymentsJournal.

BNY Mellon is exploring the use of tokenized deposits to enable its institutional clients to make payments over blockchain rails. As the world’s largest custodian by assets, BNY’s treasury services unit processes roughly $2.5 trillion in payments each day and oversees about $55.8 trillion in assets.

Tokenized deposits share many characteristics with stablecoins, offering the stability and trust of traditional banking services while leveraging blockchain infrastructure. However, unlike stablecoins, tokenized deposits represent direct claims on commercial bank balances.

The industry has been actively seeking use cases that expand the utility of tokenized deposits. By moving these assets onto decentralized ledgers, BNY would be able to settle transactions almost instantly and at reduced costs. The system would also operate around the clock—an advantage over traditional correspondent banking networks, which are constrained by standard operating hours.

Unlocking New Use Cases

The move comes as stablecoins have gained immense popularity as a means of facilitating cross-border payments. BNY Mellon is the official custody partner for Ripple’s stablecoin, RLUSD. While stablecoins have become useful for payments between financial institutions, tokenized deposits are finding their own applications.

“The use cases for a company like BNY are many,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “There’s the potential for automation on unlocking liquidity once certain obligations and conditions are met, and for 24/7 cash sweeps that reduce intraday borrowing or overdraft risk. Tokenized deposits could reduce failed-trade risk in fund redemptions due to instant settlement. They have the potential to be programmable coupon or dividend disbursements. Repo transactions and clearing are a huge part of banks operations, so this could reduce the timelines and move collateral instantly.”

The Problem of Interoperability

The use of these tokens remains limited due to the lack of interoperability between banks. Enabling banks to transact tokenized deposits with one another would require a shared communication system, which does not yet exist.

“Some of the other use cases involving cross border payments are still in the air,” said Hugentobler. “They need to figure out the interoperability side between banks to participate on any given ledger.”

This isn’t BNY’s first venture into token innovation. The company recently launched a tokenized money market fund in collaboration with Goldman Sachs. Other banks are also exploring similar initiatives: HSBC introduced a tokenized deposit service for corporate clients to support cross-border transactions, while JPMorgan Chase launched a pilot program giving institutional clients access its own proprietary deposit token.

The post BNY Mellon Explores Tokenized Deposits for Internal Transactions appeared first on PaymentsJournal.

Many financial entities have entered the stablecoin arena in recent years, but Visa’s exploration of digital assets for cross-border payments could be a game changer. It marks the first adoption of a stablecoin by a major payment rail that already processes the lion’s share of international transactions. While this is an important step forward, stablecoins are still a long way from becoming the default solution for cross-border payments.

Visa’s pilot program will allow businesses to prefund Visa Direct transactions using stablecoins rather than fiat currency. By treating stablecoins as equivalent to funds on deposit, buyers and sellers can enable instant payouts without leaving capital tied up across multiple currencies until needed.

Visa is positioning the stablecoin option not just a convenience, but a tool to improve liquidity management. In the past, businesses had to lock up significant amounts of capital in advance and endure multi-day settlement for cross-border transactions. With stablecoins, those inefficiencies can be greatly reduce.

“It’s definitely a significant development in the space,” said Hugh Thomas, Lead Analyst of Commercial and Enterprise at Javelin Strategy & Research. “By offering the ability to move money in and out of stablecoin accounts with Visa Direct—the way you might move money in and out of your bank account—you open up a much broader set of potential users. Users don’t have to adopt fewer familiar providers and technology, and they get the assurances that come with a familiar and trusted brand as an overlay to less familiar payment products.”

Stablecoins Are Transforming Cross-Border

Stablecoins have proven highly useful in cross-border payments. Because these tokens are pegged to stable assets—usually the U.S. dollar—they provide predictability in settlement and reduce exposure to market volatility. Cross-border markets have responded quickly to these benefits, driving widespread adoption of stablecoins in a short period.

“Stablecoin settlement volumes surpassed Visa and Mastercard’s settlement volume combined last year,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “SWIFT and Mastercard’s blockchain solutions show us that these new rails are where it’s all headed—normalizing tokenized dollars for cross-border payments. But it will take some time to build it all out.”

Visa executives noted that regulatory clarity also encouraged them to incorporate stablecoin technology into their payments infrastructure. The passage of the GENIUS Act in the U.S. in July established clear rules for stablecoin issuers. This followed the European Union’s Markets in Crypto Assets (MiCA) regulations, which provide a comprehensive framework for stablecoin usage in the region. Such guardrails have bolstered confidence in digital assets, especially among legacy financial institutions.

High transaction costs have historically been another stumbling block. In Latin America, inefficiencies have been a particular struggle. According to Mastercard, the average cost of sending remittances in Latin America is 6.3%, well above the 3% target established by the United Nations. With stablecoins, transactions are often nearly and eliminate the need for currency conversion, which can complicate expense planning.

A Flood of Stablecoins

Many financial entities have introduced—or are considering introducing—their own stablecoins, including the Mexican government, which is developing a coin pegged to the peso.  Zelle’s proposed coin appears designed to enable entry into the cross-border market, which is currently inaccessible to its 150 million users. PayPal has also launched its own stablecoin, but it has long supported peer-to-peer cross-border transaction through its Xoom platform.

In contrast, Visa’s program works with existing stablecoins rather than creating a new one, leveraging the more than $200 billion already circulating in the market.

“It would make more sense for Visa to build its own stablecoin-focused layer 1 network, rather than issue a stablecoin,” said Hugentobler. “Their edge is already connecting moving parts, like consumers, businesses, and financial institutions. They should stay on the path of ‘owning the airport’ rather than becoming a single airline through issuing their own stablecoin.”

Thomas added: “Visa and Mastercard are payments networks and switches. They don’t absorb any of the risks entailed in making payments, which is a big part of why the market loves their stocks. Launching a stablecoin would feel a bit like starting a bank for Visa. It would be out of their core competencies and would risk suggesting to the market that they’re shifting away from the focus that’s so well-appreciated by investors.”

Toward a Tipping Point

Given their popularity and increasing momentum, it may sometimes seem as though stablecoins are approaching a tipping point—destined to become the default vehicle for cross-border payments, potentially replacing the traditional correspondent banking system. Yet, Thomas notes that there is still a long road ahead.

“The Nobel laureate economist Jean Tirole has talked about the need for payments systems to be built on public infrastructure, not speculative tokens,” Thomas said. “His points echo those raised by fellow Nobel winner Paul Krugman and others, who have talked about concerns related to previous regulatory failures like with money market funds, instruments built to project security that eventually failed, requiring government bailouts. Tirole points out the fines Tether received for misrepresenting reserves, and how Circle had its reserves jeopardized by the collapse of Silicon Valley Bank.”

Past breaches of trust are likely to keep many players on the sidelines for now. However, heightened regulatory guardrails, coupled with the confidence that comes only with experience, could go a long way toward solidifying stablecoins’ role in the cross-border process.

Visa, for its part, is taking a measured approach, testing the waters through a pilot program set to run into 2026 before deciding whether to launch a full-time stablecoin platform. Perhaps that will mark the true tipping point.

The post Is Visa’s Stablecoin Gambit a Tipping Point for Cross-Border Payments? appeared first on PaymentsJournal.

OnePay has made significant enhancements to its services since Walmart took a majority stake in the company, and now the fintech is expanding further by adding crypto trading to its platform.

According to CNBC, OnePay customers will be able to trade bitcoin and ether as early as this year through a partnership with crypto firm Zerohash. While OnePay has not specifically confirmed the details, if users are able to hold bitcoin and ether in the mobile app, it would likely mean they could also convert their crypto holdings and use the funds to make purchases at Walmart or pay off balances.

The addition  of crypto capabilities represents another major milestone for the firm, which was established by Walmart and venture firm Ribbit Capital just four years ago. Since its launch, OnePay has climbed to become the fifth-ranked free finance app on Apple’s App Store, joining the ranks of fintech heavyweights like PayPal, Venmo, and Cash App.

Adding to Its Repertoire

Although the Walmart connection has certainly fueled the platform’s rapid growth, OnePay was built as an independent company from the retailer, with the goal of extending its reach beyond even Walmart’s substantial customer base.

Like many rival fintechs, OnePay has continued to aggressively add services. The company partnered with Synchrony to issue Walmart’s store-branded credit cards after Walmart recently moved on from Capital One.

OnePay also helped Walmart add buy now, pay later (BNPL) through a partnership with Klarna. Altogether, OnePay now offers credit and debit cards, savings accounts, BNPL, a digital wallet, peer-to-peer (P2P) payments, and even wireless plans.

Importing the Concept

This formidable array of services rivals those offered by China’s super apps, Alipay and WeChat Pay. These unified mobile platforms have become one-stop shops for consumers, often extending well beyond financial services to include features like shopping and messaging.

Many fintech firms are now working to bring the super app concept overseas. Klarna, for example, has continued to expand its product suite with offerings like a debit card and wireless plans. Even Bolt, originally known as a merchant checkout solution, has begun to shift into the super app market.

Similarly, PayPal, Venmo, and Cash App have all introduced features that stretch far beyond their trademark P2P payments. While these fintechs may lack the Walmart partnership that OnePay enjoys, they currently operate more established platforms and boast significantly stronger crypto and digital assets capabilities—at least for now.

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Tokenization has gained increasing traction in the financial services industry in recent years, but Vlad Tenev, CEO of Robinhood, believes this is just the tip of the iceberg.

Speaking at a crypto conference in Singapore, Tenev described tokenization as a “freight train” that will “eat the entire financial system.” He highlighted several forces driving this momentum, including the growing adoption of digital assets technologies in mainstream finance and greater regulatory clarity across many regions.

Tenev predicted that most major markets will establish some form of tokenization framework within the next five years, even if widespread adoption takes considerably longer.

“This is definitely where we’re headed,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “The CEO of Nasdaq recently shared similar comments. Live pilots already exist through Depository Trust & Clearing Corporation (DTCC), and they’ve been processing more than 100,000 equity transactions per day in parallel to the traditional system. Tokenized cash rails are gaining traction—stablecoins, tokenized deposits, etc.—but it’s not going to happen tomorrow.”

From an Innovation to the Norm

Although most real-world assets—from art to property deeds—can be tokenized, one of the most compelling applications is the tokenization of stocks and bonds. According to Tenev, tokenization has the potential to simplify trading so significantly that tokenized stocks could become the standard for trading U.S. stocks outside the United States.

These remarks come shortly after Robinhood’s launch of over 200 tokenized U.S. stocks to customers in the European Union. Interestingly, the shift toward tokenization followed the company’s decision to cease its crypto trading, once one of its core services.

The Ground Floor

Volatility is often associated with crypto and was one of the reasons the Robinhood moved on from crypto trading. With tokenization, however, Tenev believes he can bring Robinhood in on the ground floor of an emerging financial services innovation.

There has been significant institutional investment in tokenization over the past few years. Companies like Franklin Templeton and BlackRock have tokenized money market funds, reaching staggering valuations. BlackRock currently manages the largest tokenized private fund, with assets under management of roughly $2.5 billion.

Many of the largest financial institutions have either developed their own tokenization platforms or partnered with tech firms to build them. For example, JPMorgan Chase recently rebranded its blockchain-based platform—one of the first bank-owned blockchains—and broadened its focus to include more tokenization initiatives.

Both Chase and Citi have identified tokenized deposits as a key innovation in financial services. Citi even noted that while it had considered launching a stablecoin, it has been more active in tokenized deposits. The rationale is clear: tokenized deposits can provide real-time settlement and low fees similar to stablecoins, but within the safeguards of a regulated banking environment.

“I think tokenized deposits will be a big focus for financial institutions because private lending has grown immensely, just in the last year,” Hugentobler told PaymentsJournal. “More banks are putting assets like HELOCs and personal loans on chain, and it is much faster and more transparent for banks and consumers. It’s a trend that’s going to continue—companies are going to continue to put funds and assets on-chain.”

Developing the Standards

While tokenization does appear to be gaining momentum, Tenev noted that the U.S. will likely be among the last major economies to fully adopt it, given its already well-established financial infrastructure.

That said, several other considerations must be addressed before tokenization can become a mainstream part of everyday financial operations.

“Instant settlement will likely introduce greater liquidity needs, so infrastructure providers and other players will need to develop solutions,” Hugentobler said. “They also need to develop a framework or standards for tokenized assets in which the rights of owning any given asset are linked or bound to the asset—otherwise you’re just trading a wrapper (like with bitcoin).”

“There are compliance frameworks that need to be built out, liquidity challenges for weekends, and interoperability solutions that all need to take place,” he said. “But, this is all coming down the pipe. So the institutions that are taking action today to partner or build out solutions are going to see first-mover advantages. FIs need to think out of the box and have a forward-thinking mindset to survive and thrive.”

The post The Continued Tokenization of Real-World Assets Is Inevitable, Says Robinhood CEO appeared first on PaymentsJournal.

Stablecoins are having a moment, growing to multiple hundreds of billions in circulation, with national governments, crypto entities, and traditional financial institutions all testing the waters. As such, stablecoins have been entered into a sort of competition with tokenized deposits, which are digital tokens representing deposit claims on the bank, recorded on a programmable ledger.

In a new report, Stablecoins vs. Tokenized Deposits, Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, compares and contrasts these types of currency and considers how they might coexist. “The choice between stablecoins and tokenized deposits is not binary,” he said. “Banks will have the ability and opportunity to offer both, but the debate over the two products represents a strategic fork that will shape how banks remain relevant in digital money.”

Stablecoins Have Taken the Lead

Stablecoins and tokenized deposits share many characteristics and use cases. Although stablecoins have a proven track record and have already settled trillions of dollars in transaction volume, tokenized deposits are still establishing themselves in the marketplace.

Stablecoins and tokenized bank deposits leverage blockchain technology to modernize payments and value movement, allowing for faster settlement across geographies at any time. But there are key differences.

Pegged to fiat currencies, stablecoins’ primary advantage was introducing stable digital money into crypto and fintech ecosystems. They have expanded on use cases such as decentralized financial services and global remittances, things that were previously impossible for traditional bank deposits.

In contrast, tokenized deposits offer the stability and trust of traditional banking services while leveraging internal blockchains. This allows them to expand the capabilities of deposit accounts, but they have generally had limited functions thus far.

“Stablecoins have moved ahead in the race between the two vehicles largely because they have filled a necessary use case for cross-border payments,” Hugentobler said. “Tokenized deposits are primarily used for intrabank operations. Unless there’s another bank that wanted to use JP Morgan’s Connexus or something like that, where they can send those tokenized deposits instantly, they don’t enable a bank to use their tokenized deposits outside of that particular bank. But they can be used for anything in between—cross-border payments, remittances, micro transactions, merchant payments, all those things that have been discussed for stablecoins.”

The Promise of Interoperability

A key that will help tokenized deposits gain traction with banks is interoperabilty. If banks want to interact with each other, they must develop some sort of system of communication for sending tokenized deposits.

“Otherwise it’s just intrabank thing that can help with settlement and fees and that sort of thing, which is good but limited,” Hugentobler said.

Tokenized deposits at companies like JPMorgan Chase and Citi already offer large commercial customers benefits that anchor those banks to tokenized money in controlled, regulated ways. If banks decide to hesitate or temper their strategy to hedge against risk or compliance issues, that could sideline them while more nimble, nonbank issuers move ahead.

The key for banks, Hugentobler said, is to remember the opportunity in this area is not simply to preserve deposits or to chase after the hype that stablecoins are receiving. The real benefit is to redefine the role of digital currency as money becomes increasingly programmable, interoperable, and borderless. The banks that know the differences between tokenized deposits and stablecoins, and how each can be leveraged, will be ready to play a role in the next generation of value movement.

The Role of Regulation

Tokenized deposits fall under the existing FDIC umbrella as covered deposits that are held by banks. While that limits what they can do under a highly prescribed regulatory regime, it also means they’re able to be implemented quickly. They can be used for intrafirm settlements, clearing, and other transactions that don’t require the hoops, as it were, faced by stablecoins, which require a one-to-one reserve requirement.

European regulators have emphasized that recording the deposit claim on a blockchain does not change its legal nature; it remains a deposit subject to deposit taking and prudential rules. That is one more reason tokenized deposits exist outside of many of the requirements for stablecoins. That is making it much simpler for banks to work with deposit tokens than stablecoins from risk and compliance standpoints.

Stablecoins are already being used as important payment tools within the open, global ecosystem of decentralized financial services. Soon, they will be used for more traditional money movement. But Hugentobler said that if stablecoin volumes increase, as most observers expect, there could be the potential for systemic risks if they’re not overseen correctly or audited.

“These issuers don’t have the reserves that they say they do,” he said. “It might take a liquidity run for more regulation to come in. But the industry’s been waiting on something to happen in this area. After the stablecoin regulation came out, it’s given a pretty robust framework for developers.”

A Mixed Blessing for Stablecoins

Although cryptocurrencies were initially celebrated by supporters as something outside a government’s purview, regulation has been a mixed blessing. The GENIUS Act, which was signed into law in July, established federal standards for the issuance, trading, and custody of stablecoins. By putting guardrails around the digital assets industry, the law gave users an increased sense of security. It provided the same stability that the MiCA (Markets in Crypto Assets) Act gave Europe when it was passed in 2024.

“Whether it’s a new product, a new stablecoin, or something related to them, 40% of them have happened after the GENIUS Act was put into law,” Hugentobler said. “Before, companies were kind of afraid to launch a new product or integrate some sort of product into their system because no matter how compliant or robust they made their system, they didn’t have any guidelines to go with. Now they definitely feel more comfortable.”

The post Is There Room for Stablecoins and Tokenized Deposits? appeared first on PaymentsJournal.

The digital euro, first proposed in 2020, is now looking at a potential launch date of mid-2029.

“The middle of 2029 could be a fair assessment,” European Central Bank Executive Board member Piero Cipollone said this week. “We should arrive at a general approach, as they call it, an agreement among member-states by the end of the year.”

The ECB’s Governing Council began advance work on the digital euro, envisioning it as a digital currency issued by the central bank to supplement cash, not take its place. It entered a preparation phase in 2023, focusing on technical development and devising EU-wide legislation to ensure compliance with privacy and anti-money laundering rules. As of March, there was speculation that the digital euro might be ready by the end of the year.

Roadblocks Are Piling Up

But roadblocks continue to pile up. Many lawmakers question the necessity of the digital euro in the first place and remain skeptical that it would justify the costs involved.

The European Parliament must pass legislation to move the project forward, but it continues to drag its feet. The former central banker leading negotiations on the digital euro’s legal framework with Parliament, Fernando Navarrete, has long been a skeptic of digital currencies. Navarrete recently published a paper, “Do We Really Need a Digital Euro: A Solution to What Problem Exactly?”

A major obstacle has been disagreement among EU nations over how the digital euro should be issued and how much each resident should be allowed to hold. The latter is especially sensitive, as governments fear that unlimited CBDC holdings could trigger destabilizing bank runs.

Last week, EU finance ministers reached a potential compromise by agreeing to impose limits on digital euro holdings. For now, domestic officials will be allowed to set caps on individual holdings, though ministers emphasized that the Council of Ministers will have an opportunity to revisit the rules before they are finalized.

Concerns Over Privacy

The framework would allow the ECB to track ownership of digital euros, helping protect against fraud and money laundering. However, this has raised privacy concerns in countries such as Germany and the Netherlands, which are seeking safeguards against potential payment surveillance.

Discussions have also centered on whether banks should be allowed to charge for distributing digital euros, and how to ensure the currency remains compatible across various payment rails. The ECB has recommended that legislation require all payment services providers to support the digital euro.

The post Why Is the Digital Euro Taking So Long to Develop? appeared first on PaymentsJournal.

After prolonged contention over the direction of the digital euro, European finance officials may have reached a compromise on the strategy for the central bank digital currency (CBDC).

The European Central Bank (ECB) has positioned the digital euro as a much-needed counterweight to the dominance of both Visa and Mastercard’s card networks and dollar-backed stablecoins. In addition to payments competition, the ECB argues that a digital euro could strengthen the region’s independence in critical sectors such as finance, energy, and defense.

Despite these potential benefits, bringing a digital euro to fruition has been a difficult road. A major obstacle has been disagreement among EU nations over how the digital euro should be issued and how many of it each resident would be allowed to hold. The latter is especially sensitive, as governments fear that unlimited CBDC holdings could trigger destabilizing bank runs.

Now, however, there appears to be light at the end of the tunnel. EU finance ministers have agreed that domestic officials will be able to weigh in on the issuance of the CBDC in their countries and will retain the power to set limits on individual holdings.

Lingering Objections

While this is a substantial step forward for the digital euro, several objections to the CBDC remain. The ECB would be able to track ownership of digital euros, potentially bolstering defenses against fraud and money laundering.

However, many governments are concerned that this capability could also give the ECB a channel to surveil their nation’s citizens. Further doubts have been raised about the ECB’s ability to keep the digital euro secure, particularly after an outage at the central bank earlier this year disrupted transactions involving trillions of euros.

A Political Statement

One of the overriding challenges facing the digital euro is that many lawmakers see little need that would justify the cost of issuing it. This is one of the reasons why many other countries have scrapped plans for a CBDC.

Most notably, the Bank of England has paused its work on a digital pound, partly because officials didn’t identify a compelling case for introducing it. By contrast, the EU views the digital euro as more than just a tool for payments.

“The digital Europe is not just a means of payment, it is also a political statement concerning the sovereignty of Europe and its capacity to handle payment, including on a cross-border basis, with a European infrastructure and solution,” said Christine Lagarde, President of the ECB said during a press conference.

The post EU Moves One Step Closer to Issuing a Digital Euro appeared first on PaymentsJournal.

The SEC has approved Grayscale’s multi-asset crypto exchange-traded product, Digital Large Cap Fund (GDLC)—the crypto world’s first equivalent of a mutual fund. Unlike earlier products that invested solely in bitcoin or ether, Grayscale’s fund offers a diversified basket of cryptocurrencies, including XRP, Solana, and Cardano.

This approval comes after a long period in which numerous digital asset funds were stalled in regulatory backlogs. It has been more than a year since Grayscale first sought permission to convert its over-the-counter fund into an ETP. 

New Generic Listing Standards

In addition to this specific approval, the SEC also approved rule changes proposed by the three national securities exchanges to establish generic listing standards for exchange-traded products that hold digital assets.

“The generic listing standards allows exchanges to list commodity-based ETPs and ETFs holding crypto without requiring individual agency reviews for each fund,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “This will significantly streamline the process, which used to take up 240 days. It will reduce barriers to accessing digital asset products in the U.S., and we will likely see additional financial products based on the ETPs and ETFs, such as options.”

A Logjam for Approval

The crypto fund industry began in January 2024, when the SEC approved 11 funds invested in bitcoin. That was followed a few months later by approval of five ether-based funds. Grayscale was part of the inaugural class of vehicles for both assets.

Momentum then stalled as the SEC was slow to approve funds holding other forms of crypto. As of last month, 92 different crypto funds were still awaiting approval, many of them tied to lesser-known assets like Avalanche and Bonk. Grayscale was among them and still hopes to convert its Chainlink Trust into an ETF.

Because GDLC is diversified across several different assets—including bitcoin and ether—it may give individual investors more confidence in its relative stability. The concept of crypto mutual funds has been around for some time, but they may take a while to fully mature.

“It definitely marks a milestone for the industry, but we’re pretty stretched this cycle,” said Hugentobler. “We won’t really know how much of a success this will be until after the bear market portion of the cycle and see how it rebounds with volumes and flows.”

The post Grayscale Gains Approval for First Crypto Mutual Fund appeared first on PaymentsJournal.

The latest entity to consider minting its own stablecoin is Early Warning Services, the consortium of seven major U.S. banks that owns Zelle. The move could open up a new suite of services for Zelle, most prominently cross-border payments.

Zelle has grown by leaps and bounds since its introduction in 2017. It processed more than $1 trillion in payments volume last year and boasts more than 150 million users.

However, one area where it lags behind competitors like PayPal is the ability to send money across borders. Currently, Zelle users must have a U.S. bank account to transmit funds to one another.

A Spate of Stablecoins

Many financial entities have considered introducing stablecoins in recent months, particularly after the passage of the GENIUS Act, which created a pathway for even highly regulated financial institutions to offer a stablecoin for the first time. Citigroup, JPMorgan Chase, and Bank of America have all been exploring the possibility of entering the stablecoin space.

PayPal launched its own stablecoin, and last year, unveiled a transfer platform capable of sending money across borders. Zelle is likely interested in competing with PayPal in this area.

“The biggest use case is cross-border payments,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Zelle could also use the stablecoins for instant refunds and chargeback credits, but most of the other programmable use cases will take time to build out and get right.”

Bringing Down the Fees

One question to address is whether Zelle would charge for cross-border payments. While Zelle transactions are currently free for users, cross-border payments typically incur a fee between 0.5% and 2.0% when using traditional remittance methods.

Stablecoins have already reduced the cost of sending money internationally. For example, Solana charges only pennies for its cross-border services, regardless of remittance size. Ethereum, the most expensive of the crypto-related cross-border services, still charges just a few dollars, though costs can increase when network congestion is high.

Given these low costs—and Zelle’s no-fee model, it’s possible the company could offer such payments for free.

“Zelle needs to be careful if it charges fees for cross-border payments and remittances,” Hugentobler said. “If the fee is too large, users will go a different route to send stablecoins for next to nothing.”

A spokesperson for Zelle told PaymentsJournal that it had no comment on the stablecoin reports.

The post Zelle’s Stablecoin Could Mark Its Entry to Cross-Border Payments appeared first on PaymentsJournal.

Just as stablecoins have proliferated, there will be more networks to support them.

Blockchain infrastructure firm Fireblocks unveiled its global stablecoin network, which is designed to connect businesses with on/off ramp, liquidity, and compliance providers across the globe.. In a news release, Fireblocks likened its network to cross-border payments system Swift and noted that it already has more than 40 providers and hundreds of payment companies on board.

One of the selling points for Fireblocks is that its network was built to be compliant and enterprise-grade, but the company isn’t alone in this arena. After keeping plans for its blockchain under wraps, Stripe has officially unveiled its stablecoin-based blockchain Tempo, a collaboration with venture capital firm Paradigm.

Patrick Collison, CEO of Stripe, noted that existing blockchains were built to support cryptocurrencies, not to accommodate the nuances of stablecoin transactions. Like the Fireblocks network, Tempo is geared toward organizational adoption. However, unlike Fireblocks, Stripe already has an extensive and established customer base of businesses.

The Number of Competing Options

While this is a factor in Stripe’s favor, the payments giants face obstacles as it vies for position in a growing stablecoin market. Aside from the challenges associated with managing a secure global payment network, competing options are increasingly emerging.

For example, Circle recently unveiled its financial services blockchain, Arc. As Circle is the issuer of the second-largest stablecoin in the world, USDC, creating a stablecoin-centric infrastructure was naturally one of the company’s objectives for the blockchain.

Instead of building its own solution, crypto company Ripple announced that it will buy Rail, a stablecoin platform, to build a more extensive structure for organizations.

A Fragmented Market

All these blockchains are competing with established platforms like Ethereum and Solana, which many financial institutions have already heavily used for stablecoin transactions. Although all these platforms aim to unify global payments, they have also created a fragmented market.

For this reason, Google unveiled its Google Cloud Universal Ledger (GCUL), a financial services blockchain designed to be neutral and scalable. Google’s leadership noted that a neutral solution was necessary because, for example, Stripe’s competitors are unlikely to use Tempo.

Although it remains to be seen which solution will become predominant, the race to build the infrastructure for the surging stablecoin market means more launches are likely on the way.

The post Stripe and Fireblocks Launch Stablecoin Solutions appeared first on PaymentsJournal.

Along with stablecoins, tokenization has become a central focus regarding digital assets by the financial services industry. However, a European regulator has raised concerns that the technology could cause misunderstandings for retail stock investors.

According to Reuters, Natasha Cazenave, Executive Director of the European Securities and Markets Authority (ESMA), spotlighted the many fintech companies that are now working to create tokens backed by corporate stocks.

Although there are tangible benefits to this model, the ESMA chief said many investors in these instruments may not understand that they aren’t directly buying a share in a company when they buy a tokenized stock. Instead, tokenized stocks are held by a special-purpose company and backed by the shares they represent.

Market and Regulatory Risks

Cazenave’s comments echoed a recent statement from the World Federation of Exchanges (WFE), a London-based consortium of financial institutions. The WFE addressed a letter to the leading global securities commissions to warn about the risks of tokenized stocks, saying that these representations of mainly U.S. stocks were often listed by unregulated brokers and crypto firms.

The WFE also pointed out risks that this model could pose for stock markets. Tokenized stocks traded outside of regulated markets could potentially drain liquidity from traditional exchanges, affect stock prices, and diminish market integrity. Additionally, the WFE said that if a trading platform failed, determining asset ownership could be difficult.

A Proper Regulatory Framework

Although there are concerns about the technology, tokenization has become one of the most powerful forces driving the financial services industry. Tokenization makes trading real-world assets more transparent and efficient, and it goes far beyond stocks—including such things as bank deposits, property deeds, and government bonds.

For this reason, tokenization projects have received heavy investments from many of the world’s largest financial players, including Blackrock, JPMorgan Chase, and Franklin Templeton. Additionally, once-reluctant hedge fund Citadel Securities announced its intentions to enter the crypto market.

Tokenization has also become a central initiative for many nations. The Bank of England recently noted that the technology would play a key role in the country’s future innovations in financial services.

Despite its concerns about tokenized stocks, ESMA also said that it wasn’t backing away from tokenization technology. The EU has been a leader in the digital assets movement, as evidenced by the region’s newly passed Markets in Crypto-Assets regulations, which govern the disruptive technology.

Cazenave underscored the EU’s role as a financial services innovator and acknowledged that tokenization could lower costs, improve transparency, and make transactions more efficient—so long as it operates within a proper regulatory framework.

The post Regulator Voices Concerns That Tokenized Stocks Could Cause Investor Confusion appeared first on PaymentsJournal.

The 92 cryptocurrency exchange-traded funds awaiting approval from the SEC will test the depth of investor appetite for more specialized digital assets. Following the success of bitcoin and ether ETFs launched last year, crypto firms are betting that investors will show similar interest in lesser-known entities such as Avalanche and Litecoin. Whether the demand materializes will depend on how quickly the SEC breaks through the logjam of products awaiting approval.

The list of pending applications surfaced through research by James Seyffart, an analyst at Bloomberg. Eight of the potential offerings are invested in Solana, while another seven would hold XRP. Additional offerings include Dogecoin, Melania, and Cardano.

Many of these funds have been awaiting approval for some time. In April, Bloomberg reported that 72 crypto-related ETFs were pending approval, indicating that 20 more ETFs have been filed over the past four months.

The queue continues to grow. Earlier this week, 21Shares sought approval from the SEC to launch the first ETF invested in SEI, the token used by the Sei blockchain.

Slow Movement from the SEC

There’s no telling when these approvals might come, if at all. Grayscale filed for approval of its Cardano ETF in February and was initially told that it would receive a decision by August. This week, the SEC informed Grayscale that a decision would now come at the end of October. Grayscale is also seeking approval to convert five existing trusts into ETF structures.

The delay may be due to a lack of personnel. The SEC has lost roughly 15% of its staff this year after the Trump administration offered buyout packages to all employees.

The markets are taking steps to address the backlog and prevent it from happening again. In July, the New York Stock Exchange, Chicago Board of Exchange, and Nasdaq proposed listing standards for crypto ETFs that would expedite the process for these vehicles to trade publicly.

A Lucrative Niche

The market for crypto funds remains lucrative. Last year, the world’s largest asset manager, Blackrock, launched the iShares Bitcoin Trust ETF. It now generates more in fees from that fund than from its flagship S&P 500 fund.

Blackrock has since launched similar funds in Canada and Europe and has begun offering options trading on its bitcoin ETF. However, Blackrock currently has no other crypto ETFs pending before the SEC.

The post Nearly 100 Crypto ETFs Are Waiting for SEC Approval appeared first on PaymentsJournal.

As more financial services-oriented blockchains emerge, Google plans to launch a neutral, global blockchain for the industry.

In a LinkedIn post, Rich Widmann, Head of Web3 Strategy at Google Cloud, provided details on the new offering, dubbed the Google Cloud Universal Ledger (GCUL), noting that the layer-1 blockchain has been years in the making. He said its credibly neutral infrastructure would support Python-based smart contracts.

Although Widmann mentioned that further technical details about GCUL would be shared in the future, he underscored neutrality and scalability as key differentiators for the platform. Unlike other blockchains, which have been built around a specific cryptocurrency or company, GCUL is designed as an agnostic blockchain capable of connecting the billions of users in Google’s ecosystem.

The Blockchain Race

Google’s announcement follows news that some of the world’s largest payments companies are developing proprietary blockchains. Circle—best known for issuing the stablecoin USDC—recently unveiled Arc, its financial services blockchain.

Naturally, USDC will play a primary role in Arc, and Circle noted that the blockchain is optimized for stablecoin payments. However, Arc was designed to support all forms of digital currencies and tokenized assets.

Payments firm Stripe has also been developing a blockchain called Tempo, which would leverage its extensive global network of businesses. While Stripe has largely kept its blockchain plans under wraps, it has been transparent about its digital asset ambitions through recent high-profile acquisitions of stablecoin company Bridge and crypto wallet provider Privy.

Standing Out

Although the launches of Stripe and Circle are significant, these are far from the first financial services blockchains on the market.

In addition to Coinbase’s Base and Robinhood’s Artritum, there are also well-established, dominant digital asset blockchains like Ethereum and Solana. In particular, the speed and efficiency of Solana has attracted many of the largest financial services companies, including PayPal, Visa, and Franklin Templeton, to the blockchain.

The emergence of these options is a testament to the powerful capabilities of blockchain, which offers security, transparency, and efficiency in financial operations. However, this rapid proliferation has also created a fragmented landscape.

Widmann referenced this fragmentation in his post, noting that Circle’s stablecoin rival Tether was unlikely to use Arc, just as Stripe’s competitors were unlikely to adopt Tempo. He further observed that Google’s position as a neutral infrastructure provider could help GCUL stand out.

The post Google Is Building a Universal Blockchain for Financial Institutions appeared first on PaymentsJournal.

Gemini, the crypto exchange founded by the billionaire Winklevoss twins, has launched a new credit card that offers rewards in the cryptocurrency Ripple (XRP). This card follows an earlier release from Gemini that provides rewards in bitcoin, other crypto assets, and the exchange’s own stablecoin, the Gemini Dollar.

The launch comes shortly after Gemini filed for its initial public offering earlier this month. Among the companies financially backing the offering is Ripple, which has extended the exchange a credit line of up to $150 million.

Ripple’s Returns

For its part, Gemini is touting the growth of its crypto asset, noting that investors who held XRP rewards for the year ending in July saw gains of 453%. That’s the highest percentage increase among all rewards currencies available to Gemini credit cardholders.

The card’s cashback structure allows users to earn up to 4% back in Ripple for fuel or electric vehicle charging, 3% for dining, 2% for groceries, and 1% on general spending. Cardholders also have the option to earn bitcoin or choose from more than 50 other cryptocurrencies.

The Struggle for Profitability

Despite hopes for the upcoming IPO, Gemini has struggled to achieve profitability. The latest filing with the SEC revealed a net loss of $282.5 million in the first half of the year. In 2024, Gemini reported $142.2 million in revenue but still recorded a $158.5 million net loss. Its cash and cash equivalents declined from $341.5 million at the end of 2024 to $161.9 million by mid-2025.

Since its founding in 2014 as a platform for buying, selling, trading, and storing cryptocurrency, the company has experimented with several new products, most of which have stumbled out of the gate. In 2021, for instance, the company introduced Gemini Earn, which allowed users to earn interest of up to 7.4% by lending crypto assets to cryptocurrency lender Genesis Global Capital LLC.

The program grew to about 200,000 members before it was forced to suspend trading during a crypto crash in November 2022. Genesis Global Capital filed for bankruptcy just a few months later, and Gemini ultimately agreed to repay more than $1 billion to its customers.

The post Ahead of Its IPO, Gemini Unveils a Ripple Credit Card appeared first on PaymentsJournal.

Much has been made of the security and immutability of blockchain, but this security comes with a caveat: It can be achieved only when the blockchain is separated from external systems. This means that a smart contract could be set up in a supply chain to tell a company when a shipment is transferred, but it couldn’t make routing decisions based on real-time geolocation data.

As Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, found in the report Oracles: The Missing Link Between Blockchains and the Real World, oracles can be the bridge between blockchains and the rest of the world. However, there are many aspects to consider as more organizations, and especially financial institutions, incorporate this technology.

Oracles in the Picture

One of the simplest examples of oracles in action is an online sports bet, such as when two parties bet on the outcome of a football game.

“You connect your wallet, make your bet, and depending on the end score, the oracle would pull that data as soon as the game’s over and automatically send payouts to whoever picked the winner,” Hugentobler said.

Oracles are entities that turn standard smart contracts into hybrid smart contracts—self-executing programs that can react to real-world events and interact with traditional systems.

With oracles in the picture, many use cases emerge. For instance, a hybrid smart contract could be built to trade a stock or bond based on complex market data. Similarly, the smart contract could be instructed to take certain actions within a loan portfolio in response to shifting interest rates.

Another intriguing use case for oracles is in the insurance industry, where weather data is often used to calculate insurance premiums and payouts.

“The oracle could use multiple weather sources if a tornado or a hurricane came through, to validate and verify that an insurance claim needs to be paid out,” Hugentobler said. “It’s just all put on automatic with these oracles, because once these conditions are laid out in the insurance claim smart contract, it’s all executed automatically on-chain and paid out.

“This is great in the case of insurance, where in a lot of these situations it can take months for people to get money. If this can cut time down significantly to a matter of days, that’s huge.”

Making the Intended Decisions

Although there are powerful use cases for oracles, introducing external data into a secure blockchain carries risks. The challenges are similar to those that have affected artificial intelligence—namely, that AI models are only as good as the data they are built upon. If an AI model receives data from a single source, there is a substantial risk this data could be skewed, corrupted, or manipulated.

Oracles face this same issue. When data comes from a centralized repository or a disreputable source, an oracle could provide incorrect data to a hybrid smart contract, resulting in an error or an unintended consequence.

AI has also been a frequent target for bad actors, as evidenced by the recent exploitation of Google’s Gemini platform and hacking attacks against Microsoft’s Copilot. With nearly every AI platform that has been introduced, cybercriminals have attempted to hack it or find loopholes within it to help them carry out illicit activities.

Oracles and smart contracts—especially those that perform financial operations—will also be targets for bad actors. This is one of the main reasons it is imperative to decentralize oracles and to ensure they retrieve their data from multiple trusted sources.

Some of the top oracle companies, like Witnet, Paralink, and Provable, have developed a model designed to mitigate these risks. In these platforms, oracles are made up of a smart contract and off-chain infrastructure that queries APIs and constantly updates the data in the hybrid smart contract.

However, the leading oracle solution, Chainlink, has taken this a step further. The platform is a decentralized network not specific to any blockchain. The objective of Chainlink is to collect all of the external sources for its oracles into what is effectively an on-chain library. Oracles can then reference this single framework, ensuring smart contracts have the best chance of making informed decisions.

Overhauling the Infrastructure

Over the past few years, digital assets have become a central focus for financial institutions. Stablecoins and tokenized deposits have featured in the strategies of many banks and credit unions seeking to leverage this nascent technology.

However, blockchain is at the heart of all these technologies. To truly leverage digital assets, more financial services firms must explore smart contracts and oracles. However, there is an additional consideration for these organizations.

“There are always risks,” Hugentobler said. “There is obviously smart contract risk if something doesn’t execute. There are risks of funds being lost or sent to the wrong address or something like that, but I think one of the biggest risks is integrating this stuff into existing systems.”

Oracles are a middleware solution, so they don’t require any hardware implementation. Still, integrating oracles and hybrid smart contracts could present a challenge, depending on the institution’s systems.

“I think the infrastructure still needs to go through an overhaul for this stuff to really make a difference, because I think one of the biggest things is providing transparency to the end user of the financial institution,” Hugentobler said. “Once that’s built out, though, I think this stuff is pretty seamless.”

The post Oracles Can Be the Final Piece of the Blockchain Puzzle appeared first on PaymentsJournal.

Although the global stablecoin market has surged above $280 billion in value, coins backed by the British pound account for only a fraction of this segment.

The U.S dollar has been the underpinning for all the leading stablecoins, and the United States has taken a significant step forward with the passage of the GENIUS Act—the long-awaited regulatory framework governing stablecoin usage in the country.

This U.S. dominance is one of the main reasons 30 of the largest crypto companies, including Coinbase, Kraken, BitGo, and Fireblocks, have urged Britain to reconsider its perspective toward stablecoins. The digital asset firms called for a national stablecoin strategy that “positions stablecoins not as a risk to be contained, but as a financial infrastructure to be responsibly embraced.”

Strengthening Its Position

The firms noted that a national stablecoin strategy will not only keep the UK from lagging behind the U.S. but also would strengthen the UK’s position as a global financial hub and generate new income streams for the nation.

A UK treasury spokesperson told CNBC that the country plans to finalize its framework around all digital assets (including stablecoins) by the end of the year. The official said this legislation was designed to give investors more confidence and drive growth in the UK.

A New Form of Money

Stablecoins have been one of the most impactful forces on the financial services industry in recent years. The digital assets have the potential to solve many long-standing issues like cross-border payment inefficiencies and volatile domestic currencies.

Although stablecoins have substantial potential, concern about the dominance of the U.S. dollar in the market has increased. This is one of the reasons some countries have explored central bank digital currencies (CBDCs), which are issued by a government instead of a company like Circle or Tether.

This could mitigate one of the stablecoin risks—that the company issuing the asset might not have the reserves to back it. Despite the potential benefits of CBDCs, the rapid rise of stablecoins has caused them to fall out of favor with many governments. Only three countries have deployed CBDCs on a national scale, and many other countries have abandoned their CBDC programs.

Interestingly, the UK is one of the countries that have considered scrapping plans for a digital currency. Bank of England officials have said it was more sensible for the UK to focus on other payment innovations rather than on a digital pound and that there was no need to launch a new form of money at this time.

The post Crypto Companies Implore the UK to Update Its Stablecoin Policies appeared first on PaymentsJournal.

Few financial products have dominated the spotlight in recent months quite like stablecoins. With high-profile launches and new regulations, they are poised to make a substantial impact.

However, as a recent report from Ripple—2025 New Value: Stablecoin Trends in Business and Beyond—details, today’s landscape is just the tip of the iceberg for stablecoins.

More than just a crypto offshoot, stablecoins—particularly those where the value is pegged to a fiat currency— can address long-standing financial challenges like cross-border payment inefficiencies, treasury management complexities, and the limitations of today’s global settlement systems. They’ve also proven to be the digital asset of choice for traditional institutions that want to engage in the crypto ecosystem.

Solving for Inefficiencies

Most of the global finance leaders surveyed for Ripple’s report believe that stablecoins will have a massive or significant impact on business and finance, especially in the Middle East and Africa (MEA).

Stablecoins have been an important innovation for MEA because much of the region has faced longstanding issues such as heightened inflation, currency devaluations, and limited access to foreign exchange. Stablecoins can help mitigate or even eliminate these challenges.

In Latin America, cross-border payment inefficiencies have been a particular struggle. According to Mastercard, the average cost of sending remittances in Latin America was 6.3%, well above the 3% target established by the United Nations. With stablecoins, transactions are often nearly free.

Another issue with cross-border payments is the regulatory nuances specific to each country. Although crypto and digital assets have faced their share of regulatory uncertainty, these obstacles are gradually diminishing.

In the Persian Gulf, the UAE and Bahrain have established strong regulatory frameworks that enable stablecoins to play a significant role in both institutional and retail transactions. The European Union also recently passed its Markets in Crypto Assets (MiCA) regulations, which provide a comprehensive framework for stablecoin usage in the region.

One of the most historic milestones for stablecoins—and for the broader digital assets community—was the passage of the GENIUS Act in the United States. This legislation created a clear pathway for many organizations, including highly regulated financial institutions, to offer a stablecoin for the first time.

Stablecoins in the Enterprise Environment

The better-regulated stablecoin market has become highly attractive to many organizations. According to Ripple, many financial leaders indicated they were open to using stablecoins within the next three years, and roughly a third said they already use them in their day-to-day operations.

The top three use cases cited were cross-border payments, trading and trade settlement, and serving as an alternative to traditional banking systems.

Another significant advantage of stablecoins is their potential to dramatically improve financial access in underbanked regions, as they enable bank-less transactions. This means organizations in these regions—and beyond—can use stablecoins for payroll, savings, and payments, all with minimal transaction costs.

Businesses interested in the trading and trade settlement use case can also benefit from stablecoins’ unique attributes: 24/7 accessibility, enhanced liquidity, and reduced counterparty risk.

The Bridge to Digital Assets

Due to the powerful advantages of stablecoins, even participants from more traditional financial institutions are beginning to explore stablecoin strategies. Ripple’s research shows that approximately 86% of respondents are open to using stablecoins, while fewer than 10% have no plans for stablecoin adoption.

As more financial institutions move from strategizing to full-scale implementation, they are likely to explore additional digital asset initiatives.

Although central bank digital currencies (CBDCs) have fallen out of favor in the U.S.—largely due to the surge in stablecoin adoption—there is still potential for more CBDCs to emerge globally.

A CBDC is the official, government-issued digital version of a nation’s fiat currency, such as China’s e-CNY digital yuan or the Bahamas’ Sand Dollar. While privacy concerns have fueled some pushback, many regions are still pressing ahead with CBDC projects. In some cases, these efforts aim to counter the growing influence of stablecoins, which are largely backed by the U.S. dollar.

Stablecoin adoption could also drive a surge in tokenized deposits. These are digital representations of customer deposits held in bank accounts. The tokens are backed by funds held by the issuing institution and are typically designed for real-time transactions between financial institutions.

Citi recently highlighted the bright future of tokenized deposits, even as it announced it was considering launching a stablecoin.

Although stablecoins and tokenized deposits share many similarities—such as real-time settlement and low transaction fees—tokenized deposits are built to operate within a regulated banking environment. This is one reason tokenization initiatives have been undertaken by organizations like the Bank of England and the Bank for International Settlements (BIS).

In addition to CBDCs and tokenized deposits, organizations that adopt stablecoins are more likely to delve into the tokenization of real-world assets, crypto, and other blockchain-based technologies. However, stablecoins will likely remain the first step—a step financial institutions should already be preparing to take.

“FIs need to think beyond payments and about how embedded programmability features into financial workflows can enhance or streamline their operations,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research.

“Ripple frames stablecoins as being core to the future financial architecture,” he said. “Stablecoins are a fast, compliant, and programmable asset ready for institutional adoption. For FIs, this means rethinking settlement, custody, and financial product design to harness these rails before competitors do.”

From Hype to Utility

The infrastructure underpinning the digital assets industry, combined with improving regulatory clarity, is creating a zeitgeist for stablecoins. Institutions that adopt stablecoins today will be best positioned for the future.

That said, risks remain—particularly for financial institutions. They need solutions that not only ensure compliance but also protect their business from fraud. If an institution is considering issuing their own stablecoin, they’ll also need a bank-grade digital asset custody solution for secure storage and management.

This makes it imperative that these institutions partner with a stablecoin and digital assets provider that have a proven track record of working closely with industry regulators and global policymakers.

“Ripple’s RLUSD stablecoin demonstrates how compliant assets on blockchain rails can be integrated into enterprise workflows,” Hugentobler said. “These rails unlock new opportunities and models for FIs and service providers.”

“FIs and banks should take note—stablecoins aren’t just for cross border payments,” he said. “They’re for treasury and cash management, liquidity management, FX operations, and 24/7 settlement. If a financial institution or bank isn’t exploring stablecoin integration at this point, they’re behind the curve. There has been a significant shift from hype to utility.”

The post Stablecoins Are Driving a Financial Services Revolution appeared first on PaymentsJournal.

Wyoming has officially launched its Frontier Stable Token (FRNT), becoming the first public entity in the U.S. to issue a blockchain-based stablecoin. The state says the token will enable instant transaction settlement and lower fees, though it remains to be seen which use cases will take hold.

During a trial period, Wyoming used the token to automate vendor agreement approvals and enable real-time payments—a process that would normally take 45 days. One of the state’s primary hopes for is that the stablecoin will attract investors to build new businesses in Wyoming. 

Wyoming Governor Mark Gordon, who was previously the state’s treasurer, has suggested that the token could support companies developing new data centers to power generative artificial intelligence platforms. He also pointed to potential use in settlements when out-of-state providers buy energy from Wyoming’s coal or natural gas producers.

Cross-border payments—a leading driver of stablecoin adoption worldwide—are expected to be the largest use case for FRNT, at least at the outset.

“Wyoming is such a large producer of energy in the states, its biggest use case will be for settlement on the energy based transactions and on the B2B front,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research.

Retail Options

FRNT will not be sold directly to the public but will be available for purchase through a network of authorized resellers. Nevertheless, Wyoming hopes that consumers will be able to use the tokens to pay for everyday purchases. According to data from NOWPayments, more than 45% of all transactions using crypto are now processed with stablecoins. 

Hugentobler is more skeptical about consumer use cases developing. “It’s likely to be used by crypto-native users who support it and Wyoming or Wyoming-adjacent businesses,” he said. “But unless major payment providers like Visa or Mastercard adopt it, it may take time to gain serious traction on the retail side.”

A State Lab for Crypto

Wyoming has emerged as a leading state in crypto adoption, having passed roughly 30 laws to encourage innovation in digital assets. FRNT is fully backed by U.S. dollars and short-duration treasuries, held in trust for the benefit of token holders.

By law, the state is required to hold 102% of the token’s reserves in cash and short-duration treasuries to ensure liquidity. The state also plans to invest the stablecoins’ remaining reserves in instruments such as treasury bonds, with the returns being used to fund Wyoming’s public schools.

The post Wyoming’s Stablecoin Opens for Business, Seeking Users appeared first on PaymentsJournal.

Amid a post-pandemic tourism slowdown, Thailand is launching an 18-month program to test whether crypto payments can help draw more foreign visitors.

Before COVID-19, Thailand welcomed about 39.9 million foreign international arrivals, generating roughly $58.86 billion in revenue. However, Southeast Asia’s second-largest economy has struggled to attract visitors in the subsequent years. Thailand’s state-planning agency recently lowered its 2025 forecast by 10%, to 33 million visitors.

To boost momentum, Thailand is preparing to launch a “TouristDigiPay” program, which will allow foreign tourists to convert cryptocurrencies into Thai baht when making purchases in the country.

The project is a joint effort between Thailand’s Finance Ministry, Anti-Money Laundering Office (AMLO), and Securities and Exchange Commission (SEC), which recently completed a study on how financial innovation and digital assets could foster both economic and tourism growth.

A Welcome Addition

Although crypto conversion will likely be a welcome addition for many tourists, using the system will require some prior planning.

Those who want to utilize TouristDigiPay must open an account with both a crypto firm and an e-money provider, each regulated by the appropriate agencies. These firms must also undergo Know Your Customer and customer due diligence checks as set forth by the AMLO.

To provide additional safeguards, TouristDigiPay will operate in a sandbox environment with monthly spending limits and no direct cash withdrawals. These guardrails are designed to prevent digital assets from being used to directly pay for goods or services. The SEC noted that merchants will receive all payments in baht.

Only foreign tourists who are staying in Thailand temporarily can use the service. Once approved, they will be able to exchange their digital assets for baht and make electronic payments, including those that use QR code scanning.

Relieving Travel Stressors

Being able to complete accurate and secure payments is one of the common stressors for travelers abroad. Offering these visitors a way to pay in the local currency can make an impact. China’s Alipay reported a tenfold increase in foreign tourists after the popular digital wallet announced integration with other wallets in the region.

Digital assets have long been a contender a potential solution to improve cross-border payments because they are decentralized and secure. However, the volatility associated with crypto has hindered it from becoming a more widespread option. Programs like TouristDigiPay address this issue by converting crypto to baht immediately, but it remains to be seen whether they will have enough impact to help turn around Thailand’s tourisms struggles.

The post Thailand Pilots Crypto-to-Baht Conversion to Drive Tourism appeared first on PaymentsJournal.

The passage of the GENIUS Act in the U.S. has brought stablecoin interest to a fever pitch in recent months. However, even as more of the world’s leading organizations consider launching stablecoin, the use cases for these fiat-backed assets are still being unlocked.

In a recent PaymentsJournal podcast, Nabil Manji, SVP, Head of Fintech Growth and Financial Partnerships at Worldpay, and James Wester, Director of Cryptocurrency and Co-Head of Payments at Javelin Strategy & Research, highlighted payouts as one of the most intriguing applications for stablecoins—a model that could offer dramatic benefits for merchants.

At the Heart of Dovetailing Trends

In addition to regulatory clarity in the U.S., there has been global momentum toward more transparent digital asset regulations. For example, the European Union recently passed its Markets in Crypto-Assets (MiCA) legislation.

This improved regulated environment has made the space more attractive for both traditional financial institutions and corporates to explore digital assets. These organizations are considering stablecoins for several reasons, including payments, corporate treasury management, and yield generation.

The combination of regulatory clarity and institutional interest has dovetailed with broader payments trends to bring stablecoins into the spotlight.

“What I think makes the timing almost a perfect storm in a positive way is in many markets around the world, we’ve had domestic real-time payments,” Manji said. “The big outlier has been the U.S., where up until recently with RTP and FedNow, there hasn’t been relatively ubiquitous real-time payments.”

“Very quickly, the world’s largest economy and the participants in it, are going to grow accustomed to having real-time payments for domestic use cases through those payment rails,” he said.

In addition to the surge in real-time payments, cross-border e-commerce has continued to grow significantly, driven by factors like marketplace shopping, the gig economy, and social media commerce.

Consumers increasingly expect these trends—real-time payments and cross-border transactions—to converge, and they don’t understand why an adequate solution isn’t yet available.

Stablecoins are among the leading contenders to fill this gap because transactions are instant, efficient, and borderless. While their surface-level utility as a digital representation of the U.S. dollar is a game-changer, it’s only the beginning of what the technology can do.

“It’s becoming clearer, even to savvy payment folks, that it is different from what we have had in the past,” Wester said. “That was one of the misconceptions for a while, it was ‘Don’t we already do something like that?’ Well, not really. Once you begin to understand what stablecoins can do in terms of being a programmable digital bearer instrument, that idea becomes very powerful, and people begin to explore what they can do with it.”

The Two Lenses

While payment acceptance has traditionally taken precedence, payouts are at the heart of many merchants’ business models. These companies are searching for ways to make real-time, inexpensive payouts to beneficiaries, which could include employees, vendors, customers or other third parties.

These payouts are often high-frequency and low-value—such as those a marketplace might make to its sellers or a gig company to its workers. They could also include an airline reimbursing a passenger for disrupted travel plans, or an online gaming company paying out winnings to a user.

Often, these merchants need to make payout in a relatively high number of currencies and geographies. Additionally, many of the best candidates for stablecoin payouts serve unique customer bases.

“You layer on top of that the type of customers of theirs that would want to receive a stablecoin instead of fiat currency,” Manji said. “Then you layer on top the recipients that are in places like countries that have volatile currencies, or countries that the population is underbanked or unbanked.”

“Also, populations where they’ve got a relatively young age skew and people that want something like a stablecoin, because they’re comfortable with investing and generating yield on a stablecoin or operating something like a crypto wallet,” he said. “Those are the two lenses where this makes sense to offer to customers.”

Cutting Through the Complexity

Though stablecoin payouts may seem like a no-brainer given the regulatory environment and consumer familiarity, many merchants are still concerned about the implications of adopting cryptocurrency for payouts.

“One of the problems with payments people is we’re fascinated with payments, thinking everybody else is fascinated with payments too, and they’re not,” Wester said. “They just want to make sure that their money moves. We started talking about blockchain, digital assets, cryptos, stablecoins and how cool it is from a technology standpoint. All they did was look at it and say, ‘Wait, how are payments done? This sounds complex.’”

However, advancements in technology have made global payouts using stablecoins virtually indistinguishable from payouts in fiat currencies.

For example, on Worldpay’s platform, a merchant can fund their account in various fiat currencies. They can then initiate a payout request via an API call or by uploading a batch file containing hundreds or thousands of payments requests. Alternatively, they can log into the online portal to submit a one-off manual payment.

Regardless of the method, the payment instruction determines which currency should be deducted from the merchant’s account and which currency should be paid out to the recipient.

“For example, they may say, ‘Use some of my USD balance that I funded you to payout one of my marketplace sellers in Turkish lira,” Manji said. “We have connections in our platform to payout in over 130 currencies in over 180 markets, of which approximately 80 are on real-time payment rails. We can, in most cases, execute a relatively instantaneous payout to a beneficiary in countries covering most of the world’s GDP.”

The addition of stablecoin payouts to the platform means that Circle’s USDC has essentially become the 131st payout currency—making the adoption of stablecoin payouts as simple as the click of a button.

“There’s no new integration; there’s no new platform; there’s no new logic,” Manji said. “All we’ve done is in the field in the API where you put the destination currency, instead of putting something like Turkish lira or Argentinian peso, you just put USDC. Instead of sending us an international bank account number or a routing number and account number, you send us a wallet address and we take care of it from there.”

“So, the merchant doesn’t need any crypto wallet,” he said. “They don’t need to hold USDC. They don’t need to touch USDC. They don’t need to know what chain the customer’s wallet is on. They don’t need to screen the wallet. We take care of all of that for them.”

Across the Spectrum

This functionality can be a game-changer for merchants, but it is just the beginning of the road for stablecoins. Once organizations become accustomed to stablecoin payouts, they will begin to recognize other benefits, such as the ability to automatically execute transactions.

“The people who seem to light up the most when you talk about programmability are corporate treasurers,” Wester said. “They’re like, ‘I can do a lot of stuff that right now is either a manual process or an inefficient process.’ I think that is going to be an area where we’re going to see a lot of development.”

The recent surge of stablecoin-related news has led some to wonder when the hype might fade. However, the efficiencies and capabilities of stablecoins are likely to keep them at the forefront of the financial services industry for many years to come.

“There is this increasing interest from traditional financial institutions, from the payment ecosystem, from our clients, and from consumers to start using stablecoins in a meaningful way,” Manji said. “I think there’s this real interest now—across the spectrum—that’s giving us a lot of excitement in terms of how we’re thinking about the space and how we want to invest.”

The post Amid Surging Stablecoin Use Cases, Payouts Stand Out appeared first on PaymentsJournal.

After generating some controversy with its initial announcement, Google has clarified its rules regarding crypto wallets in its app store.

Google Play will require crypto wallet companies in many regions, including the United States and the European Union, to be licensed with their domestic regulators and comply with industry standards.

U.S. wallet providers would need to be recognized by the Financial Crimes Enforcement Network (FinCEN) as a money services business and authorized by with their state as a money transmitter, unless the company is a federally- or state-chartered bank.

UK providers must gain approval from the Financial Conduct Authority (FCA), while EU crypto wallet companies will have to register as a crypto-asset service provider (CASP) under the region’s recently passed Markets in Crypto-Assets (MiCA) framework.

Concerns Over Wallet Rules

There was pushback against this policy from the crypto community because Google initially didn’t clarify whether the rules would apply to both custodial and non-custodial wallets. This prompted some non-custodial wallet providers to question the rules, noting that self-custodial wallets currently don’t require a license under U.S. law.

After these concerns were raised, Google updated its policy to state that non-custodial wallets don’t fall under the purview of the rules, which are set to take effect in October.

The Compliance Tradeoff

There have been a slew of regulatory efforts around digital assets globally, including the MiCA enactment and the passage of the GENIUS Act in the U.S. These efforts have generally been lauded by the crypto community after years of regulatory uncertainty, which many feel has kept digital assets from becoming a mainstream financial product.

While regulatory clarity will likely bring crypto to a larger audience, it will also increase the compliance burden on crypto companies.

For example, there are substantial reporting requirements for firms before they can be registered as a money services business with FinCEN. Crypto wallet companies will have to develop an anti-money laundering plan, create Suspicious Activity Reports (SARs), and perform Know Your Customer (KYC) checks, among other functions.

This means that many crypto firms, which have been built on a decentralized infrastructure, will have to weigh whether inclusion in Google Play is worth the compliance tradeoff.

The post Google Requires Licensing for Crypto Wallet Providers appeared first on PaymentsJournal.

Bullish has completed its initial public offering, with the company valued at more than $5 billion. The strong debut signaled that digital assets have firmly established a place on Wall Street.

Bullish operates a crypto exchange focused on institutional investors, as well as the trade publication CoinDesk. The IPO was led by Wall Street heavyweights JPMorgan and Citigroup. Asset manager BlackRock and Cathie Wood’s investment fund Ark Invest each expressed interest in purchasing up to $200 million worth of shares in the offering.

A Solution for Crypto Custody

Bullish holds roughly $2 billion in cryptocurrency assets, primarily in bitcoin, with smaller holdings in ether and some stablecoins.

The company has also established itself as a leading custodian for crypto assets. In large part because of regulatory hurdles, custody has been a sticking point for the industry, and most of the asset managers that launched bitcoin ETFs did so with outside custodians. Bullish will now be providing a Wall Street-approved holding mechanism for banks and asset managers that do not want to develop their own custodial infrastructure.

Expanding Crypto Investing

The appetite for an institutional crypto exchange has surged since the SEC approved bitcoin ETFs in January 2024, with nine funds from major players like BlackRock and Fidelity quickly gaining traction. That momentum continued in June, when five ETFs tied to ether—the world’s second-largest cryptocurrency—launched.

The Trump administration has also taken a crypto-friendly stance, lifting regulations that prevented banks from holding digital assets. Most recently, it has floated the idea of letting future retirees allocate a portion of their 401(k) savings to crypto.

These developments have fueled record inflows into both bitcoin and ether ETFs. Ether funds alone saw over $1 billion invested in a single day this week—smashing the previous single-day record of $726.6 million set in July.

Meanwhile, public companies are adding to the wave by increasing their crypto holdings. According to data from Bitbo Treasuries, ETFs and public and private companies together now control more than 13.5% of the total bitcoin supply.

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As stablecoins play an increasingly prominent role in cross-border payments, Remitly is preparing to offer users digital wallets capable of sending and receiving funds in stablecoins.

These disbursements will be handled through Remitly’s partnership with Bridge, the stablecoin infrastructure provider for Stripe. The first step will be the launch of Remitly Wallet, a multi-currency digital wallet that supports both fiat money and stablecoins. Currently in beta, the wallet is expected to go live in September.

Remitly is also incorporating stablecoins like USDC—issued by crypto firm Circle—into its internal treasury operations. By tokenizing portions of its U.S. dollar reserves, Remitly aims to enable faster fund transfers across time zones and outside of banking hours, reducing reliance on pre-funded local currency pools.

Taking the Lead

Remitly, which specializes in serving immigrants and overseas workers, says the move will enhance speed, reliability, and cost-efficiency for users in over 170 countries.

“Traditional remittance methods are costly and can take days or even weeks for the end consumer to receive a payment,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Then they may have to convert the fiat currency to their local currency —if they have access to a bank or similar institution—which adds more time and fees.

“Stablecoins streamline these processes for consumers to send and receive funds near instantly, with significantly reduced fees,” he said. “The Remitly wallet will enable the conversion from stablecoins to a local currency with a click of the button at a much more affordable rate. To stay competitive, financial institutions need to adopt a stablecoin strategy today or risk losing significant market share.”

A Time for Growth

The release of the product is well-timed, as the Trump administration’s tariff policies have led to significant currency fluctuations worldwide. Stablecoins help resist currency volatility by being pegged to fiat currencies such as the dollar, giving them more traction in emerging markets, where they can support price stability in mining operations.

Earlier this year, The Bank for International Settlements (BIS) released a study showing that cryptocurrencies facilitated roughly $600 billion in cross-border payments in Q2 2024. BIS also noted that Circle’s USDC and Tether’s USDT stablecoins have gained traction in everyday cross-border transactions.

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In the latest convergence of digital assets and mainstream financial services, PayPal is launching a platform that enables merchants to accept payments in over 100 cryptocurrencies.

The service, Pay with Crypto, allows consumers to connect their existing crypto wallets from major platforms like Coinbase Wallet, MetaMask, Kraken, and OKX—unlocking access to a market of 650 million crypto users. At launch, the platform will be available to all U.S. users except those in New York.

One of the key drivers behind PayPal’s launch is the need to address inefficiencies in cross-border payments, which are often plagued with payment delays and high fees. PayPal noted that the platform will charge merchants a 0.99% transaction fee on crypto payments—a rate it claims is 90% lower than the average credit card processing fee.

Inclusive, Borderless Commerce

The crypto launch follows last week’s unveiling of another cross-border-focused solution from PayPal: PayPal World. With this platform, PayPal and Venmo wallets can connect to leading global wallets, including India’s Unified Payment Interface (UPI), China’s WeChat Pay, and potentially Latin America’s Mercado Pago.

This means PayPal and Venmo users can send payments to users of these other systems—even if the recipient doesn’t have a PayPal account—and vice versa. While PayPal World and Pay with Crypto are currently two disparate systems, Alex Chriss, President and CEO of PayPal, noted how both launches are indicative of the “the future of inclusive, borderless commerce.”

Yields for Merchants

Digital assets have long been considered one of the driving forces behind the emerging payments paradigm. A key component of this shift is PayPal’s stablecoin, PYUSD, as all transactions on the platform are automatically converted into PYUSD or fiat currency at checkout.

Though PYUSD was launched roughly two years ago, it has yet to gain substantial ground in a market where Tether holds a commanding lead. However, PYUSD’s market cap has increased roughly 80% since the beginning of the year.

This momentum is expected to continue due to PYUSD’s central role in PayPal’s crypto platform. However, it also coincides with a wave of new stablecoins entering the market, including one from payments competitor Stripe.

The immediate conversion to PYUSD also benefits merchants by allowing them to accept crypto payments without exposure to volatility—and potentially earn a yield.

In a statement, Chriss also noted that “the business can accept crypto for payments, increase their profit margins, pay lower transaction fees, get near instant access to proceeds, and grow funds stored as PYUSD at 4% when held on PayPal.”

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Just two years ago, Reuters reported that more than 130 countries were exploring central bank digital currencies (CBDCs), and that nearly all of the G20 countries were in the advanced phases of their programs. However, only three countries—Nigeria, Jamaica, and the Bahamas—have launched CBDCs to date, and programs in many other countries have come to a standstill.

As Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, found in CBDCs Are Dead—for Now. What Comes Next?, several factors are behind the rapid shift away from government-issued, fiat-backed tokens. More important, shelving CBDC programs could have long-ranging effects on the digital assets industry.

From the Backburner to a Ban

One of the driving factors behind the initial CBDC push was the declining usage of the original central bank currency: cash. Because of the dominance of the card networks and the emergence of crypto and digital assets, many leaders believed their countries should consider alternatives.

These initiatives were accelerated by the pandemic—when digital payments gained rapid prominence—and the global instability caused by Russia’s invasion of Ukraine.

Even though former President Joe Biden requested an assessment on the feasibility of CBDCs, the United States had no firm plans to issue a retail digital dollar. Instead, a U.S. CBDC for bank-to-bank payments was being considered.

After a change in the administration, CBDCs have moved from the backburner to an outright ban. A bill barring the U.S. Federal Reserve from issuing a CBDC without explicit congressional approval has passed the House of Representatives and awaits action in the Senate.

“For now, the next three and a half years or so, nothing significant is going to come out of the U.S., and I think that this wasn’t a surprise,” Hugentobler said. “Trump was talking about it when he was doing his campaign, and I think his idea is to favor the private sector where all this stuff can flourish and where he thinks the real innovation takes place.”

A Risky Proposition

While the U.S. ban is notable, the United States was never at the forefront of CBDC innovation. Perhaps more revealing about the state of CBDCs is that many other countries are shelving their programs, too.

For example, the UK has long been an innovator in financial services, particularly in the open-banking model. However, the Bank of England is reportedly scrapping its plans for a digital pound.

Britain’s central bank cited concerns that a CBDC may not bring substantial benefits to the UK or its financial system. Instead, the regulator said it made more sense for the country’s banks to focus on payment innovations rather than on a CBDC and that there was no need to introduce a new form of money.

South Korea also recently suspended its CBDC trials after the initial phase, citing concerns that the cost of the trials outweighed the potential upsides.

Privacy is an overarching concern in these implementations. A CBDC could give government officials substantial insights into transactions and, therefore, personal data. One of the primary ways regulators would use this data is to identify money laundering or fraudulent activity.

However, many have argued that the potential for abuse makes CBDCs risky.

“That’s been one of the biggest concerns since their inception,” Hugentobler said. “Some argue that it would break the Fourth Amendment—that’s Trump’s point of view and that of his team, I think. They agree that the innovation is there, a CBDC would provide benefits, but the urge is too strong for policymakers to resist—to not overstep and take advantage of the technology.”

The Anointed Coin

As CBDC initiatives have faded, stablecoins have taken over the limelight. Although USD-backed stablecoins and CBDCs track the value of the dollar one to one, stablecoins are issued by crypto firms like Tether, Circle, and Paxos.

As CBDCs have languished in trial runs, the leading stablecoins have been circulating in what is now a $272 billion market. This dominance has left little room for CBDCs.

“We did a long report on CBDCs when things were gearing up, and the whole time I was writing it, I was thinking, ‘Everything that these can do, a stablecoin can do,’” Hugentobler said. “The difference there is that a dollar coming from the U.S. government is backed by the good faith of the government, whereas with a stablecoin issuer, as long as they have a strong balance sheet and the reserves are there, there’s no issue.”

Reserves are a concern, but the leading stablecoin issuers have been transparent in their quarterly reports about the status of the reserves that back their tokens. There is also a newly minted law passed to govern stablecoins, with U.S. lawmakers having passed the GENIUS Act just days before the anti-CBDC law passed the House.

Even though stablecoins have seemingly been anointed by lawmakers, industry players, and consumers, these tokens carry privacy concerns as well. Much like CBDCs, stablecoins allow their issuers to gain insights into transactions.

For example, Tether reported that it has frozen roughly $2.5 billion at the behest of global authorities after the funds were connected to illicit activities. While striking back against bad actors should be applauded, the crypto company’s ability to pinpoint the misused funds raised questions about its visibility into other transactional aspects.

The GENIUS Act has also received pushback. Some lawmakers have been concerned that a regulated stablecoin is no different from a CBDC in this framework and that it would give the U.S. government the power to surveil its citizens.

Not Counting It Out

These concerns will likely be amplified as the multitude of new stablecoins—including offerings from retailers, tech giants, and traditional financial institutions—flood the market. However, the substantial benefits of stablecoins, such as real-time, transparent payment settlement, mean that most concerns are likely to fade.

The onslaught of stablecoins may seem like the death knell for CBDCs, but this may not be true. Although there have been assumptions that a single payment type—whether it be stablecoins, real-time payments, or card transactions—will eventually win, the greater likelihood is that all of these payment types will coexist and find different use cases.

After all, despite all the hoopla about the demise of paper currency, recent legislation has been proposed to ensure that U.S. consumers can always use cash.

“I’m not counting CBDCs out,” Hugentobler said. “If we get a different administration in who wants to bring it back, or if there is a big liquidity event like we saw in COVID, I think they would use that as fuel to push a CBDC for quicker, faster payments directly to the people. I’m definitely not counting it out—but I’m also not counting on it.”

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After law enforcement agencies identified illegal activity, stablecoin issuer Tether froze $85,877 worth of its flagship USDT coin.

The freeze followed a user’s report that their Binance account has been hacked and their USDT was drained. However, this freeze is relatively small compared to the firm’s recent larger-scale actions.

In June, Tether froze $700 million in USDT across 112 wallets after U.S. authorities requested an intervention. To date, Tether says it has frozen over $2.5 billion in USDT after working with global authorities to identify illicit activity.

These freezes address one of the most long-standing concerns with digital assets: their potential for misuse in money laundering and fraud.

“Tether’s ability to track transactions and freeze USDT linked to illicit activity sets it apart from traditional fiat and decentralized assets,” Paolo Ardoino, CEO of Tether, noted in a blog post. “We take our responsibility to combat financial crime seriously and will continue working closely with global law enforcement agencies.”

The Foundational Tenets

The ability to identify and freeze funds at the smart contract level sets stablecoins apart from cryptocurrencies like Bitcoin and Ethereum. One of the foundational tenets of these digital assets is that they are decentralized and free from government oversight.

Privacy concerns have been one of the main reasons why stablecoins are often favored over government-issued central bank digital currencies (CBDCs). For example, critics of the digital euro said that the CBDC could be used to surveil the region’s citizens, an assertion denied by the European Central Bank.

Control and Visibility

Interest in CBDCs has continued to wane in most countries. In the U.S., legislation that would ban the Federal Reserve from issuing a CBDC has moved forward—even as the nation’s first stablecoin regulations have been signed into law.

However, stablecoin issuers’ ability to monitor and control their coins raises concerns about privacy. These concerns are amplified as a wave of new stablecoins are expected to enter the market. Retailers like Walmart and Amazon, tech giant Meta, and leading U.S. banks like JPMorgan Chase, Bank of America, and Citi have all announced plans to launch their own stablecoins.

As these products roll out, questions will persist about how these organizations will enforce the usage of their stablecoins—and how they will protect users’ data.

The post Tether Freeze Raises Stablecoin Centralization Concerns appeared first on PaymentsJournal.

Wyoming—often at the forefront of crypto innovation—has piloted its Wyoming Stablecoin (WYST) with help from blockchain firm Hashfire.

Hashfire’s platform was built to bring agreements and contracts on-chain. The goal of the WYST trial was to automate vendor agreement approvals and enable real-time payments—a process that would normally take 45 days.

According to Coindesk, Wyoming officials have indicated they could launch the stablecoin as soon as this month and plan to move forward with broader use cases for WYST later this quarter.

Not Jumping on the Bandwagon

There have been a slew of stablecoins announced in recent months, largely due to the imminent passage of the GENIUS Act, a landmark U.S. bill designed to establish a regulatory framework for stablecoins.

However, Wyoming is not merely jumping on the bandwagon. The state announced its plans to launch a stablecoin nearly a year ago.

“Wyoming has been the leading state in crypto acceptance, and it is attempting to maintain that lead,” Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, told PaymentsJournal. “Their stance on crypto is akin to that of Switzerland—they fully support it and they have passed roughly 30 laws to help push innovation while still protecting consumers.”

Making Crypto Advances

While Wyoming has been an early mover in the digital assets space, several other states and cities have made advances of their own. For example, New York State recently proposed a law that would allow residents to use bitcoin, ether, and other cryptocurrencies to pay fines, taxes, and penalties.

Both Colorado and Utah have accepted cryptocurrencies for tax payments for years, and Louisiana recently became the first state to accept crypto payments for all state services. Additionally, Detroit will accept crypto for tax and fee payments—making it the largest U.S. city to do so.

Although these entities haven’t yet matched Wyoming’s progress, more government agencies are likely to explore digital assets. If the WYST trials are any indication, digital assets have the potential to transform often-onerous government payment process into a streamlined, real-time operation.

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As U.S. lawmakers inch closer to passing stablecoin legislation, Citigroup is reportedly exploring the possibility of issuing its own stablecoin.

In a post-earnings call, Jane Fraser, CEO of Citigroup, said the institution is also evaluating key aspects of digital assets, including stablecoin reserve management, fiat and digital currency on- and off-ramps, and crypto custodial services.

This growing interest in digital asset technologies reflects a larger trend in the U.S. financial services industry. JPMorgan Chase and Bank of America have both signaled plans to deepen their involvement with stablecoins, with JPMorgan pursuing several initiatives through its Kinexys digital assets division.

Stablecoins have dominated the limelight in recent months, with industry leaders like Walmart, Amazon, and Meta openly considering launching their own stablecoins. However, fiat-backed tokens are more than just a passing fad—they have the potential to revolutionize finance, particularly in areas like cross-border payments.

Lost in the Hoopla

Amid the stablecoin hype, the broader integration of digital asset technologies into mainstream finance often gets overlooked. Blockchain—the underlying technology behind digital assets, including stablecoins—has applications that go well beyond cryptocurrency.

With its secure, transparent framework, blockchain offers an ideal foundation for artificial intelligence. AI has struggled with inefficiencies, often due to reliance on incomplete data repositories and a lack of transparency around its decision-making. Blockchain can mitigate both issues: its records are immutable, and its processes are fully transparent.

A Trend That Will Continue

Blockchain can also serve as the foundation for tokenizing real-world assets. For example, a property deed could be digitized and placed on-chain, making often complex property transactions secure, transparent, and near-instant.

For these reasons, many investment firms, such as Citadel and BlackRock, have explored the tokenization of stocks and bonds.

However, according to Citi’s Fraser, one of the strongest areas of opportunity for Citi lies in tokenized deposits. Tokenized deposits can offer the same speedy settlement and low fees as stablecoins, but within a regulated banking environment. This is one of the reasons tokenization initiatives have been taken up by organizations like the Bank of England and the Bank for International Settlements (BIS).

“I think tokenized deposits will be a big focus for financial institutions because private lending has grown immensely, just in the last year,” Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research told PaymentsJournal. “More banks are putting assets like HELOCs and personal loans on chain, and it is much faster and more transparent for banks and consumers.”

“It’s a trend that’s going to continue—companies are going to continue to put funds and assets on-chain,” he said.

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Three major federal bank regulatory agencies issued a joint statement warning banks about the risks associated with taking custody of cryptocurrency assets. While the statement does not impose new regulations on crypto custody, it signals a significant shift—indicating that the federal government is now fully engaged on this issue, a notable departure from the previous administration’s stance.

The statement, issued by the Federal Deposit Insurance Corporation, the Federal Reserve, and the Office of the Comptroller of the Currency, reiterates that existing risk management principles apply to the safekeeping of crypto assets and reminds banks of their obligation to comply with applicable laws and regulations. It also clarifies that banks may provide safekeeping services for crypto assets, whether in a fiduciary or non-fiduciary capacity.

The statement highlights the legal and compliance risks related to crypto assets, especially concerning anti-money laundering and the Bank Secrecy Act. It calls on institutions to carefully assess operational, legal, and technological risks before launching crypto-related services. The regulators also emphasize the importance of employee training, stating that all personnel involved in crypto asset safekeeping must have adequate knowledge and understanding of the associated risks and requirements.

The Legacy of SAB 121

The statement marks the final rollback of a previous SEC rule, Staff Accounting Bulletin 121, that had limited financial institutions from holding crypto directly. That rule required banks maintaining custody of crypto to record those holdings on their own balance sheets.

The requirement originated from a staff bulletin intended as guidance on existing accounting standards, but many lawmakers viewed it as regulatory overreach. It led Senator Cynthia Lummis, (R-Wyo.), a crypto supporter, to describe SAB 121 as “a rule under the administrative procedure act, disguised as an accounting guidance.”

ETFs Raise the Issue

Despite the restriction, banks continued offering crypto custody services, and by mid-2024, U.S. banks collectively held nearly $16 billion in digital assets. The issue gained further prominence following the introduction of exchange-traded funds in early 2024. Since SAB 121 deterred banks from holding bitcoin, those assets were concentrated in a small number of institutions. Overturning the rule opens the door for more banks and other organizations to hold digital assets directly.

Last year, the Senate voted in a bipartisan effort to overturn the rule, though President Biden opposed the new regulation. SAB 121 was eventually rescinded just four days after President Trump took office. Shortly after, the SEC published SAB 122, stating that institutions should assess the risk of loss associated with crypto custody and record that amount as a contingent liability on their balance sheet.

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As more crypto firms make inroads into mainstream finance, Ripple is applying for a banking license with the U.S. Office of the Comptroller of the Currency (OCC).

Although the company is best known for its XRP cryptocurrency and ledger, Ripple launched a stablecoin, RLUSD, last year. If the banking license is approved, the firm would be subject to federal and state oversight, and the New York Department of Financial Services would regulate RLUSD.

Ripple’s application comes just days after Circle submitted its own request for a bank charter. If approved, Circle would establish a new entity—the First National Digital Currency Bank, N.A. With charters in place, Circle and Ripple could potentially offer tailored services to institutional clients in the future, including tokenization of real-world assets.

Ripple’s leadership also confirmed the company has applied for a Master Account with the Federal Reserve. If granted, this would allow Ripple to hold RLUSD reserves directly with the Fed, providing its stablecoin with an added layer of security.

Moving to Capitalize

Both Circle and Ripple are moving quickly to capitalize on the recent passage of the GENIUS act, which establishes a regulatory framework for U.S. stablecoins.

The legislation has driven a surge in stablecoin interest in recent months. Major retailers like Walmart and Amazon, along with tech giant Meta, are among the many players considering the launch of their own brand-specific stablecoins.

Financial services provider Fiserv has also unveiled plans to launch a compliance-geared stablecoin designed for use by its network of financial institutions.

Between Checking and Crypto

As more traditional players explore stablecoins, crypto companies are expanding into mainstream financial services. For example, crypto exchange Kraken announced it is launching a P2P payments app that could potentially compete with fintechs like PayPal and Venmo.

Meanwhile, new platforms are emerging to bridge the gap between checking and crypto accounts. Ripple unveiled plans to develop a cross-border payments solution in Europe through a partnership with OpenPayd, which provides the infrastructure to move certain regional fiat currencies into RLUSD—and vice versa.

Similarly, Circle plans to roll out Circle Payment Network, a cross-border system designed to facilitate bank transfers between USDC and fiat.

These launches underscore the continued push of crypto companies into the heart of traditional financial services—a trend likely to accelerate as regulatory clarity improves in the U.S.

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After three months of testing, South Korea’s central bank has postponed further development of its central bank digital currency (CBDC), as both the government and local banks increase their support for stablecoins.

The Bank of Korea has suspended the second round of CBDC trials, originally scheduled for later this year. Meanwhile, eight South Korean banks are collaborating on a stablecoin backed by the Korean won, which they hope to launch by next year.

This shift may signal a broader trend among central banks globally, moving away from CBDCs in favor of stablecoins. A senior official at one of the participating banks told South Korea’s Yonhap News Agency that the coexistence of CBDCs and stablecoins remains uncertain.

Unhappiness with the First Tests

There are signs that the CBDC tests soured the banks on its potential. One senior banking official said that seven participating banks became unhappy with the cost of the second phase of the CBDC trials. Half of the banks involved in the stablecoin project also took part in the CBDC trials.

The first stage of the CBDC tests involved 100,000 participants testing payments using the central bank-issued currency, which ran from April 1 through June 30. During this period, up to 100,000 citizens ages 19 or older, and holding an account at a participating bank, could convert their deposits into the CBDC for use at stores like 7-Eleven. The second phase would have expanded the number of merchants involved.

Even when the program was introduced, some worried that CBDCs could grant governments too much insight into their citizens’ transaction histories. They instead advocated for stablecoins as a better solution, combining the stability of fiat currencies with the efficiency of cryptocurrencies.

A New Governmental Direction

Dissatisfaction with the CBDC testing isn’t the only reason for the shift in priorities. The newly inaugurated South Korean President Lee Jae-myung is a strong supporter of crypto. During his campaign, he promised to support a won-based stablecoin market. His Democratic party has already submitted a bill that would allow qualifying companies, including nonbanks, to issue stablecoins.

“We don’t know whether the issuing entity of stablecoins will be banks, big tech, or fintechs,” a Korean bank official told Yonhap. “We have no choice but to prepare for both situations before they become legislative.”

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Kraken, one of the world’s largest crypto exchanges, is continuing its expansion into mainstream financial services with the launch of its peer-to-peer (P2P) payments app.

The platform, dubbed Krak, allows users to send cross-border P2P payments in both fiat and crypto. The Krak app features an attached spend account and an earnings account that offers yield generation on more than 20 digital assets.

The app puts Kraken in competition with well-established P2P players like Venmo and Cash App. In addition to their substantial customer bases, both Venmo and Cash App support crypto transactions to varying degrees.

However, Kraken’s roots in digital assets mean Krak will offer a much wider crypto scope. Users will be able to send and request payments using 300 different assets, including both crypto and local currencies.

A Tough One to Crack

Kraken’s P2P launch marks the next step in the exchange’s broader push into mainstream financial services. The company recently introduced a debit card for its UK and European customers, allowing them to spend crypto assets at millions of merchant checkouts.

While building a more comprehensive financial ecosystem is a logical step for Kraken, it’s still unclear whether the exchange’s customers have a strong appetite for crypto-based payments—whether through a debit card or P2P app.

“It’s been a tough one to crack,” Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, told PaymentsJournal. “A debit card, just like with other remittances, makes more sense when you use something that’s less volatile, like a stablecoin.”

“Accounts debited are great when you have crypto that has increased in value, but once the value of those tokens decreases, they don’t want to use the debit card,” he said. “Time will tell if they’ve cracked it, but I think they need to leverage something less volatile.”

Intent on Addition

Regardless of the traction these efforts gain, more crypto firms appear intent on adding conventional financial services. Stablecoin issuer Circle recently announced it is launching a cross-border payments network designed to connect financial institutions around the world.

International transactions were also the focus of Sling Money’s new P2P payment rail, built to serve as a bridge between local payment systems like ACH and stablecoins.  

Similarly, Kraken has several products in mind for Krak. According to Reuters, Kraken plans to add physical and virtual cards, as well as loan products, to the platform soon.

The post Kraken Moves Beyond Crypto with P2P App appeared first on PaymentsJournal.

More banks will soon have an avenue to capitalize on crypto, as Fiserv rolls out a digital assets platform and stablecoin that will be available to its customers.

The stablecoin, FIUSD, along with the platform, will be accessible to banks and credit unions by the end of the year. This move is expected to dramatically increase the number of financial institutions that can offer crypto services.

FIUSD will be built on infrastructure provided by stablecoin leaders Paxos and Circle, and will initially be issued on the Solana blockchain. Solana has become the blockchain of choice for financial institutions due to its speed and lower transaction costs compared to Ethereum.

Laster this year, Solana is slated to receive a major upgrade that will not only outpace competing blockchains, but also surpass the speed of the well-established payment rails built by Visa and Mastercard.

Combining Global Reach

With this foray into digital assets, Fiserv hopes to build interoperability with other stablecoins. The company has already unveiled its partnership with PayPal to integrate FIUSD with PYUSD, PayPal’s stablecoin.

PYUSD has been around for two years, and one of its main features is that it’s issued by a payments company—not a crypto company—with a global customer base. Fiserv noted that combining the global reach of Fiserv and PayPal would accelerate the adoption of both companies’ stablecoins.

Actively Expanding Use Cases

While banks and credit unions have increasingly viewed digital assets as a powerful opportunity, compliance concerns have kept many financial institutions on the outside looking in.

A key feature of FIUSD is that it’s built with a compliance-first approach. Fiserv said FIUSD gives financial institutions full control and enables compliance through the company’s existing fraud monitoring, risk management, and settlement systems.

The company also hopes to bring more digital asset offerings to its platform in the future. Tokenization is another technology that financial institutions have incorporated over the past few years—for many of the same reasons stablecoins have gained traction.

Tokenization of real-world assets simplifies transactions that are time-consuming, risky, and expensive for banks. Fiserv is exploring the use of deposit tokens to maintain the benefits of stablecoins in the institutional environment and is in discussions about partnerships to expand use cases.

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The headwinds that once held back financial institutions from adopting crypto—whether due to regulatory concerns or a lack of understanding of digital assets—are finally easing. In the coming years, a fifth of all U.S. money center banks and public companies are expected to allocate at least 2% of their treasury holdings to crypto. Digital assets such as Bitcoin, Ethereum, XRP, along with dollar-backed stablecoins, are poised to play a bigger role in the global financial system.

Stablecoin usage for cross-border payments is growing rapidly, and crypto ETFs are seeing significant adoption. Combined with positive regulatory developments and mounting pressure from institutional investors, the digital assets industry is entering a new era of adoption. In a PaymentsJournal webinar, Joanie Xie, Managing Director for North America at Ripple and James Wester, Director of Cryptocurrency at Javelin Strategy & Research, discussed this incredibly exciting time for the sector. 

Tokenizing Assets

More institutional players are recognizing the advantages of digital assets, such as enhanced transparency, efficiency, and lower costs. Major firms like JPMorgan Chase or Goldman Sachs have been exploring the integration of tokenized platforms into their service offerings. 

Tokenization involves converting traditional assets into blockchain-based tokens, making it easier to create, transfer, and settle assets in a decentralized manner. This has the potential to revolutionize the markets for foreign exchange, commodities, bonds, ETFs, mutual funds, and real estate by creating greater efficiency and transparency, while offering increased liquidity.

Over the past two to three years, financial institutions have increasingly embraced the benefits of public blockchains, such as instant settlements, automated compliance, and 24/7 financial operations—all driving greater efficiency and transparency. By working with public blockchains in a compliant manner, financial institutions can deliver better products at a lower cost.

“We’ve seen companies across different industries increasingly adopting digital assets and blockchain technology,” said Xie. “It’s been mainly to enhance operations, engage with new customers and streamline their financial processes along a wide range of financial assets, including stocks, bonds and money market funds.”

One example is BlackRock, which last year launched Biddle, a tokenized money market fund, on public blockchains. Similarly, Fidelity and PayPal have embraced digital assets by offering crypto trading and investment services to their customers. In global cross-border payments, institutions like Travelex Bank are leveraging blockchain technology to expand into new corridors, improve their FX services, and acquire new customers.

The Custody Platform

To enable tokenization, an institution must have very robust digital asset custody capabilities. Without that, it’s difficult to offer tokenized assets to customers.

“Banks need to have a secure custody platform to safeguard digital assets,” said Xie. “When they choose the custody service provider, they have to be very careful to choose the right one.

“We work with DZ Bank, which has leveraged blockchain to tokenize financial assets and unlock new revenue streams for the bank. At the same time, they provide institutional-grade digital asset custody services to their customers. It’s a very critical piece of that entire world.”

Use Cases for Stablecoins

Another rapidly growing payment use case is stablecoins, which serve as a bridge between traditional finance and digital assets. Particularly valuable for cross-border payments, stablecoins can enhance speed, transparency, and efficiency.

“Stablecoins are the number one topic that we have discussions with our clients right now,” said Wester. “That’s not surprising, since we’ve looked at all of these use cases over the last five or six years and we always knew they were possible. We’ll probably see more large players getting to the space and coming out with new products and services very soon.”

The Importance of Regulatory Guidance  
One of the biggest drivers behind institutional adoption is increasing regulatory clarity. The overturning of SAB 121 earlier this year cleared the way for banks to directly invest in and custody crypto assets. Shortly after, OCC issued updated guidance allowing banks to engage in crypto activities, and FDIC followed suit by clarifying that FDIC-supervised institutions can engage in crypto-related activities without requiring prior approval. 

Regulatory developments are evolving rapidly, especially regarding the Know Your Customer and Anti-Money-Laundering rules. Compliance teams must stay up to date with the latest requirements for handling digital assets, including considerations around capital gains and cross-border tax implications. Banks will need to regularly train their compliance teams on new regulatory updates and revise their internal policies to ensure teams can manage digital asset transactions efficiently and compliantly. 

Banks also need to make sure that they have a secure and efficient infrastructure that integrates seamlessly with their existing systems. Key areas to focus on include building a high-performance network and adopting blockchain networks specifically designed for financial use cases, such as the XRP Ledger. 

Partnering with specialized firms can enable banks to access cutting-edge technology much faster, without overextending internal resources. Banks should carefully evaluate partnerships that can support the design and development of flexible, scalable systems—allowing them to expand and diversify their offerings as they grow. 

Getting In on the Future

Traditional finance systems are being disrupted by emerging technologies. Adopting blockchain and digital assets now can help banks gain a competitive edge. Those that resist this shift may struggle to remain relevant as the industry and the underlying technology continue to evolve.

“Step number one is for banks to assess their Treasury strategy and digital asset diversification,” said Xie. “Identify opportunities to diversify into digital assets and explore different use cases in payments in treasury operations or in their investment strategies. For the banks who have already experimented in the past, maybe this is a good time to move forward from proof of concept to conducting pilots.”

Wester also notes that financial institutions and technology vendors need to understand this is a generational shift. “It’s going to take some time, but every financial institution and vendor needs to be paying attention to it. It’s going to cross pretty much every team, too,” Wester said. “It’s not just a technology shift, it’s a product shift, it’s risk and compliance shift.” 

Xie added: “The final takeaway is that this technology is real. Banks that embrace these technologies strategically today will unlock more opportunities, improve their efficiencies and deliver better services to their customers in the future.”

The post Digital Assets Deliver: How FIs Are Leading the Next Financial Era appeared first on PaymentsJournal.

After bringing Shopify on board, Coinbase will roll out its stablecoin acceptance platform to merchants at scale.

The platform, dubbed Coinbase Payments, provides the infrastructure where merchants can receive payments in Circle’s USDC. It runs on Coinbase’s layer-2 network, Base, and supports hundreds of wallets, including MetaMask, Phantom, and Coinbase Wallet.

On the back end, the solution is designed to handle standard merchant operations such as refunds and subscriptions, leveraging Coinbase’s APIs.

Benefits and Rewards

Shopify is already live on Coinbase Payments, a partnership which brings stablecoin payments to a wide array of merchants and creators. While stablecoin acceptance gives customers another way to pay how they prefer, it also offers substantial benefits to merchants.

Stablecoin payments are borderless, secure, nearly instant, and free from the transaction fees typically associated with credit cards. These advantages are part of the reason why the two largest retailers in the world—Amazon and Walmart—have considered launching brand-specific stablecoins.

In addition to reducing transaction costs—which could translates to billions of dollars in savings for major retailers—there is also the potential for merchants to offer incentives for using branded coins. Coinbase hopes to bring this capability to Coinbase Payments by adding support for programmable rewards to the platform soon.

The Deluge of Stablecoins

The deluge of stablecoin-centric launches in recent months shows no sign of slowing—especially now that the U.S. has reached a key milestone. The Senate recently passed the GENIUS Act, a bipartisan bill aimed at establishing a regulatory framework for stablecoins in the U.S.

This marks the first time such legislation has moved forward at the federal level. However, the Act still faces obstacles: The U.S. House of Representatives must pass it, and lawmakers may need to reconcile it with its own STABLE Act.

Despite differences between these two bills, the development represents a significant step forward for the digital assets industry. The lack of regulatory clarity has long drawn criticism,  and more certainty provide a tailwind for the already accelerating stablecoin market.

The post Coinbase Launches Stablecoin Platform for E-Commerce appeared first on PaymentsJournal.

The Senate’s passage of the GENIUS Act marks the first time stablecoin legislation has cleared either Congressional chamber, along bipartisan lines. The bill—establishing federal standards for the issuance, trading, and custody of stablecoins—passed with a 68-30 vote, including support from 18 Democrats.

The House of Representatives must now pass the bill for it to become law. However, the Senate may have been the tougher nut to crack.

“This clears a major hurdle, especially since some of the most vocal critics of crypto and digital assets sit in the Senate,” said James Wester, Director of Cryptocurrency at Javelin Strategy & Research.

Roughly 97% of stablecoins are denominated in U.S. dollars, so regulation in the U.S. could have global ripple effects across the crypto industry. Even European banks are taking note. France’s Société Générale, for example, is launching a stablecoin pegged to the U.S. dollar after its euro-backed stablecoin failed to gain traction.

The Framework Behind It

The GENIUS Act establishes a federal framework for Permitted Payment Stablecoin Issuers, while allowing state-supervised issuers to continue operating under the same national standards. This is expected provide financial institutions and other large entities with a clear, reliable path to market under consistent expectations. Already, there have been reports that Walmart and Amazon are exploring the development of their own stablecoins under the law’s framework.

Each stablecoin token must be fully backed by U.S. dollar reserves, verified through monthly audits. By ensuring issuers maintain adequate reserves to support the value of their stablecoins, the law aims to safeguard investors and promote stability within the broader stablecoin market.

Additionally, all stablecoin issuer would be required to comply with anti-money laundering and Know Your Customer regulations.

Next Steps

The bill must still pass the House of Representatives, which has been considering its own STABLE Act. Key differences between the two proposals remain, particularly regarding yield-bearing stablecoins and which entities would be authorized to issue them.

 “The next step is reconciliation, likely aimed at aligning GENIUS with the House’s STABLE Act,” Wester said. “That could get contentious. That said, this is all good. It shows real momentum. We’re no longer debating if stablecoins will be regulated; we’re debating how. And both bills show a serious effort to give the market legal clarity.

“If reconciliation lands in a workable middle ground, we could finally see the U.S. establish a framework that gives bank-issued, fintech-issued, and platform-issued stablecoins a path to compliance,” he said. “It’s long overdue.”

The post Inside the Senate’s Newly Passed Stablecoin Bill appeared first on PaymentsJournal.

As more organizations consider branded stablecoins, a recent JPMorgan Chase trademark application has fueled speculation that the bank is gearing up for a stablecoin launch.

The document filed with the U.S. Patent and Trademark Office seeks to trademark JPMD, which has been considered to stand for JPMorgan Dollar. The application states that the bank is pursuing this trademark to carry out crypto and digital assets services such as trading, transfers, and payment processing.

Although JPMorgan Chase has not yet confirmed anything, many in the crypto industry quickly took the filing as a sign that a stablecoin is on the way from the largest bank in the United States.

A Strong Proponent

This isn’t a stretch. JPMorgan Chase has been an early adopter and strong proponent for digital assets technologies. The institution launched one of the world’s first bank-operated blockchains, Onyx—a platform later rebranded to Kinexys—to bring technologies like blockchain and tokenization to mainstream financial services.

The platform’s crypto payment settlement system, JPM Coin, is a cryptocurrency that banks use to perform foreign exchange conversions on the blockchain. One of the initial use cases for the crypto, which was also rebranded as Kinexys Digital Payments, was to facilitate USD to euro conversions.

More recently, Kinexys signed a deal with India’s Axis Bank to allow the bank’s enterprise clients to send and receive USD transfers both domestically and cross-border in real-time.

A Solo Stablecoin

JPMorgan has strong digital assets underpinnings, but recent indications were that the bank wasn’t pursuing a solo stablecoin. In fact, The Wall Street Journal reported that Citi, Chase, Bank of America, and Wells Fargo were considering issuing a joint stablecoin.

Whether or not JPMorgan decides to go at it alone, it seems clear that major financial institutions around the world are destined to enter the roughly $250 billion stablecoin market. This trend is spreading outside of the financial services industry. Walmart and Amazon recently signaled that they are considering brand-specific stablecoin launches of their own.

This news raised concerns that stablecoin payments to the two largest retailers in the world could remove significant volume from the traditional financial system, which is likely a reason that banks are working toward stablecoins of their own.

The post JPMorgan Pursues Trademark for Potential Stablecoin appeared first on PaymentsJournal.

The two largest retailers in the world are considering stablecoin launches—moves that could shift a significant volume of transactions away from the traditional financial system.

The Wall Street Journal reports that both companies are exploring this strategy as they eye the potential passage of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act—a law designed to provide a regulatory framework for stablecoin transactions.

A brand-specific stablecoin could save Amazon and Walmart billions in transaction fees while enabling instant and transparent payments. Th impact could be especially pronounced in cross-border payments, where global retailers often face high fees and delays.

However, there are also concerns that widespread adoption of stablecoin payments could divert billions from the traditional banking system. So far, neither Walmart nor Amazon have confirmed their stablecoin ambitions yet.

Not Alone in Their Ambitions

The retail giants aren’t alone in these ambitions, as the WSJ also noted that travel company Expedia Group and many major airlines have considered stablecoins of their own.

Meta is also working with stablecoin companies to launch its own stablecoin, with cross-border payments as a primary use case. For example, an Instagram creator could receive an international payment in Meta’s stablecoin and bypass delays, fees, and regulatory barriers.

Getting into the Game

Although there are concerns that these stablecoin launches could detract from financial players, more traditional banks are getting into the game themselves. France’s Societe Generale became the first regulated bank to launch its own stablecoin with a euro-backed offering a few years ago, and it now plans to follow this up with a USD-backed stablecoin.

There have also been reports that major U.S. banks like Citi, Chase, Bank of America, and Wells Fargo are considering issuing a joint stablecoin. These financial institutions are enticed by a $250 billion market that already includes a stablecoin from PayPal, and will likely soon include one from Stripe.

Many companies that aren’t launching their own stablecoin are still working to accept coins issued by Tether and Circle. Most recently, e-commerce marketplace Shopify said it would accept Circle’s USDC through a partnership with Coinbase.

According to Shopify, the reason why it is adding this functionality is because stablecoins provide a secure and efficient protocol that can be accepted by the company’s global base of creators.

The post Walmart and Amazon Mull Launching Branded Stablecoins appeared first on PaymentsJournal.

After making strides toward its stablecoin launch, Stripe will acquire crypto wallet provider Privy.

Although Privy is not yet a leading player in the crypto wallet space, it has 75 million accounts and partnerships with brands like trading platform Hyperliquid and NFT marketplace OpenSea.

Privy’s protocols allow clients to build crypto wallets embedded directly into their platforms. The Stripe acquisition—details of which have yet to be disclosed—should vastly expand Privy’s ecosystem.

Though the brand will come under Stripe’s umbrella, Privy will continue to operate as an independent product. In a social media post, Privy said that both companies share the goal of bringing crypto and fiat closer together to transform how value moves digitally.

Crypto Stops and Starts

The deal represents Stripe’s continued investment in the digital assets space following its blockbuster acquisition of stablecoin issuer Bridge. Shortly after the $1.1 billion deal, Stripe announced it was going ahead with trials of its dollar-backed stablecoin overseas.

The long-awaited launch follows a series of crypto-related stops and starts for the fintech. Stripe made an early foray into bitcoin payments years ago, but the demands of processing crypto proved too intensive. Additionally, the company has been working toward launching a stablecoin for over a decade.

Beaten to the Stablecoin Punch

Momentum has been building for Stripe in recent years, after the fintech partnered with Coinbase to allow users to receive payouts and convert fiat into stablecoins like Circle’s USDC and Pax Dollar.

The launch of its own stablecoin will place Stripe in a highly dynamic $250 billion market. Payments competitor PayPal has already taken an early lead with the launch of its PYUSD coin two years ago.

While PYUSD has yet to capture significant market share of companies like Tether and Circle yet, PayPal is betting that its well-established customer base and strong relationships with institutional investors will help its offering gain ground.

Stripe is likely aiming to leverage its customer base in a similar way. It stands apart from other crypto platforms through enterprise-grade, compliant products. The addition of an embedded crypto wallet should further solidify Stripe’s position in the digital assets space.

The post Stripe Continues Digital Assets Push with Privy Acquisition appeared first on PaymentsJournal.

After its euro-backed stablecoin failed to gain traction, Société Générale is launching a stablecoin pegged to the U.S. dollar.

The Paris-based bank’s EUR CoinVertible (EURCV) was a milestone offering because it marked the first time a regulated bank issued a euro-backed stablecoin.

Though the stablecoin was launched two years ago and is compliant with the European Union’s Markets in Crypto-Assets (MiCA) regulations—which govern crypto and stablecoins—EURCV has only around $47 million in circulation.

Jean-Marc Stenger, CEO of SG-Forge, the digital assets arm of Société Générale, told Reuters that a USD-backed stablecoin was the natural next step for the bank. It is also another landmark for Société Générale, as it will be the first time a major bank has launched a dollar-based stablecoin.

The new coin, dubbed USD CoinVertible (USDCV), is expected to be issued this summer on the Ethereum and Solana blockchains.

The Need for a Regulated Offering

Though stablecoins have become a $250 billion market, MiCA regulations limit many players from trading in the EU. Most notably, Tether—which issues the world’s leading stablecoin—is not licensed to operate in the region.

While the other major stablecoin player, Circle, is licensed under MiCA and has successful euro- and dollar-backed stablecoins in circulation, Société Générale believes there is still room for USDCV.

“At the moment, there are no other banking-related players in that space,” Stenger told Reuters. “That’s definitely the feedback we have from the market, both corporates, financial institutions, but also crypto exchanges. There is a very, very strong need for well-regulated, robust offering in the crypto and stablecoin space.”

A USD Coin in the EU

It had become a foregone conclusion that a significant financial institution would offer a stablecoin, as banks around the world have been inching closer to the digital asset. The Wall Street Journal recently reported that major U.S. banks like Citi, Chase, Bank of America, and Wells Fargo have considered issuing a joint stablecoin.

However, the Société Générale’s USDCV launch is intriguing because there have been concerns in the EU about the dominance of USD stablecoins. Some have said that the reliance on these coins would only increase the region’s dependence on foreign currencies and companies.

Interestingly, USDCV is backed by U.S. bank BNY Mellon, who will act as the custodian for the stablecoin’s assets. However, Société Générale believes that the stablecoin’s potential use cases in crypto trading, cross-border payments, foreign exchange transactions, and cash management outweigh any foreign dependence.

The post France’s Société Générale Launches USD Stablecoin appeared first on PaymentsJournal.

Circle recently launched a network designed to harness the potential of stablecoins in cross-border payments, and the network has now added another integration.

The Circle Payment Network (CPN) was first announced in April, with the company’s ambitious goal of creating a global rail to rival those operated by Visa and Mastercard. As the issuer of the world’s second-leading stablecoin, USDC, it was clear that stablecoins would play a key role in CPN.

The network aims to bring digital assets transfers—previously the domain of crypto exchanges—directly to financial institutions. To this end, Circle is integrating with RedotPay to allow users in Brazil to send payment using leading stablecoins, such as USDT and USDC, with funds automatically converted to Brazilian Real in the recipient’s account.

Circle had previously unveiled a similar solution with Tazapay in Hong Kong. CPN also has integrations with Conduit and Alfred Pay, with the latter planning to use the network to enable stablecoin-to-fiat transfers through Brazil’s PIX instant payment system and Mexico’s similar SPEI system.

Changing the Game

These solutions could be a gamechanger in cross-border payments, which have frequently faced issues like payment delays, regulatory barriers, and high fees. Many consider cryptocurrencies uniquely suited to solve to address these challenges because they are decentralized, and their blockchain underpinning enables transactions that are efficient, transparent, and cost-effective.

This is a use case where digital assets are beginning to gain traction—the Bank for International Settlements (BIS) recently reported that bitcoin, Ether, and the leading stablecoins facilitated roughly $600 billion in cross-border payments in Q2 2024.

BIS also noted that Circle’s USDC and Tether’s USDT stablecoins—along with low-value bitcoin payments—are seeing increasing adoption in everyday cross-border transactions.

Gaining Global Traction

The proliferation of stablecoins is accelerating, and this is not driven solely by crypto players. PayPal’s stablecoin has been on the market for over a year, and Stripe has its own option in the works.

More financial institutions—both in the U.S. and abroad—are also considering their own options to keep up with the demand for digital assets. If Circle Payment Network continues to gain traction, it could become an additional driver in the global stablecoin push.

The post Circle’s Cross-Border Payments Network Gains Traction appeared first on PaymentsJournal.

In a move that has the potential to usher in a new era of cross-border payments, Sling Money is introducing its US and European Virtual Accounts—combining the accessibility of traditional payment rails with the efficiency of tokenization. According to Sling Money, these accounts will go beyond peer-to-peer transactions, enabling users to receive payments in their local currency from multiple locations around the world.

Designed as a global equivalent to Venmo, Sling Money lets users route payments into either a U.S. account and routing number or a European IBAN. This means they can receive funds in both dollars and euros—directly into their Sling Wallet.

“Sling Money has bridged two separate systems—local banking rails like ACH and stablecoins—into a single seamless app,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “This will significantly reduce friction in cross-border payments.”

Founded three years ago, Sling Money launched in the U.S. last November and is now available in more than 75 countries. In addition to ACH, it also plans to expand into using RTP and FedNow as payment rails.

An Alliance with Bridge

A key development in all of this was Stripe’s acquisition of the regulated financial infrastructure provider Bridge in February. Bridge’s technology converts incoming payments into stablecoins—either the Pax Dollar, a dollar-backed stablecoin issued by Paxos Trust Company, or the Euro Coin, issued by Circle. Sling then transfers the chosen stablecoin to the user’s wallet, where the funds can be held within the app or converted into local currency for a small fee.

“Stripe’s acquisition of Bridge, now powering Sling Money’s accounts, signals that one of the biggest fintechs in the world is leading the charge with stablecoin infrastructure and seamless payment applications,” said Hugentobler. “It also gives Sling greater credibility and probably scalability as well. There’s clearly a convergence of traditional and blockchain based fintech going on here.”

The Stablecoin Difference

Stablecoins are increasingly playing a key role in cross-border payments. According to the Bank for International Settlements, bitcoin, ether, and other leading stablecoins facilitated roughly $600 billion in cross-border transactions in Q2 2024 alone.

“This highlights the validity of stablecoins as a payment option thesis,” said Hugentobler. “Sling Money is ahead of many of its competitors in the way that it is already enabling regulated crypto payments through Bridge.”

The post Sling Money Brings Stablecoins to Traditional Rails for P2P Transfers appeared first on PaymentsJournal.

Crypto custody firm Bitgo is launching a Crypto-as-a-Service (CaaS) platform designed to help financial institutions integrate digital asset trading into their offerings. The platform enables banks and fintechs to incorporate crypto capabilities using Bitgo’s wallet infrastructure and APIs.  

Like most as-a-service platforms, the solution is designed to be modular and turnkey.

Given the regulatory environment, risk and compliance remain top priorities for financial institutions evaluating new technologies. Bitgo’s platform includes Know Your Customer and anti-money laundering tools and is designed to meet banking compliance standards.

“I think one of the reasons why this is so significant is that through modular APIs, it reduces the need for extensive in-house development and expensive setup for infrastructure,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It includes regulatory compliance and even insurance coverage, and allows institutions to tailor their platform’s features to clients’ specific needs—which should allow for quick rollout/scalability. “

 “FIs need to evaluate the interest/demand for crypto services among their clientele to determine opportunities to best utilize BitGo’s services,” he said.

Increasing Interconnectedness

This news follows a trend of increasing interconnectedness between traditional financial institutions and the crypto industry.

Digital assets firms have adopted functions once reserved for financial services companies, and Bitgo, Coinbase, Circle, and others have even considered pursuing bank charters in the U.S. Obtaining a bank charter would allow crypto companies to offer loans and accept deposits.

What’s more, Circle announced it would launch a cross-border payment network aimed at rivaling the worldwide rails of Visa and Mastercard.

Increased Investment

Even as crypto firms have emulated banks, more financial institutions have been investing in digital assets technologies. For example, the efficiency and security of blockchain make it a prime candidate to underpin mainstream financial services—not just cryptocurrency.

Blockchain also enables the tokenization of real-world assets like property deeds and stocks. Tokenization has become a central focus for financial institutions because it can streamline processes that are currently manual and expensive.

Perhaps most of all, stablecoins have factored into many financial companies’ strategies, as they offer the benefits of crypto without the volatility. For this reason, PayPal launched its PYUSD stablecoin, Stripe has one in development, and Meta is considering one of its own.

In addition to investing in the technologies, more financial institutions are acquiring or investing in crypto companies. For example, Stripe’s stablecoin launch was made possible by the $1.1 billion acquisition of Bridge.

In one of the earlier examples of this trend, investment banking giant Goldman Sachs made a substantial investment in Bitgo seven years ago.

The post Goldman Sachs-Backed Bitgo Launches Crypto-as-a-Service Platform appeared first on PaymentsJournal.

By building around a model whereby users must find the most energy-efficient sources to unearth new assets, bitcoin mining helped to create a new system of computing. Linking a range of computing systems, decentralized physical infrastructure networks (DePIN) reduce processing costs as well as risk. These complex computing networks are also finding new use cases in areas like artificial intelligence and tokenization.  

A new report from Javelin Strategy & Research, Decentralized Infrastructure and Computation: How Does It Compare?, looks at how DePIN offers a cost-effective approach by being able to truly scale and make the network stronger. The benefits of decentralized computation and infrastructure networks outweigh other computing methods in use today, according to Joel Hugentobler, Cryptocurrency Analyst at Javelin and the author of the study. But he warns that this technology is still immature, so businesses must be careful and consider every aspect before moving to implement it.

Spreading the Risk Around

The logic behind DePIN is simple: Rather than operating a single network system in a single place, businesses run multiple servers in multiple areas. By force of habit, many multinational companies often concentrate their computing processes in a single location.

“Even a business as large as Facebook has centralized data servers in one or two locations,” Hugentobler said. “They have all their computation power localized. With all the tech companies located in Silicon Valley and other parts of California, if something like an earthquake were to happen, that would create huge havoc on their business operations. We could go on another 50 or 100 years and there not be an earthquake, but at the same time, it also could happen a week from now. Nobody knows.”

The decentralized architecture of DePIN essentially eliminates the risks of service disruptions by spreading the computational resources around the globe. In the event a node or even several nodes failing, the remaining network components maintain service. What’s more, by leveraging blockchain technology and offering access via cryptographically secure access and storage, DePIN safeguards stored data against unauthorized access or manipulation by third parties.

In addition to eliminating centralized risk, the DePIN model provides lower overhead costs. Managing resources for infrastructure often requires providers to make expensive long-term bets on building out capacity. DePIN keeps that infrastructure delivery within the principles of a market economy, maintaining a natural balance of supply and demand. Participants in the network can expand as demand dictates.

In addition, participants contributing to a network bear the cost of maintaining the equipment. That significantly reduces the overall operating costs for users as opposed to building their own infrastructure.

A Model Arising from Mining

Bitcoin mining paved the way for decentralized models. Bitcoin mining started out on simple computers and even laptops. But it’s built into the model that the difficulty of creating new assets—and the necessity for stronger computing enterprises—increases every four years.

As a result, mining organizations began a somewhat centralized model, but they offered incentives to participants to provide the additional computational resources they needed. Over time, the model became truly decentralized.

When the model matured, innovators developed specialized mining equipment to help them solve the mining algorithm over time. The systems are much more efficient now, in part because they led innovators to seek creative ways to gain low-cost electricity.

Centralized systems require 100 megawatt-hours per day, and sometimes more, because of their reliance on large, single data centers. Decentralized systems, on the other hand, optimize processing efficiency and consume less than half of that per day, making them more energy-efficient in many cases.

Energy efficiency also has an impact on operational costs tied to the centralized data centers, which can average around $1 million per month. Decentralized systems’ operational costs are a fraction of that. They also provide ancillary benefits.

“Bitcoin miners have gone to very small towns in Africa where there’s a small waterfall,” Hugentobler said. “They’ll hook up a hydropower Infrastructure, so these towns that didn’t have access to electricity before now have this electrical infrastructure to tap into.”

In Texas, bitcoin mining operations are fairly common, as is oil drilling. When the grid needs additional power for oil drillers, the bitcoin miners contractually shut down and provide that extra load to the grid.

Decentralized computation can use this same model for electrical grids all around the world and provide resiliency. Even when a handful of grids are shut off, the network can continue to run.

Explorations in Other Businesses

It is becoming more common to see collective ownership in other types of businesses as well. Participants provide physical resources, and in return they get incentives like token rewards or discounts to some of the services the network provides.

Some AI models are starting to catch on to the benefits of decentralized computing. DeepSeek, for example, has begun to leverage the decentralized model for its open-source computing. This allows it to source that computation out and reduce overhead.

In some respects, DePIN is similar to the cloud, which also has decentralized components. But there is a key difference in that cloud systems are usually tied to a centralized infrastructure in single, large data centers.

Next Steps

Hugentobler recommends that financial institutions and other technology providers begin looking at decentralized computing networks for tasks such as AI model training, high-volume data processing, and real-time financial computations. Just as bitcoin mining matured from central processing units to highly efficient application-specific integrated circuits, decentralized computing is likely to follow a similar trajectory, driving greater performance and cost efficiency over time.

Decentralized computing has matured to where organizations should already have it on their road map for further study and understanding. But only through hands-on experimentation will companies be able to tweak and enhance decentralized systems, determine which blockchains to use, manage incentives, and hash out other issues that need to be considered in launching a pilot. It’s a lengthy process, but all indications are that computation-heavy organizations will greatly benefit from the process.

The post Why Decentralized Computing Models Are Gaining Momentum appeared first on PaymentsJournal.

Crypto exchange Coinbase was the target of an attack that resulted in stolen customer data and potentially $400 million in damages.

The company reported that a group of bad actors had been approaching its overseas contractors for months, attempting to bribe them into releasing customer information.

Once the criminals succeeded, they threatened to leak the data unless Coinbase paid a $20 million ransom in bitcoin. Although the company refused to pay and notified law enforcement agencies, it has decided to cover reimbursement expenses ranging from $180 million to $400 million for customers who have been or may be scammed by bad actors using the stolen data.

Coinbase noted that no passwords, private keys, funds, or Coinbase Prime accounts were compromised, and that less than 1% of its monthly transacting users were impacted by the attack. Additionally, the company announced a $20 million reward for information leading to the arrest and conviction of those responsible for the scheme.

A Prime Target

Employees have increasingly become targets for cybercriminals aiming to gain access to company data.

Financial organizations are prime targets because they hold troves of personal and financial data—this is why hackers targeted the U.S. Office of the Comptroller of the Currency, which monitors the activities of all U.S. financial institutions and has significant access to highly sensitive information.

As the largest crypto exchange in the U.S., Coinbase has leveraged the surging interest in digital assets by making large acquisitions and introducing new technologies. Given the company’s global scale, the likelihood that Coinbase would become a target for criminals has increased.

Intensifying the Vetting Process

Attacks designed to manipulate consumers or employees into revealing protected data have become increasingly creative, making fraud an issue that businesses can no longer afford to ignore.

Coinbase noted that after detecting the breach, it terminated the employees involved, warned impacted customers, and beefed up its fraud defenses.

Another ramification of this attack is that it will likely prompt the crypto exchange—and other financial services companies—to reevaluate contractor relationships and more thoroughly vet the employees who have access to protected customer data.

The post How Bad Actors Recruited Coinbase Agents for Extortion and Phishing appeared first on PaymentsJournal.

The Bank for International Settlements (BIS) found that bitcoin, Ether, and the leading stablecoins facilitated roughly $600 billion in cross-border payments in Q2 2024.

The report highlighted that speculation and broader global financing  trends are the main forces driving the use of digital assets. BIS also noted that Circle’s USDC and Tether’s USDT stablecoins—along with low-value bitcoin payments—have gained traction in everyday cross-border transactions.

Additionally, the study underscored the duality of crypto, which can operate as both an investment vehicle and a transaction mechanism. BIS noted that the data points to a growing overlap between crypto assets as speculative assets and traditional financial systems.

An Ideal Candidate

There has long been speculation that cryptocurrencies could be an ideal solution for cross-border payments. These transactions often face challenges ranging from payment delays and high fees to regulatory restrictions.

As a result, many potential solutions have cropped up, including offerings from Visa and Mastercard, global messaging network SWIFT, and even a project organized by BIS—a consortium of central banks focused on exploring international payments systems.

Digital assets present a compelling alternative for cross-border payments due to their decentralized nature and blockchain foundations, which enable transactions that are immediate, transparent, and cost-effective. However, the volatility of cryptocurrencies like bitcoin and Ether, coupled with concerns around fraud and security, has kept many financial institutions from adopting digital assets in earnest.

Moving Beyond Borders

This sentiment has changed over the past few years, as more institutions have invested in technologies like stablecoins and tokenization. Stablecoins have been the focus of many initiatives by leading financial services companies like PayPal and Stripe. Even Meta announced its plans to launch a stablecoin to facilitate its worldwide operations.

Although more companies are adding digital assets to their product offerings and crypto is more mainstream than ever, there are still risks to consider.

“Our assessment highlights a continuing need for future research to understand the dynamics of global crypto flows,” the BIS noted. “Our analysis indicates that policy measures designed to dampen traditional financial flows may have limited impact on constraining cross-border crypto activity.”

“Yet, as cryptoassets become more integrated with mainstream finance, understanding the systemic risks and potential contagion effects between these markets will be essential for policymakers and market participants alike.”

The post Crypto Is Playing an Increasing Role in Cross-Border Payments appeared first on PaymentsJournal.

Three years after abandoning its previous effort to produce a stablecoin, Meta is now working with several cryptocurrency companies to introduce a new version of the digital currency.

The company plans to use the stablecoin for cross-border payments, simplifying payouts to the creators who use its platforms around the world. Not only will this make it easier for Meta to pay everyone in a single currency, but it would also allow the company to avoid the processing fees typically charged for payment modes like wire transfers.

That makes sense, given that much of Meta’s expenses consist of numerous small payments to contributors. Some reports suggest that Meta may integrate the stablecoin with Instagram, allowing it to pay creators up to $100 per transaction.

Regulatory Concerns

Meta’s entry into the crypto space began in 2019 with its Libra project, initially aimed at developing a stablecoin—later renamed Diem—to facilitate global payments. However, the initiative was scrapped in 2022, reportedly due to heavy regulatory pressure from the Biden administration.

Following the company’s announcement of the sale of its crypto assets, Diem CEO Stewart Levey noted: “Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead.”

A More Welcoming Environment

The current landscape is much more welcoming to the idea. For one thing, the Trump administration has been more favorable toward the crypto industry than Biden was.

“It mainly comes down to the pro-crypto regulatory environment,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Two stablecoin bills are going through the House and Senate right now, with likely more coming down the pipe.”

As a result, stablecoins are having a moment, with several major financial players entering the market. Tether and Circle remain the leaders in the space, but JPMorgan Chase, Mastercard, Visa, and PayPal are all offering stablecoin programs of various kinds.

“Whether Meta decides to build and issue their own or partner with someone like Circle is yet to be determined,” said Hugentobler. “But tech providers, financial institutions and other companies of all types are realizing the benefits of stablecoins for digital payments and the efficiencies they offer.” 

The post Why Meta Is Getting Back into the Stablecoin Business appeared first on PaymentsJournal.

Crypto exchange Coinbase will launch the x402 payments mechanism, which leverages the existing HTTP “402 Payment Required” status code to facilitate instant stablecoin payments.

The protocol allows APIs, apps, and AI agents to conduct transactions during web interactions with minimal code integration. This means humans and AI agents can exchange digital assets as easily as they exchange data.

“x402 turns this 402 status code into a real payment layer, which allows any server to request a payment, and any client (human or agent) to respond with digital dollars like stablecoins,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Giving agents access to external context and APIs right now is a fairly high-friction process with a lot of manual configurations. The x402 streamlines and removes a lot of the bottlenecks associated with that.”

AI in the Shopping Experience

Eliminating these obstacles could be the next step in granting agentic AI a more substantial role in transactions. There has been a significant push toward incorporating agentic AI into the shopping experience, which has intensified in recent weeks, as both Mastercard and Visa have rolled out new platforms.

Mastercard’s Agent Pay incorporates agents capable of shopping for specific items—such as a pair of yellow skis—or even assembling a selection of products and services for an entire occasion. Shortly after, Visa introduced its Intelligent Commerce platform, offering a similar range of features.

However, these services can go further than simply locating and suggesting items. The ultimate goal is for agentic AI to autonomously handle every step of the transaction, including the purchase itself.

Dominating the Limelight

Coinbase’s crypto-centric solution represents the ongoing convergence of artificial intelligence and digital assets—a trend that has accelerated in recent years. Although blockchain and tokenization initiatives are priorities for financial institutions, stablecoins have dominated the narrative.

The potential of Coinbase’s x402 is likely to reinforce the prominence of stablecoins.

“This model is more scalable, efficient, economically viable, and it opens up a new on-chain business model for content and cloud service providers,” Hugentobler said. “Stablecoins enable programmable transactions for reoccurring payments or subscriptions. It also has built-in compliance and security.”

The post Coinbase Payments Protocol Puts Stablecoin Transfers in AI Agents’ Purview appeared first on PaymentsJournal.

Bitcoin has dramatically altered the financial world over the past decade and a half. However, the blockchain that underpins the most dominant cryptocurrency in the world can process only five to seven transactions per second. In contrast, an impending update to Solana will allow the blockchain to process roughly one million transactions per second.

In the report Understanding Solana for Financial Services, Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, examined the upgrades in the works for Solana, its potential to make a significant impact on financial services, and the emerging use cases for this powerful technology.

A Robust Architecture

The Solana blockchain not only will be much faster than bitcoin but it will also be 10 to 15 times faster than credit card rails like Visa and Mastercard. This substantial increase in Solana’s throughput will come to fruition through the Firedancer upgrade.

“This isn’t just theoretical,” Hugentobler said. “Jump Trading—the brains behind this upgrade—they’re notorious for high-frequency trading. Coming in and providing this extra validator not only diversifies the code base, which adds additional security, but obviously adds that crazy throughput with 400-millisecond finality. It’s not just theory—they’ve had multiple demos where they are executing these volumes of transactions live.”

Scaling to this speed would not be possible if Solana didn’t already have robust architecture in place. One of the key benefits of the network is it reduces counterparty risk—the chance that an unknown third party doesn’t hold up its end of the transaction.

In addition to speed and security gains, Solana is less expensive than the leading blockchain, Ethereum. Solana’s fees are less than a penny compared with Ethereum transaction fees, which can range from $1 to $50.

The speed, security, and cost benefits of Solana make the blockchain a strong fit for financial services applications. Once the Firedancer upgrade is live, Solana can do even more to eliminate many of the issues financial services firms have faced.

“Their architecture, with this upgrade, supports real-time settlement in traditional payment rails,” Hugentobler said. “But what’s really cool about all this is it eliminates batch processing, which is a significant pain point in legacy systems.”

Compliance in a Box

A significant barrier that has kept many institutions from fully investing in digital assets is concerns about the security of financial data. Although blockchain is inherently a secure and transparent network, financial institutions have specific compliance and risk management demands.

To meet this need, Solana has introduced technologies like token extensions, which can protect private data on the blockchain. Token extensions enable developers to create tokens with unique features designed for specific use cases.

For example, token extensions can give institutions the capability for confidential transfers, which allow merchants to maintain confidentiality of transaction amounts while financial institutions have visibility into other transaction details for compliance purposes.

Token extensions can also enable memo fields, which allow additional information to be included with payments.

The blockchain’s token extensions were a key factor behind PayPal’s decision to bring its stablecoin, PYUSD, from Ethereum to Solana. The payments giant credited the speed and efficiency of the blockchain as the driving forces behind the success of PYUSD and said the added customization provided by token extensions meant that Solana essentially provided “compliance in a box.”

A Compelling Hybrid

As powerful as token extensions are, they are also due for an upgrade. Helius Labs and Solana Labs recently announced an extension of the confidential transfers token extension called confidential balances.

Confidential balances are built to enable private token transfers within institutional compliance. In addition to tools that protect data, confidential balances also allow for partial confidentiality, which means organizations can determine whether to fully conceal specific token amounts or just to mask certain aspects.

Some of the use cases for this added functionality are in payroll, B2B payments, and other scenarios where particular regulatory requirements come into play. Solana has also developed auditor keys, which give institutions more insight into transactions without overreaching on compliance.

All these innovations mean Solana is poised to deliver on more of an institution’s needs.

“Solana with this upgrade has enabled token extensions which allow KYC, AML, compliance, transaction freezing, things like metadata tagging, confidential transfers, and real privacy transfers—all on a public blockchain,” Hugentobler said. “These extension capabilities enable financial institutions to operate like a private type blockchain, but it’s all on a public blockchain, which is a compelling hybrid model in my eyes.”

Moving Past Speculation

These characteristics have made Solana a top choice for tokenizing real-world assets—which can be an intensive process. For example, Franklin Templeton recently moved the third-largest tokenized money market fund, valued at $594 million, onto the blockchain.

However, the use cases for Solana can go much further.

“Solana is being used by big names like Visa, PayPal, and Franklin Templeton,” Hugentobler said. “They’re using it for stablecoins, cross-border payments, tokenized funds, treasury settlement, that sort of thing. It’s moved past the speculative phase; it’s being used for real use cases.”

The Firedancer upgrade should make Solana an even more compelling choice for financial services companies, once it is live.

“Frankendancer is the hybrid upgrade between Firedancer and what’s existing, a smooth process that’s fully live,” Hugentobler said. “It has consensus live voting and all that sort of thing on the back end. Firedancer is live, but it doesn’t have the consensus model fully live, so the voting and things like that are not 100% quite yet, but they are saying it should go fully live this quarter.”

The post After an Upgrade, Solana is Primed to Be the Blockchain of Choice for Financial Institutions appeared first on PaymentsJournal.

After its crypto revenues plunged in Q1, Robinhood is stepping back from trading in digital assets. Meanwhile, E*Trade is planning to ramp up its crypto services. The divergence appears to reflect the distinct client bases each company serves.

Robinhood has long been a popular platform for trading, but its crypto-related revenue for Q1 2025 dropped to $252 million, down about 30% from the previous quarter. Over the same period, crypto trading volume on Robinhood fell by 35%.

Currently, cryptocurrency transaction-based revenue makes up more than 43% of Robinhood’s total transaction revenue. However, during a recent earnings call, CEO Vlad Tenev said the company plans to scale back its digital assets to avoid such fluctuations in the business.

“We’re diversifying the business outside of the crypto business, which will make us less reliant on crypto transaction volumes,” Tenev said during the call.

A Wealthier Client Base

At the same time, Morgan Stanley is exploring ways to add crypto trading to its E*Trade platform—described as the most serious move yet by a major U.S. bank to give retail users direct access to cryptocurrencies. The initiative is expected to roll out sometime next year.

Why the two different approaches for the rival trading platforms? It comes down to the client base.

“Robinhood depends heavily on retail trading, so their revenues are highly volatile,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Volume can swing dramatically from month to month depending on crypto prices. They’re looking to stabilize their revenues with more consistent streams. I also think Robinhood may have maxed out their product in crypto for now.  

“Morgan Stanley has much higher net worth clients than Robinhood’s mainly retail client base,” he said. “High-net-worth individuals want regulated secure access to crypto. With the regulatory tailwinds we’ve been seeing, high-net-worth investors are starting to anticipate the growth of tokenization in the coming months.”

Heated Competition

The big banks’ entry into trading crypto may be another factor behind Robinhood’s recent pullback. Other major financial institutions, including Charles Schwab and SoFi, have also been exploring entry into the crypto space.

E*Trade, meanwhile, already offers its wealthier clients access to crypto exchange-traded funds, options, and futures contracts.

The post Robinhood, E*Trade Go Two Different Directions on Crypto appeared first on PaymentsJournal.

Stripe has invited companies outside of the United States, the UK, and the EU to participate in trials of its U.S. dollar-backed stablecoin.

Patrick Collison, CEO of Stripe, said the payments firm had been planning a stablecoin launch for over a decade. The company made an early foray into bitcoin payments around the same time, but the demands of processing crypto and digital assets led Stripe to step away from bitcoin shortly afterward.

However, Stripe has made crypto a priority over the past year. The company entered into a partnership with Coinbase, allowing users to receive payouts and convert fiat in stablecoins like Circle’s USDC and Pax Dollar.

While this was a significant step, there has long been speculation about when Stripe would issue a stablecoin of its own. Rival payments firm PayPal recently introduced its PYUSD stablecoin, and its established customer base and institutional connections helped the token quickly gain significant traction in the market.

Compliance-Grade, Enterprise-Ready

After the recent acquisition of stablecoin company Bridge, it became clear that Stripe had stablecoin designs of its own. The $1.1 billion deal was the largest purchase Stripe ever made, and one of the largest acquisitions the crypto industry has seen.

While it may seem like just another stablecoin in an already crowded market, there are clear advantages that Stripe brings to the table.

“Unlike crypto-native firms that build first and seek permission later, Stripe is ‘regulatory-first’ and that gives it a leg up,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “With regulatory approval of the Bridge acquisition, Stripe’s stablecoin product could offer the compliance-grade, enterprise-ready solution that banks, fintechs, and international businesses have been waiting for.”

The Real Prize

In addition to compliance benefits, Stripe aims to differentiate itself by targeting markets that have been previously underserved.

“Everyone’s talking about stablecoins in the U.S., but Stripe believes the real prize is outside the states,” Hugentobler said. “While competitors fight for domestic market share, Stripe is building liquidity rails across the Global South, Asia, and Latin America—where demand for dollar-stable value transfer is enormous but bank infrastructure is weak.”

Additionally, Stripe is likely hoping its stablecoin can help solve persistent cross-border payment issues like delays and fees.

“Stripe could lock up international business clients who need fast, cheap, and compliant payment options,” Hugentobler said. “Global companies are desperate for low-friction cross-border payment solutions. Existing payment options are expensive, slow, and often have currency exchange barriers. Stripe’s product is filling the gap.”

The post How Stripe’s Stablecoin Can Differentiate Itself in a Crowded Market appeared first on PaymentsJournal.

The emergence of DeepSeek has shifted the understanding of what AI can accomplish on a comparatively small budget. However, as groundbreaking as the model is, DeepSeek still suffers from many of the limitations that have plagued other AI models, including the reliability of data inputs and the transparency of information.

As Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, found in his Harnessing AI Through Blockchain report, blockchain can be not only the solution for these issues but also the best foundation for one of the most powerful technologies in recent times.

Escaping the Black Box

One of the main issues with AI is that it can provide false or misleading information. This is a problem resulting from centralization—AI is making decisions based on a repository of knowledge that has discrete boundaries.

Another concern is that data scientists often don’t have full transparency into what artificial intelligence is up to within these parameters. This has led to the “black box” problem, where AI has made the wrong decision, but analysts can’t understand why. This issue is exacerbated when AI is faced with a substantial number of variables, as can occur in making complex financial decisions.

A decentralized foundation like blockchain can mitigate both issues. Blockchain is transparent and its records are immutable, so scientists can get full clarity into the data inputs feeding the model and decisions at every step.

AI models can be even more efficient when they are open-source because there is a decentralized community that can ensure the model is optimized and on track. Decentralized AI also distributes tasks that are normally centralized in large data centers across the network.

“Open source, especially paired with blockchain, is the trend going forward,” Hugentobler said. “It’s more efficient, and it eliminates a single point of failure. Moving away from a typical AI model running if-then logic to a more dynamic approach integrating blockchain propels both technologies forward and enables companies to use it for more things.”

Dynamic Smart Contracts

Some of the most dynamic efficiencies gained from shifting AI to the blockchain come from supercharged smart contracts. Smart contracts are digital contracts on the blockchain that execute when certain conditions or thresholds are met.

This could include tasks like issuing a ticket, selling a stock, or sending out a push notification. Once the smart contract executes, the blockchain is updated, it can’t be changed, and the pertinent parties can immediately view the results.

Smart contracts can also be stacked to automate a workflow, with a sequence of actions that are completed in a domino effect. However, when AI and blockchain are combined, smart contracts have the potential to do much more.

“With normal AI, it’s like if Apple stock reaches $60, then sell,” Hugentobler said. “With the dynamic approach with blockchain and AI, it’s if Apple stock is expected to rise within a couple of months based on sentiment or volume, then hold. If Apple stock breaks above the 52-week high on more than average volume, then buy. Otherwise, if it breaks $40 on more than average volume, sell.

“All that can be embedded in the smart contract, so it happens automatically. It can be applied to the stock market, compliance, know your customer (KYC), you name it. In that dynamic model, rather than just the if-then approach, it opens the door to more automation.”

Decentralizing Privacy and Security

Substantial buzz has swirled around the potential for AI in many use cases, but it has been somewhat mitigated as the limits of artificial intelligence have been exposed. In addition to the incidents where AI has provided bad information, there are also privacy and security concerns.

For example, DeepSeek has already been banned from government devices in many countries—including the United States—over concerns about the model’s ties to the Chinese Communist Party (CCP) and the lack of transparency about how DeepSeek uses its data.

In a letter, U.S. lawmakers said that “by using DeepSeek, users are unknowingly sharing highly sensitive, proprietary information with the CCP—such as contracts, documents, and financial records.”

These privacy concerns have also been raised about other centralized AI models because they collate vast amounts of data, often without user consent. There have also been many instances where the data in AI systems has been tampered with, either to spread misinformation or to perpetrate criminal acts.

Blockchain is a better solution because its unchangeable records are fully secure, which drastically reduces the risk of bias or manipulation. The decentralized approach also means users retain control over the data they share with AI.

Integrating Both Technologies

The benefits of digital asset technologies have caused record-high investments by the leading financial institutions over the past few years. Tokenization, stablecoins, and crypto have become far more prevalent—and they are all underpinned by blockchain technology.

Even though AI and digital assets have emerged in disparate arenas, the synergies these technologies share mean they could be better together.

“The crypto industry has been around for 15 to 16 years now, and it’s grown to what it has become today without the help of AI,” Hugentobler said. “But integrating both of those technologies is just going to speed up the pace of change and evolution. I think that’s going to spill into a lot of other areas rather quickly.

“Financial institutions need to assess their use of AI, and they also need to assess their infrastructure. If they can integrate blockchain into their AI systems, there’s a lot that they can do that agentic AI really can’t do.”

The post A Synergy of Technologies: How Blockchain and AI Are Better Together appeared first on PaymentsJournal.

With a clear regulatory framework in place, more European banks are planning to add digital assets in their product offerings.

According to CoinDesk, ING, a Netherlands-based firm, is planning to launch a euro-backed stablecoin. This initiative may involve a joint effort with other EU financial institutions and crypto firms.

Europe’s Markets in Crypto Assets regulations (MiCA) went into effect this year, establishing a framework for how digital assets can be exchanged in the EU. One aspect of MiCA is that stablecoin issuers in the region must obtain an authorization license.

Another rule requires stablecoin issuers to hold a substantial portion of their reserves in EU banks. This requirement was a dealbreaker for Tether, which chose to discontinue its euro-backed stablecoin ahead of MiCA’s launch, citing concerns that this concentration in EU banks could lead to “insolvency and fractional reserve risks.”

Alternatives to USD Stablecoins

In contrast, Circle has chosen to continue offering its EURC stablecoin while maintaining compliance with MiCA. However, the euro stablecoin’s market capitalization is nowhere near that of the company’s USDC dollar-backed product.

The growing dominance of USD stablecoins has raised concerns in the EU, as it increases the region’s dependence on foreign currencies and companies. For this reason, many have proposed that a digital euro—a central bank digital currency (CBDC) issued by the European Central Bank—would be essential to reduce the influence of USD stablecoins.

Two Disparate Worlds

While it may be some time before a digital euro hits the market, French financial institution Société Générale has already issued the first euro-backed stablecoin in the EU. Launched through its SG-Forge digital assets segment, EURCV began on the Ethereum blockchain and will expand to Solana this year.

It remains to be seen whether this stablecoin, along with the upcoming offering from ING et al., will be able to gain traction in a crowded stablecoin market.

However, these offerings are indicative of the continued merging of two previously disparate worlds. Just as EU banks are looking to add digital assets, Circle and other crypto companies have announced plans to pursue a bank charter in the U.S., which would make them full-service financial providers.

The post EU Banks Consider Stablecoin Launches After MiCA appeared first on PaymentsJournal.

More digital assets companies are expanding into traditional financial services territory, as evidenced by two recent moves by Circle.

The firm, best known for its USDC stablecoin, revealed plans to explore applying for a bank charter. Gaining a bank charter would allow the crypto company to offer traditional lending products and take deposits.

Circle also recently shared that its most imminent product launch would be the introduction of a cross-border payments network. A source told Cointelegraph that the new network is “initially targeting remittances but is ultimately aiming to rival Mastercard and Visa.”

Unifying a Fractured Landcape

Cross-border payments have been a pain point for years, facing issues like payment delays and high fees due to the lack of a standardized transaction format. Several solutions have been proposed to unify the fractured landscape, including everything from the SWIFT network to Visa and Mastercard’s worldwide rails.

Interestingly, stablecoins like USDC have been considered one of the leading contenders for cross-border payments because their blockchain foundation makes transactions instant and inexpensive.

However, there has been some recent pushback against stablecoins, as all the leading options are based on the U.S. dollar, which detractors argue only serves to further increase the dollar’s dominance.

Circle has yet to share details on its cross-border solution, so it’s unclear if the network is intended to serve as an alternative to its stablecoin and how it will be positioned in an already crowded landscape.

Taking on Financial Services

Despite concerns about the prevalence of stablecoins, their dominance appears to be holding strong. The success of Circle’s stablecoin, now the second-leading option in a trillion-dollar market, has been the catalyst behind both the company’s moves into financial services.

The promise of digital asset technologies like stablecoins, tokenization, and blockchain is a major reason why so many leading financial institutions are heavily investing in what was once considered crypto-related tech.

However, even as mainstream institutions adopt digital assets, crypto companies have begun to take on aspects of conventional financial services. According to the Wall Street Journal, Circle is not alone in its ambitions to expand beyond crypto. Coinbase, BitGo, and Paxos are also considering applying for a banking license.  

The post Circle Mulls Bank Charter, Unveils Cross-Border Payments Network appeared first on PaymentsJournal.

Although the United States has shown little interest in establishing a central bank digital currency (CBDC) of its own, other nations around the world continue to advance their research and pilot programs. The Bank for International Settlements (BIS), which has taken the lead in the development of CDBCs, announced six new blockchain-related projects last year.

However, the landscape isn’t yet fully cleared for CBDCs to take center stage. A report from Javelin Strategy & Research, CBDCs: Where Are We Now?, looks at the progress of key projects around the world, why the UK is emerging as a leader in the technology, and how these initiatives are likely to shape the future of global financial services.

The “Central Bank of Central Banks”

Established in 1830, the BIS is owned by a consortium of central banks around the world, with both the Federal Reserve Bank of New York and the U.S. Federal Reserve being members. It has been at the forefront of CBDC development, driving collaboration, research, and the testing of real-world applications.

“Being the central bank of central banks in some ways, they recognized the need for digital transformation in central banking early on,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research and author of the report. “They established the BIS Innovation Hub in 2019 focusing on CBDCs, tokenization, and digital payments. They’ve played a crucial role in research and experimentation with CBDCs and led collaborative projects worldwide, given their position.”

Project Agora is the most comprehensive and inclusive CBDC initiative the BIS has undertaken to date. More than 40 major financial institutions are participating in this effort to explore how tokenization can enhance wholesale cross-border payments. For those in the CDBC arena, projects like these offer valuable opportunities to engage with key players, stay informed on emerging developments, and potentially get involved.

Different Approaches for Different Nations

There’s a positive regulatory shift expected in the coming years, but each country maintains distinct regulatory requirements, and each jurisdiction presents its own compliance standards and risks. As CBDC development progresses, companies that stay nimble and closely follow the regulatory landscape will be better positioned to capitalize on emerging opportunities.

But even broader regulatory easing toward cryptocurrency doesn’t necessarily make a region more amenable to CBDCs.

“In January, newly elected President Trump released an executive order titled ‘Strengthening American Leadership in Digital Financial Technology,’” Hugentobler said. “This should provide significant easing in the coming months and years for the digital asset industry overall. But it also prohibited the establishment, issuance, or promotion of CBDCs, so for now progress will be halted in that realm in the United States. For the next four years I don’t see any significant progress happening in the in the U.S.”

Other parts of the world are more intent on paving the way toward a CBDC. Among the central banks exploring digital currencies, the Bank of England (BoE) has taken the lead, actively assessing feasibility and potential benefits. Although still in its exploratory phase, the Digital Pound Project made notable advancements in 2024, driven by pilot programs, technical research, and collaboration with government and private sector players.

“The BoE has been at the forefront of crypto regulation and accepted this new technology before a lot of other countries,” said Hugentobler. “With MiCA creating a clear framework, it puts them in a global leadership stance. Along with other central banks, the Bank of England accepted this and moved quickly to create the infrastructure and technology to trade derivatives, and now it’s one of the biggest markets in in the world.”

Moving Away from Dollars

The BoE has worked with the BIS Innovation Hub to understand best practices and potential challenges, and has participated in research for Project Rosalind, which focused on cross-border CBDCs, APIs, and developing a user-friendly design. But the UK economy appears to be facing headwinds of its own. A shaky domestic economy can serve as a spur for the development of a CBDC.

“We have a luxury here in the United States having the dollar be the reserve currency of the world,” Hugentobler said. “There’s always a strong demand for dollars. Debt that’s denominated in dollars is growing in other countries, and that is typically stronger than a lot of other currencies. When their economy weakens, their purchasing power declines and they need more dollars to pay that debt off. So in a way, other countries could use CBDCs to help with that demand for dollars.

“Looking at the global debt and the deficits in a lot of other countries,” he said, “It could be an escape route type option for them to provide quicker liquidity to their citizens or banks.”

India has also opted for the private blockchain route for its digital rupee, while focusing on a wholesale CBDC pilot. Its main concern is reducing exposure to security risks.

“The economy of India is very accepting of new technologies—namely the digital identity program there that has over a billion people using it,” said Hugentobler. “It really comes down to the consumer’s willingness to use it and the implementation of it.”

The Competition with Stablecoins

Countries around the world—and their central banks—will continue exploring both wholesale and retail CBDCs in the coming years. However, a growing number are focusing on wholesale applications, given the lower monetary risks and fewer regulatory hurdles. This shift puts them in direct competition with stablecoins, which have also gained traction in recent years.  But is there enough room for both CBDCs and stablecoins to thrive in this market?

“Yes, there is,” said Hugentobler. “Central banks settle trillions worth of fiat currency daily. The global remittance market is nearing a trillion dollars, all assets combined—stocks, bonds, real estate, etc.—are worth over 500 trillion globally. Stablecoins and CBDCs are a small sliver of this currently and there’s plenty of room for both.”

The post As the U.S. Shrinks Back, the World Moves Forward on CDBCs appeared first on PaymentsJournal.

As digital assets gain wider adoption, a proposed law in New York would allow state agencies to accept cryptocurrency for government-related payments.

Assembly Bill A7788 would amend state financial laws to allow agencies to accept Bitcoin, Ether, Litecoin, and Bitcoin Cash. This would enable residents to use these digital assets to pay for fines, taxes, penalties, and other obligations.

The proposal also includes a clause allowing the state to charge a service fee to offset transaction costs or fees owed to crypto issuers.

Following the Lead

This move follows the example set by several states and cities that have started accepting digital asset payments. Colorado and Utah have been accepting cryptocurrencies for tax payments for years, and Louisiana recently announced it will be the first state to accept crypto payments for all state services.

Additionally, Detroit will accept crypto for tax and fee payments, making it the largest U.S. city to accept digital asset payments. While Detroit plans to accept many of the leading cryptocurrencies, it will also accept PayPal’s PYUSD stablecoin, as PayPal is facilitating all of the city’s crypto transactions.

The Model for Digital Assets Acceptance

The model for digital asset payments in Louisiana and Detroit could serve as a guideline for crypto payments around the country. In both cases, the public entity doesn’t directly hold any digital assets; all transactions are facilitated by a third-party provider.

This system addresses the volatility that has been one a key reason crypto hasn’t achieved broader acceptance. For instance, once a payment is made in Detroit, PayPal immediately converts the crypto to USD before it reaches the city’s accounts.

These types of integrations are likely to accelerate crypto’s momentum, even after a banner year last year. The increasing incorporation of digital assets technologies into the operations of key financial services providers and essential public organizations means crypto is more stable than ever, and further adoption is likely coming down the pike.

The post New York Residents Could Pay Bills with Crypto, Should Legislation Pass appeared first on PaymentsJournal.

Though the crypto and digital assets industry has experienced its share of fads over the past few years, it has also given rise to transformative technologies like stablecoins and blockchain. These innovations are reshaping the financial landscape. Among them, tokenization has seen growing adoption by the world’s largest financial players—a trend that shows no signs of slowing down.

In his latest report, Tokenization: Growth Trend or Fad?, Joel Hugentobler, Analyst of Cryptocurrency at Javelin Strategy & Research, explores the growing use cases for tokenization, the increasing interest from institutional investors, and the steps financial institutions should take to embrace this powerful technology.

Impressive Growth Rates

Any real-world asset (RWA) can be digitized and placed on the blockchain, from property deeds to stocks. The reasons to tokenize are many—it is a secure, fully transparent process where transactions settle instantly.

Compared to their conventional counterparts, tokenized transactions can also carry significantly lower fees. Once an RWA is digitized, it can be fractionalized and sold to multiple parties, making investments that were previously considered illiquid and expensive attainable to everyday investors.

For all these reasons, tokenization efforts have taken higher priority at financial institutions around the world. Even many central banks—such as the Bank of England—are starting to recognize the technology’s potential.

“It’s not out of the ordinary to see huge compound annual growth rate (CAGR) numbers for early-stage companies or new technology like this,” Hugentobler said. “But depending on how you calculate it, tokenization’s projected CAGRs range anywhere from 400% to 4000%. It’s pretty impressive and there are no signs of slowing down. The number of companies that have launched funds on chain has seen like a 10X in just a couple of years.”

Building a Better Blockchain

While Ethereum remains the leading blockchain for tokenization, Solana is quickly gaining ground. One key reason is speed—the Ethereum network processes around 15 to 30 transactions per second, which can be inefficient for tokenizing high-demand RWAs. In contrast, Solana can handle around 1,000 transactions per second.

Higher fees on Ethereum have also posed challenges for many tokenization use cases. Solana’s transaction fees are often much lower—sometimes under  $0.01 per transaction—making it far more cost-effective for tokenizing assets and performing complex operations.

These advantages are why more financial institutions are investing in Solana. For example, Franklin Templeton recently moved the third-largest tokenized money market fund, valued at $594 million, onto Solana.

As fast as the blockchain is, it could soon get a massive upgrade. Anza is a software development firm that was split off from Solana Labs and tasked with managing the Agave validator client on the blockchain.

In its recently released roadmap, Anza announced that its primary goal is to make Solana faster and more effective, aiming to reach one million transactions per second.

Innovations like this are among the key reasons why tokenization projects are expected to become more prevalent in the coming years.

“There have been huge advancements on the infrastructure side,” Hugentobler told PaymentsJournal. “We have custodians that have stepped up and substantially developed their infrastructure, their security, and their protocols for the institutional players who will drive this forward. That’s led to the most powerful companies in the industry getting involved, like Franklin Templeton and BlackRock.”

Tokenizing Securities Trading

Many of the leading financial firms are also exploring ways to optimize the stock and bond trading process through tokenization. While buying or selling a stock may seem as simple as a click of a button to many modern-day investors, the settlement process behind the scenes can be time-consuming and costly.

Additionally, most stocks are still bought and sold during business hours dictated by the New York Stock Exchange (NYSE). By comparison, crypto and digital assets can be traded around the clock, all year long.

These benefits, coupled with the continued mainstream acceptance of crypto, have caused a shift in sentiment among many Wall Street firms. Most notably, Citadel Securities has previously steered well clear of crypto.

However, this philosophy has changed, as Citadel recently signaled its intention to become a liquidity provider for cryptocurrencies. The firm will now be listed as a market maker on major crypto exchanges like Coinbase, Binance, and Crypto.com.

Citadel and fellow financial giant BlackRock have also considered starting their own stock exchange, potentially based in Texas. The main reason cited was to reduce the cost of trading on the NYSE, but there has also been speculation that the new exchange could be built on blockchain and incorporate tokenized stock trading.

While this initiative may take time to get off the ground, there is clearly a growing place for tokenization in securities trading.

“Equities on the U.S. stock market side are sitting at a valuation of around $555 trillion right now, while on-chain stocks are close to $5 million, so there’s so much room for that to continue,” Hugentobler said. “But I think tokenization of private credit will continue at a high rate—treasuries as well—and there’s a lot of opportunity for everything in between that hasn’t come on-chain yet.”

Preparing for the Arrival of Tokenization

Payments modernization projects have been top of mind for many financial institutions for some time, driven by rapid innovations in the payments space. However, tokenization capabilities can have just as much of an impact as adopting real-time payment support.

“The infrastructure that traditional financial institutions use is more than five decades old, and we’re moving towards this digital economy that has so many benefits and efficiencies and can help build consumer confidence and trust,” Hugentobler said. “Having that transparency, those additional tools, and that optionality definitely provides value to the end user.”

The opportunity to streamline processes that have traditionally been expensive and time-consuming means financial institutions should explore ways to implement tokenization now.

“They need to proactively build a plan, assess the risks, conduct a cost savings analysis, and prepare for what’s coming,” Hugentobler said. “Those that wait are not going to have those first-mover advantages and will be left behind. However, there are companies that have been involved in the industry coming on 15 years now, and there’s a lot of talent and experience out there. They don’t need to go at this alone.”

The post Tokenization Is Playing a Central Role in the Shift to a Digital Economy appeared first on PaymentsJournal.

The shuttering of the National Cryptocurrency Enforcement Unit (NCET), a specialized joint task force led by the Justice Department, should not open the door for more criminal actors to exploit the crypto space.

Established in 2021 under President Biden, NCET was made up of prosecutors from DoJ’s money laundering and cybercrime units, along with attorneys from other government offices. While the formal collaboration between those agencies has now been dissolved, the shift may ultimately result in regulatory oversight being handled by agencies better equipped—both in terms of staffing and mandate—to handle crypto. 

The disbanding was announced in a memo distributed by Deputy Attorney General Todd Blanche, who stated that law enforcement will now focus on prosecuting individuals who defraud digital asset investors, rather than pursuing cases involving larger entities like crypto exchanges.

Reverting to the Relevant Agencies

The closure of the task force will not necessarily reduce law enforcement efforts.

“The government will still go after bad actors, but the systemic stuff—exchanges and service providers—will be policed by the relevant agencies covering banks, commodities, and so forth,” said James Wester, Co-Head of Payments at Javelin Strategy & Research. “That has always seemed the more appropriate way to do things.

“Part of the issue with the previous administration wasn’t just the overzealous pursuit of cases against companies in the space,” he said. “The regulation through enforcement approach meant there were significant overlaps between agencies—not just the DoJ, but the SEC and CFPB as well. That meant that even companies trying to do the right thing ended up facing multiple agencies all investigating similar activities but with different interpretations of the law.”

Bringing Down Money Launderers

NCET was established with the mission of fighting illicit activity in crypto markets, with a particular focus on anti-money laundering enforcement. Among the cases it has worked on are an investigation into a hacker who exploited a crypto trading protocol for more than $100 million, and probes into North Korean actors who helped launder proceeds from crypto-related hacks. 

Perhaps the most prominent success story for NCET is the Tornado Cash case. Tornado Cash was a cryptocurrency mixer accused of facilitating more than $1 billion in money laundering transactions and laundering hundreds of millions of dollars for the Lazarus Group, a North Korean cybercrime organization. One of Tornado Cash’s co-founders was indicted in August 2023 and is scheduled to go to trial in July; the other co-founder has yet to be located.

The post Closing of Crypto Task Force Shouldn’t Hinder Law Enforcement appeared first on PaymentsJournal.

Over the next three months, South Korea will conduct a trial run of its newly launched central bank digital currency (CBDC), the digital won.

During this period, up to 100,000 citizens—ages 19 or older and holding an account at a participating bank—can convert their deposits into the CBDC.

These consumers can use digital won to pay for purchases at coffee shops, supermarkets, K-Pop merchandise stores, and delivery platforms. However, transactions will be capped at 5 million won ($3,416) during the pilot.

Participants will also be able to use the CBDC at 7-Eleven locations in the region. The convenience store chain will offer a 10% discount on all purchases made with the digital currency. According to a 7-Eleven executive, the company sees this initiative as an opportunity to embrace new technologies and accelerate its digital transformation.

Monitoring Privacy Concerns

Digital currencies offer powerful efficiency and security benefits, yet the CBDC model has faced pushback in many parts of the world. The crux of the argument against them is that CBDCs could grant governments too much insight into their citizens’ transaction histories, potentially compromising privacy.

As an alternative, many advocate for stablecoins—digital assets issued by crypto companies instead of central banks. Stablecoins are a better solution because they have both the stability of fiat currencies and the efficiency of cryptocurrencies.

Countering Stablecoin Dominance

On the flip side, many argue that stablecoins aren’t an ideal solution because all the leading stablecoins are based on the U.S. dollar. While there are stablecoins that track other currencies—such as the recently launched Mexican peso-backed stablecoin—these tokens lag far behind the billions in market capitalization enjoyed by the leading USD stablecoin issuers.

As stablecoins have proliferated, concerns have also emerged about the pivotal role that firms like Tether and Circle now play in the global economy.

For these reasons, many regions have pushed for CBDCs as alternatives to stablecoins. For example, a member of the European Central Bank’s board recently argued that because stablecoins were gaining traction in the region, the EU should issue a digital euro as soon as possible.

The post South Korea to Pilot CBDC at Retailers, Including 7-Eleven appeared first on PaymentsJournal.

JPMorgan’s recently rebranded digital assets unit, Kinexys, will enable commercial clients of India’s Axis Bank to send and receive USD transfers in real-time both domestically and cross-border.

According to Reuters, this will be the first time organizations in India will have access this functionality. Two key benefits of this feature include greater flexibility and increased liquidity due to instant settlement.

In a statement, Naveen Mallela, Global Co-Head at Kinexys, gave an example of how this capability could be advantageous—allowing companies in India to make dollar payments to Middle Eastern organizations on Sundays, which are workdays in the region.

Solving for Forex Issues

Kinexys began as Onyx, one of the world’s first bank-operated blockchains. JPMorgan rebranded the platform last year, announcing its objective was to drive on-chain foreign exchange conversions. The program initially focused on facilitating real-time dollar-to-euro conversions.

There is a demonstrable need for this type of solution, as demand for cross-border payments has increased, and the cost and efficiency of currency conversions remain pain points.

“The forex market is one of the largest and most liquid markets in the world, and 24/7 instant settlement has been much needed,” Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research told PaymentsJournal. “This will help reduce counterparty risk in multi-bank transactions and should provide greater transparency to the participants involved.”

A Blockchain-Based Financial Ecosystem

The unique demands of cross-border payments have led to much speculation about which payment rail will eventually become the platform of choice.

Cryptocurrencies are attractive for cross-border transactions due to their decentralized nature, but their volatility often makes them impractical for many use cases. For this reason, stablecoins—designed to track fiat currencies—have emerged as a leading contender.

However, global networks operated by credit card companies like Visa and Mastercard could also serve this purpose. Additionally, global messaging network SWIFT and Europe’s SEPA have also emerged as potential solutions.

With so many offerings, it becomes more likely that multiple platforms will coexist in the global payments landscape.

As Mallela noted in his statement: “Our work with Axis Bank marks the next step in creating a growing industry-wide blockchain-based financial ecosystem with interoperability among central bank digital currencies, stablecoins and other digital currency solutions.”

The post JPMorgan to Facilitate Real-Time USD Payments in India appeared first on PaymentsJournal.

The stablecoin market is more competitive than ever, yet it remains dominated by USD-backed assets like Tether’s USDT and Circle’s USDC. In this dynamic environment, Latin American crypto exchange Bitso is launching a Mexican peso-backed stablecoin, which could serve as a cross-border payments solution in the region.

The exchange has established a subsidiary, Juno, to issue its digital assets. Juno’s first launch will be the MXNB stablecoin. Juno will operate independently from Bitso to manage MXNB and will conduct its own reserve audits and reporting.

Ben Reid, Head of Stablecoins at Bitso Business, said that a primary objective for the stablecoin is to drive foreign investment by allowing “global companies to do business in Latin America in a more efficient way” than the conventional financial infrastructure.

Stablecoin Store of Value

The launch follows a recent Bitso study on Latin American crypto adoption, in which the company reported a 9% year-over-year increase in stablecoin purchases on its exchange in 2024.

While there are existing Mexican peso-backed stablecoins, such as Tether’s MXNT, Bitso noted that most of last year’s growth was seen in USD-backed stablecoins. USDT and USDC together accounted for 39% of total purchases on the platform in 2024.

Bitso referred to these stablecoins as a store of value for Latin American citizens grappling with difficult macroeconomic conditions, including high inflation and currency devaluation.

Solving Cross-Border Payments Struggles

Stablecoins have gained traction in regions with volatile currencies or underbanked populations because they offer a reliable alternative. They have also emerged as prime candidates for cross-border remittances, as their blockchain foundation ensures swift and secure payments.

Cross-border payments are more in-demand than ever but remain plagued by issues like slow settlement times, fraud, and exorbitant fees. While a Mexican peso stablecoin like MXNB would undoubtedly be a more reliable alternative to fiat currencies, there are still questions about how it will carve out a niche in a competitive market.

To drive adoption of MXNB, Juno plans to launch its Juno Mint Platform, which gives businesses the APIs and tools to redeem and convert MXNB. The service also facilitates fiat conversions and stablecoin exchanges.

The post Mexican Peso Stablecoin Launches to Streamline Cross-Border Payments in Latin America appeared first on PaymentsJournal.

Australia has proposed new rules to govern the widespread implementation of technologies like crypto, CBDCs, and tokenization as part of its efforts to modernize the economy with digital assets.

In a whitepaper, the Australian Treasury noted that it would work with the Australian Securities and Investment Commission and the Reserve Bank of Australia to pilot programs using tokenized money, such as stablecoins, to settle transactions.

The regulators also proposed a licensing structure for crypto exchanges, called Digital Asset Platforms (DAPs). DAPS will be required to meet certain financial services standards, including capital levels and privacy disclosures, and must use third-party custodians to store customer assets.

A Clear Crypto Framework

This news follows the launch of the Markets in Crypto Assets (MiCA) regulations by the European Union. MiCA is a comprehensive legal framework for the issuance, investment, and trading of crypto assets across the EU, and it has been viewed by many as a global benchmark for crypto regulation.

Establishing a transparent regulatory framework creates an environment with clear boundaries, allowing companies to build new products without fear of legal repercussions. The lack of a clear crypto framework in the U.S. has often been criticized as a hindrance to innovation.

Paying Crypto Dividends

This assertion is supported by Singapore’s approach to digital assets. The country has strived to be a leader in financial technology, and in 2019, Singapore rolled out its cryptocurrency regulations framework known as the Payment Services Act (PSA).

This framework gives the Monetary Authority of Singapore jurisdiction over companies offering digital payment token (DPT) services, including activities like operating exchanges, trading DPTs, and facilitating wallets.

The early groundwork laid by Singapore is paying dividends. According to Cointelegraph, the country has become a key destination for Web3 companies, with Singapore issuing twice as many crypto licenses in 2024 as it did in 2023.

Research from ApeX Protocol found that Singapore is home to 1,600 blockchain patents, 2,433 jobs in the industry, and 81 crypto exchanges, which—as Cointelegraph pointed out—are impressive numbers for a country with a population of less than 6 million people.

The post Australia Proposes Ambitious Regulatory Framework for Crypto and Digital Assets appeared first on PaymentsJournal.

Sophisticated malware is becoming an increasingly potent threat, as evidenced by the remote access trojan (RAT) that was recently discovered by Microsoft.

Dubbed StilachiRAT, the malware is designed to scan the Google Chrome browser for any of 20 crypto wallet extensions, including platforms like Coinbase Wallet, MetaMask, and Trust Wallet.

According to Microsoft, once the RAT detects a crypto wallet, it employs various techniques to siphon information from the system. These include extracting saved browser credentials and monitoring clipboard activity for passwords or crypto keys.

Once this sensitive data falls into the hands of bad actors, they can quickly drain the victim’s crypto wallet.

Bringing Awareness to the Capabilities

Microsoft first discovered evidence of StilachiRAT in November, and the tech firm said that it hasn’t yet been able to identify the cybercriminals behind the malware.

Though the RAT hasn’t yet gained widespread traction, Microsoft felt it was necessary to raise awareness about the malware due to its capabilities, the rapid evolution of the malware ecosystem, and to help reduce the number of potential victims.

One of the functions that makes StilachiRAT more impactful is its built-in evasion and anti-forensics mechanisms. For example, the malware can clear event logs and detect if it is operating in a sandbox environment to stave off detection.

To protect themselves from this threat, Microsoft suggests that crypto holders ensure they have up-to-date antivirus software, anti-phishing tools, and anti-malware defenses on their devices.

Threats Against Crypto Owners

Cryptocurrencies have gained significant attention over the past few years, but their decentralized nature—coupled with an often lacking regulatory framework—has made digital asset owners prime targets for cybercriminals.

These threats are supercharged by technology like Malware-as-a-Service (MaaS) platforms, which lower the technological bar for criminals and even allow them to outsource attacks. According to data from Darktrace, MaaS-based attacks picked up steam in the latter half of last year and now account for 57% of identified fraud activities.

One of the most commonly used malware tools identified in the Darktrace study was remote access trojan software, because of its efficiency and capability.

The post Microsoft Identifies Remote Access Trojan Built to Drain Crypto Wallets appeared first on PaymentsJournal.

Many European lawmakers have advocated for the launch of the digital euro as a solution to the continued dominance of USD-backed stablecoins, but a recent outage at the European Central Bank (ECB) has raised concerns about the viability of the central bank digital currency (CBDC).

Plans for the digital euro have been years in the making, and ECB officials are hopeful for a fall launch of the long-awaited project. However, the recent seven-hour outage of banking services at the ECB left trillions of euros in jeopardy, calling the future of the CBDC into question.

Members from four of the eight groups in the European Parliament have expressed concerns about the ECB’s ability to manage a digital euro. According to Markus Ferber of the European People’s Party, the largest group in the current parliament, these worries were exacerbated because the ECB “cannot even keep their day-to-day operations running smoothly.”

Differentiating the Systems

The recent outage was caused by a hardware defect in the ECB’s Target 2 (T2) system, which settles trillions in payments from the EU’s businesses and consumers, as well as investment trades.

Although the system is now back online, the substantial volume of payments it handles led to delays in paychecks, government assistance payments, and securities trades.

However, an ECB official told Reuters that the infrastructure for its planned digital euro is modeled after its TARGET Instant Payment Settlement (TIPS) system, which handles real-time payments in the region. A spokesperson noted that the TIPS system operates 24/7 and handles more transactions, but with lower value, compared to the T2 system. The TIPS system has been reliable, only experiencing minor delays during the T2 outage.

Stablecoins Gaining Ground

It’s unclear whether the differentiation of systems will be sufficient to address the newfound doubts of lawmakers who still need to approve the digital euro.

However, it’s evident that dollar-based stablecoins continue to gain ground. The security and speed of the blockchain-based assets have made stablecoins ideal candidates for cross-border transactions, with a growing range of use cases.

Stablecoins are also expanding their global reach. For example, Circle’s USDC became the first stablecoin approved for use in Japan, a country that had previously banned foreign currency-backed digital assets. As stablecoins proliferate, it will become increasingly harder for government-backed assets like the digital euro to gain traction—especially if operational concerns at the ECB persist.

The post Questions Arise About Digital Euro Amid ECB Outage, Stablecoin Dominance appeared first on PaymentsJournal.

In the latest step toward global stablecoin adoption, the crypto subsidiary of Japan’s SBI financial services company will soon support Circle’s USDC stablecoin.

SBI Group is a vast conglomerate with businesses spanning industries from banking to biotechnology. Its crypto division, VC Trade, was launched almost a decade ago and currently supports digital assets like bitcoin, Ether, and XRP.

Until two years ago, the Japanese government had a ban on stablecoins backed by foreign currencies. Although regulations have since eased, questions remained about how soon a USD-tracking stablecoin would hit the market.

SBI VC Trade CEO Tomohiko Kondo recently stated that the platform had received word from the Kanto Regional Financial Bureau’s Tokyo office that it was registered as an electronic payment instrument trading business operator. The platform plans to launch a USDC trading trial for selected users later this month, followed by a widescale USDC rollout soon.

Global Reach

Kondo has also said that SBI VC Trade was “the first and only company in Japan to obtain a so-called stablecoin license.” Circle founder and CEO Jeremy Allaire echoed this sentiment, calling USDC the “first and only global dollar stablecoin to become approved for use in Japan.”

Circle has been rapidly expanding USDC’s global reach, as the stablecoin recently achieved compliance with Canada’s new stablecoin laws. The Canadian Securities Administrators implemented a set of rules defining Value-Referenced Crypto Assets (VCRA), including digital assets that track the value of a fiat currency. As of December, USDC was the only stablecoin to meet Canada’s requirements.

Jumping Ship

While Circle is making strides, Tether’s USDT stablecoin still holds a commanding position in the market, boasting more than double the market capitalization of USDC. Additionally, numerous other stablecoin options, including those from Dai, Ethena, and even PayPal’s PYUSD, pose challenges to Circle’s position. However, despite the crowded landscape, Circle continues to stand out.

“At the end of the day, they’re all pretty much the same product, but they’re not managed the same,” Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research told PaymentsJournal. “If Circle continues to gain compliance in other jurisdictions, retail users will likely jump ship because their platform faces less risks. A lot of institutions prefer USDC over Tether currently, and this trend will continue as well.”

The post Circle’s USDC to Become “First and Only” USD Stablecoin in Japan appeared first on PaymentsJournal.

Financial services providers across the spectrum have increasingly sought to leverage digital asset technologies over the past few years. Now, Raise plans to launch its digital gift card platform, built on blockchain technology.

The Chicago-based startup raised $63 million in its latest funding round, which further bolsters previous investments from companies like PayPal and Accel. In an interview with Coindesk, Raise Founder and CEO George Bousis said the company differentiates itself by offering a digital Smart Card that is a “fully on-chain, programmable retail currency.”

Gift cards have become one of the most popular gifts, both for others and for personal use. Consumers are buying gift cards not only for their flexibility but also because prepaid cards are increasingly integrated into loyalty programs and promotions.

Equal Popularity

While physical gift cards remain the top choice, data from Javelin suggests that digital gift cards could be equally popular by the end of the decade. Digital gift cards are much easier to purchase and send, and they also allow the sender to personalize their gift with videos or messages.

However, security concerns may impact digital prepaid cards. There’s the risk of fraud or unauthorized access, as well as the possibility that gift card details could be exposed in a data breach. Additionally, cybercriminals could duplicate and deplete a digital gift card before the recipient has a chance to use it.

Leveraging Smart Contracts

Blockchain mitigates many of these security risks because it doesn’t store information in a single location. As a decentralized platform, it shares financial data across the chain. The records stored on the blockchain are encrypted and immutable, making it harder for criminals to access and duplicate.

Blockchain also improves the gift card experience. Blockchain transactions happen nearly instantly, so gift cards balances are updated in real-time.

The decentralized model reduces the need for third-party intervention, which can lower the expense of blockchain transactions. Costs can also be further reduced by smart contracts—such as those that power Raise’s Smart Cards program—allowing actions like balance adjustments and refunds to be programmed and automatically executed.

The post Raise Gets Funding to Develop Blockchain-Based Digital Gift Cards appeared first on PaymentsJournal.

As the use of stablecoins increases, Singapore’s Metro department store chain will begin supporting stablecoin transactions both in-store and online.

According to Cointelegraph, the integration will be powered by crypto platform Dtcpay. Metro customers will be able to make purchases using dollar-based assets like Tether’s USDT and Circle’s USDC, as well as FD121’s First Digital USD and the Worldwide USD (WUSD) stablecoin issued by the Worldwide Stablecoin Payment Network.

Founded almost 70 years ago, Metro department stores have since grown into an important brand across many Asian markets. However, stablecoin payments will initially be available only at the Metro Paragon and Metro Woodlands locations in Singapore.

A Viable Asset

Stablecoins have been considered one of the most viable digital assets for everyday transactions because they aren’t as volatile as many cryptocurrencies. However, until now, the majority of stablecoin transactions have been limited to crypto exchanges.

The adoption of stablecoins in retail represents another critical step toward what many consider an impending golden age of stablecoins. The use cases for a digital asset that tracks a fiat currency are numerous, such as in cross-border payments and in countries that lack a stable fiat currency.

Stablecoins Are Here to Stay

Though there are increasing applications for stablecoins, the most significant factor driving the momentum of these digital assets is their increased adoption by major players in the payments industry like PayPal and Stripe.

Two years ago, PayPal launched its PayPal USD (PYUSD) stablecoin, which soon reached a market capitalization of $1 billion. While PYUSD’s market share is still just a fraction of Tether’s industry leading USDT stablecoin, PayPal has a well-established network of partners and financial institutions that it can leverage to drive growth.

The same can be said for Stripe, which finally added crypto transactions into its payments platform after a series of attempts over the years. However, more significant than the crypto integration was Stripe’s $1.1 billion acquisition of stablecoin company Bridge in October.

The purchase was one of the largest acquisitions in crypto and digital assets history, but it also exemplified financial services providers’ growing belief that stablecoins are here to stay.

The post Singapore’s Metro Department Stores to Support Stablecoin Transactions appeared first on PaymentsJournal.

After its watershed collapse, failed crypto exchange FTX is set to send roughly $1.2 billion in repayments to its first group of creditors.

FTX Digital Markets, the Bahamian unit of the firm, will begin disbursing initial repayments to users owed less than $50,000. These “Convenience Class” creditors are expected to receive 100% of their claim amount, plus 9% interest per year.

The repayments are based on the value of the creditors’ holdings as of the day the cryptocurrency exchange declared bankruptcy, almost three years ago. The $9 billion collapse of FTX followed a series of misrepresentations and mismanagement by the company’s leadership, marking a significant blow to the crypto and digital assets industry.

Life-Shattering Impacts

Though the FTX bankruptcy caused widespread ramifications across the industry, it had life-altering effects on many creditors.

“Our life savings were stolen overnight,” Sunil Kavuri, an FTX creditor, told Cointelegraph. “We had earmarked (funds) for buying homes, children’s education. Many were depressed, suicidal, and had panic attacks…I heard of at least three suicides. Many FTX creditors are left in large debt, taking out loans to cover living costs.”

The FTX collapse was one of the key catalysts behind the subsequent “crypto winter,” during which bitcoin plummeted to around $16,000. The highly publicized bankruptcy was also considered an impetus behind a series of enforcement actions that the U.S. Securities and Exchange Commission imposed on crypto exchanges in recent years.

Strengthening Sentiment

The crypto industry has bounced back, and it had a banner year last year on the strength of new crypto ETFs, more institutional backing, and tech innovations. While sentiment around the crypto industry is stronger, there are still lingering concerns about the volatility and security of exchanges that are not fully regulated in the U.S.

The FTX repayments are a step towards allaying these concerns, but there has been criticism of the payment model. One of the main points of contention is that crypto prices have skyrocketed in the past year, bitcoin has reached an all-time high, and these gains aren’t accounted for in the repayments.

Still, there are some experts who believe that FTX creditors may be confident enough to reinvest some of their repaid funds back into the crypto market.

The post FTX to Repay Creditors in a Significant Step for the Crypto Industry appeared first on PaymentsJournal.

Coinbase intends to return to India after being forced to shut down its operations in the country over a year ago.

According to TechCrunch, Coinbase has met with several authorities in India, including the Financial Intelligence Unit (FIU), a government agency that oversees financial transactions.  

Coinbase’s previous attempts to establish crypto services in the country have been unsuccessful, including a 2022 integration with the India’s United Payments Interface (UPI) instant payments service, which was suspended after just three days. The service was halted because the National Payment Corporation of India stated that it did not recognize the legal standing of any crypto exchanges using UPI.

A year later, Coinbase was forced to pause all operations in India due to regulatory issues. Coinbase CEO Brian Armstrong later said that the crypto exchange had faced “informal pressure” from the Reserve Bank of India to cease trading in the country. While crypto trading is not illegal in India, the market remains small, partly due to the government’s 30% tax on crypto income and 1% deductions on each transaction.

Opening the Door

Coinbase hasn’t been the only crypto organization to face regulatory challenges in the country. Kraken and Binance were both forced to suspend operations in India after the exchanges faced accusations from the FIU that they were illegally operating in the country. The FIU requires more stringent disclosures on user activities than many governments.

However, Binance resumed crypto operations in India last year after assuring the FIU that it would fully comply with all requirements. This approval opened the door for other foreign crypto exchanges to operate in India. A Coinbase spokesperson told TechCrunch that the company “intends to comply with applicable regulatory requirements,” but declined to comment about any upcoming FIU registration.

An Innovation Hotbed

India has been a hub of payments innovation, driven by the country’s rapid adoption of UPI instant payments. UPI is now the most popular payment method in the world’s most populous nation, and its success has led India to establish similar operations globally.

Though crypto adoption in the country has been slow, Coinbase executives pointed to India’s strong community of Web3 developers. According to Cointelegraph, India had the highest rate of crypto adoption in the world last year, despite restrictions on foreign crypto exchanges.

The post Coinbase Is Working Toward Return to India Amid Softened Crypto Stance appeared first on PaymentsJournal.

Fed Chair Jerome Powell’s firm stance that a central bank digital currency will not happen under his watch aligns the U.S. with other nations that have been slowing their own CBDC developments.

While the Fed has no plans to pursue a CBDC, nearly a third of central banks worldwide have delayed their own digital currency initiatives, according to a survey of 34 central banks by the Official Monetary and Financial Institutions Forum.

The survey found that interest in issuing a CBDC has steadily declined. Some 18% of respondents said they are more inclined to issue one than in previous years, down from 38% in 2022.

Delays are largely attributed to concerns over regulatory and governance frameworks, as well as economic challenges that have taken precedence over CBDC development, the data shows.

Republican Opposition

The Republican Party, which has been vocal in its opposition to a CBDC, cites privacy concerns as a key issue. A year ago, five Republican senators introduced legislation to prevent the Biden administration from issuing a CBDC. At the time, Senator Tedd Budd of North Carolina stated that a CBDC would enable the federal government to monitor  and control Americans’ spending habits.

In one of his first acts after regaining the White House, President Trump issued an executive order “prohibiting the establishment, issuance, circulation, and use of a CBDC within the jurisdiction of the United States.”

Given that the GOP currently controls all three branches of government, Powell’s statement may be as much an acknowledgment of reality as a strategic decision. He has noted that creating a CBDC would require an act of Congress—an unlikely prospect with a Republican majority in both houses.

Pilot Programs and Testing Continue

Despite notes of caution, exploration into the possibilities of CBDCs continues. Thus far, only three countries—Jamaica, the Bahamas, and Nigeria—have issued a CBDC, while 44 other nations have launched some form of pilot program, according to the Atlantic Council.

More than 40 major financial institutions are working with the Bank for International Settlements, a consortium of seven central banks that includes the Bank of England and the Federal Reserve Bank of New York, on Project Agora—the most comprehensive CBDC project to date. The Bank of England has taken the lead in exploring CBDCs, actively assessing their feasibility and potential benefits.

China’s digital yuan, e-CNY, may be the first major CBDC. It has been tested across several major cities, with millions of transactions processed during the recent Lunar New Year.

The post As Powell Commits to No CBDC, Global Momentum Stalls appeared first on PaymentsJournal.

The U.S. Senate held hearings this week on whether the traditional banking industry has debanked accounts connected to cryptocurrency. While both Republicans and Democrats agree that debanking is a real problem, their approaches to a solution differ significantly.

The crypto industry maintains that federal regulators have quietly supported its debanking, though there is no definitive proof. Nathan McCauley, CEO and Co-Founder of Anchorage Digital, a crypto platform, testified during the hearing that his company lost its bank account and that dozens of banks subsequently refused to do business with him.

The Republican side, led by Sen. Kevin Cramer (R-ND), supports the Fair Access to Banking Act, which prohibits banks from categorically discriminating against legal industries. The Democratic side, spearheaded by Sen. Elizabeth Warren (D-Mass.), wants the Consumer Financial Protection Bureau (CFPB) to maintain oversight of the banking industry to ensure fairness.

Conflating the Issues

Both parties seem eager to steer the discussion toward issues only loosely related to crypto. Democrats argued that debanking crypto aligns with the unbanking of low-income and minority bank customers, a cause the CFPB has been fighting against.

During the hearing, Warren noted: “I know that the Consumer Financial Protection Bureau is a favorite whipping boy of Republicans on this committee, but the CFPB is the main agency in our government that is actively working to stop unfair debanking.”

Meanwhile, Cramer linked the issue to the ongoing complaint that banks have been hostile to conservatives—a talking point that President Trump has been pushing. Cramer said that bank presidents have told him they want to remove “political pressure from the regulator they fear, or the political movement of the day, or the activist investors trying to impose their values.”

“For the crypto and digital asset market, the issue of debanking is critical because it means a lack of access for crypto companies to traditional financial services like payment rails,” said James Wester, Co-Head of Payments at Javelin Strategy & Research. “Where the topic has become cloudy is that debanking is seen by conservatives as a political, not just a crypto, issue. Meanwhile, those on the left are conflating debanking with a lack of access to retail banking services by low income or minority consumers.”

A Nonpartisan Resolution

Until recently, crypto was not viewed as a partisan issue, with support and skepticism coming from both sides of the aisle. According to Wester, the resolution to the debanking problem is unlikely to follow a clear political path.

“Ultimately, what the crypto market wants, and needs if it is to succeed in the U.S., is a clear regulatory framework that allows it to work with traditional, regulated financial services,” said Wester. “That will take some bipartisan support, and it does look like that will happen.”

The post Senate Debates the Debanking of Crypto appeared first on PaymentsJournal.

After the massive success of its U.S. bitcoin exchange-traded fund (ETF), BlackRock plans to launch a similar product in the European Union.

As the world’s largest asset manager, BlackRock has attracted more than $57 billion in net assets to its iShares Bitcoin Trust (IBIT) ETF in just over a year. IBIT is the most popular U.S. bitcoin ETF among 12 such products that have emerged since the landmark approval by the U.S. Securities and Exchange Commission.

BlackRock’s European Bitcoin exchange-traded product (ETP) will reportedly be based in Switzerland, marking the company’s first bitcoin fund to be traded outside of North America. Recently, BlackRock launched a new bitcoin ETF on the Canadian stock exchange, Cboe Canada, providing Canadian investors with access to IBIT.

“This is no surprise as BlackRock’s bitcoin ETF, and all the bitcoin ETFs for that matter, were the most successful ETFs in history,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “People are recognizing BlackRock’s ‘stamp of approval’ and also noticing that bitcoin—although at times somewhat correlated to the Nasdaq—strongly outperforms most other assets.”

Institutional Interest

The U.S. approval of bitcoin ETFs, and the subsequent launch of Ethereum ETFs, were key drivers behind a banner year for crypto and digital assets. Bitcoin hit an all-time high, surpassing the $100,000 threshold, largely due to growing interest from many of the world’s largest financial institutions. Institutional interest in other digital assets technologies like tokenization, blockchain, and stablecoins is also surging.

However, the emergence of these powerful technologies and the massive inflows into crypto have sparked calls for regulation of the nascent industry. To that end, the EU has established its Markets in Crypto-Assets (MiCA) regulations. The framework outlines guidelines for issuing and trading digital assets, detailing how companies must authorize and supervise transactions, as well as provide disclosures.

An Attractive Region

It has been widely speculated that a transparent legal framework for digital asset transactions will make the EU an attractive market for crypto organizations. Robinhood recently expanded its services in the region, and the firm believes the EU can rival the U.S. in terms of total addressable crypto market.

According to data from Bloomberg, BlackRock plans to start marketing its new ETP in the EU as soon as this month.

“This will continue to help spread adoption as more people become aware and engaged,” Hugentobler said. “Many people will start with the ETF, then open a self-custody account and hold it themselves—which will further strengthen and grow the network.”

The post BlackRock Plans to Launch Bitcoin Exchange-Traded Product in Europe appeared first on PaymentsJournal.

Tether will launch its flagship stablecoin, USDT, on the Bitcoin blockchain and the Lightning Network, making it available on the infrastructure that powers the world’s largest cryptocurrency. This move expands the reach of the world’s most dominant stablecoin, which holds nearly $140 billion in market share.

Tether processed $10 trillion worth of transactions last year, while the Bitcoin network processed over $19 billion. For Tether’s part, the crypto firm manages USDT across more than 10 blockchains, including Ethereum, Tron, Solana, and Avalanche. Most stablecoins are built on these blockchains, which primarily operate on a smart contract infrastructure.

A Formidable Base

Tether’s integration with the Bitcoin Network was made possible by the Taproot Assets protocol, which was launched by Lightning Labs. This platform allows digital assets to be issued on the Bitcoin base layer and transferred over the Lightning Network.

The integration with the Bitcoin and Lightning networks represents a significant step that will expand Tether’s already formidable user base by millions. According to Cointelegraph, merchants accepting Bitcoin over Lightning will be able to add USDT as a payment option using the same infrastructure.

Lightning Labs CEO Elizabeth Stark told Cointelegraph that, “this integration also brings Bitcoin to the many users in emerging markets who rely on stablecoins regularly as a hedge against the devaluation of their local currencies and savings.”

Cementing Its Status

The use cases for stablecoins continue to expand, driving the rapid worldwide adoption of tokens. While new stablecoins are issued every day, Tether’s market capitalization is nearly three times that of its closest rival, Circle. The integration with the Bitcoin network should solidify USDT’s status as the forerunner in the segment.

In addition to stablecoins, the Taproom Assets protocol supports the transfer of tokenized assets. Tokenization has been another rapidly growing segment in the digital assets industry, fueled by the strong interest of many of the world’s largest institutions.

Tether launched its own long-awaited tokenization platform, Hadron, last year. Hadron currently supports the Ethereum, Avalanche, and Liquid by Blockstream blockchains, but the company said it plans to expand the platform’s reach.

The post Tether to Bring the World’s Largest Stablecoin to Bitcoin, Lightning Network appeared first on PaymentsJournal.

The institutional adoption of crypto and digital assets is at a higher level than ever. According to Ripple’s 2024 New Value Survey, the overwhelming sentiment among North American respondents is that digital assets and crypto will have a dramatic impact on business, finance, and society.

That being said, there is still some reticence, especially among North American organizations. Concerns about the lack of regulatory clarity and the potential for fraud, coupled with a reliance on legacy systems, have kept many of those institutions from adopting a modernized payments infrastructure that incorporates digital assets.

Key insights from the report are below, including the payments challenges that organizations face and the ways they’re leveraging blockchain-based solutions to overcome these challenges.

Digital Assets Will Impact Organizations Considerably

Ripple polled roughly 1,800 financial leaders across a spectrum of roles, including financial institution executives, fintech leaders, and commercial treasury management professionals.

Over 85% of respondents said that digital assets will have either a massive or significant impact on the business world. An even higher percentage anticipated that these effects would be even more substantial in the finance sector.

North American leaders’ expectations regarding the impact of digital assets on finance align closely with their European counterparts and are slightly higher than those from Asia Pacific. However, respondents from the Middle East, Africa, and Latin America expressed greater expectations for the influence of digital assets.

Blockchain was highlighted as a potential gamechanger across the board. Roughly 89% of respondents said they either use or plan to use blockchain-native currencies for payments, including stablecoins, central bank digital currencies (CBDCs), and cryptocurrencies. Use cases identified include the buying, selling, and trading of digital assets, payment acceptance, and cross-border payments.

Over half of North American participants believe that faster payment and settlement is the primary benefit of incorporating blockchain-based currencies, and that particularly applies to cross-border payments. The next most cited benefit was the always-on availability digital assets provide, followed by the cost savings they deliver. 

There is Still Payments Progress to be Made

While organizations recognize the benefits of adopting digital assets technologies, there is still progress to be made in implementing the necessary technology and infrastructure to support crypto.

Approximately 70% of commercial leaders reported still using bank transfers, such as wire and ACH, for cross-border payments. Additionally, they relied more heavily on digital wallets and credit cards compared to their global counterparts.

The technologies they use to manage their cross-border money flows are bank platforms, payment providers, and enterprise resource planning systems, in that order. Treasury management systems like Kyriba ranked as the fourth most popular option.

Credit cards remain a fixture in the U.S. and may be one reason the country lags behind global peers in adopting emerging innovations like open banking, digital wallets, and other payment alternatives. The convenience and processing of credit cards—compared to ACH—are likely reasons why payment leaders rely on them, even in spite of higher fees. 

As a result, the most frequently reported cross-border payments challenge for North American financial leaders is the high cost and fee structure associated with these transactions. When asked about the types of fees their business incurs most often in cross-border transactions, organizations cited foreign exchange fees, transfer fees, and platform fees as the top three.

Challenges with Cross-Border Payments Persist

After fees, respondents identified poor data security as their next biggest challenge with cross-border payments. This includes risks associated with incorporating digital assets, where many cited the security of the technology and price volatility as the most pressing concerns.

Personal career risk was another significant concern among respondents in North America, where it was notably higher than among peers in other regions. Enterprise finance professionals, in particular, expressed greater concern about reputational risks.

The fact that financial professionals are concerned that crypto advocacy could jeopardize their career indicates there still isn’t an overarching comfort level with digital assets and crypto in this region. This could be due to the lack of a clear regulatory framework for digital assets, or bad press about crypto fraud and other bad actors.

Blockchain-Based Benefits

While the concerns are genuine, financial leaders are hopeful that stablecoins, crypto, and CBDCs can ease several pain points for businesses. The top four issues that digital assets can help resolve are a lack of financial transparency, limited global payment network reach, poor data quality, and long settlement times.

These issues can be mitigated with blockchain-based solutions. For example, blockchain and distributed ledger technologies could reduce cross-border payment fees by minimizing the number of intermediaries involved in the payment flow.

This is particularly relevant for organizations sending payments in more exotic fiat currencies or in hard-to-reach regions. Blockchain can also eliminate the lack of liquidity and the settlement delays that can arise from processing through central or intermediary banks.

The transparent nature of blockchain can allay concerns about poor data quality by helping transaction parties verify payment details and reduce the potential for errors or fraud. In addition, the distributed nature of blockchain helps prevent unauthorized access and safeguards transaction data.

While there may always be price volatility concerns with certain cryptocurrencies, some cross-border payments platforms ensure customers are not subject to price fluctuations. For instance, Ripple Payments uses digital assets and stablecoins as a bridge between fiat currencies in a cross-border transaction.

With Ripple Payments, there is no need for additional intermediaries or correspondent banks, settlement is nearly instant, and customers aren’t required to hold crypto on their balance sheet.

Clear Payments Needs

Payments are fundamental to any organization’s success, and there will be increasing demand for convenient, secure, and instant transactions, especially in cross-border use cases. Though not all financial services companies suffer from many of the tech integration and maintenance issues that some of their global peers do, they are still hindered by legacy systems that come with increased fees and poor liquidity.

Overall, the sentiment of Ripple’s survey substantiates the assertion that digital assets technologies will continue to gain traction in North America. The main reason is there are clear payment pain points that crypto and digital assets can solve.

More companies will begin to centralize their business strategies around digital assets and the blockchain-based movement will gain momentum. Though there may be concerns around crypto now, as more financial leaders realize that crypto-based payment solutions are faster, more efficient, and less expensive ways to move funds around the world, these concerns will fade into the background. 

The post Digital Assets in North America: Trends, Use Cases and Challenges appeared first on PaymentsJournal.

Familiarity with and ownership of cryptocurrency are on the rise. Research indicates that 40% of U.S. adults now own crypto. This growing demand is likely driven by consumers looking to find alternative investment opportunities that offer potential higher returns than traditional banking. Additionally, there’s a widespread belief that blockchain-based technologies represent the future, encouraging many to secure a stake in this evolving ecosystem.

However, the anonymity associated with cryptocurrencies presents significant risks, necessitating regulatory oversight. Recent real-world examples of these threats include Hamas using crypto to evade sanctions and Russian money laundering networks that were exposed and detected by the UK National Crime Agency’s (NCA) Operation Destabilise.

This raises critical questions: how do you legislate a technology as dynamic and fast-changing as crypto, and why is such regulation crucial?

Why We Should Care About Crypto Legislation

Put simply, bad actors can exploit new crypto capabilities. Over time, this puts not just customers at risk, but the wider integrity of the banking system as well. For example, a joint international operation led by the NCA recently highlighted new uses of crypto assets to launder the proceeds of international criminal activities, including moving money across borders to elude detection. And this is a problem that’s only growing.

Chainanalysis estimates that more than $22 billion was laundered using crypto assets in 2023, and this figure trended higher for 2024. New technologies inherently involve a balance of risks and rewards that policymakers must navigate. However, as these figures suggest, the U.S. risks exposing consumers and the broader financial system to greater potential downsides than upsides in 2025.

Why the U.S. is Behind the Curve in Crypto Regulation

Compared with the UK and the European Union, the U.S. is missing the mark when it comes to crypto regulation. The European Union’s Markets in Crypto-Assets Regulation (MiCA), in part, provides a framework for managing financial crime risk with respect to crypto assets. The UK’s approach is more circumspect, led by the Financial Conduct Authority (FCA). Engagement between the public and private sectors is critical because the assets and the technology are still relatively nascent, so learning and working collectively to manage and identify financial crime risks is even more important.

Meanwhile, the current U.S. landscape is evolving and may change direction with a new administration in 2025. The 2024 Financial Innovation and Technology for the 21st Century Act is a first step to more cohesive regulations, and amendments continue to be made. However, collaboration between regulators, such as the Securities and Exchange Commission (SEC) and the Financial Crimes Enforcement Network (FinCEN), is needed to develop a uniform, harmonized approach.

Because the U.S. Congress has not established plans to regulate crypto at the federal level specifically, oversight is currently spread across various bodies, making a harmonized approach to compliance more difficult for organizations subject to multiple regulators. What’s more, understanding the entire ecosystem is important as assets can be moved through the broad ecosystem of financial services companies to obfuscate financial criminal activity.

The Legislative Approach Needed for Effective Crypto Regulation

One of the most effective ways to combat financial crime in the crypto space is to ensure that legislation focuses on its foundational goal: stopping financial crime. Laws and regulations should not just restrict or control cryptocurrencies for their own sake but should aim to prevent illicit activities such as money laundering, fraud, and the financing of terrorism. By adopting this approach, policymakers can create more targeted, effective, and sustainable policies.

Transparency is central to this approach. Transparency is vital at multiple levels, particularly in how it relates to both crypto’s underlying technology and the broader framework of legislation that governs it. From a technology perspective, lawmakers can encourage or mandate the development of technologies that allow for better monitoring and tracking of crypto transactions. This includes integrating tools that allow law enforcement agencies to track transactions across blockchains or require that crypto exchanges and wallet providers implement Know Your Customer and anti-money laundering (AML) protocols to ensure that the system is not being threatened by bad actors.

It’s critical that legislation is inherently flexible to handle evolving technological developments. To that end, we need to avoid a “black swan” event by keeping inherent risks in mind. For example, suspicious activity detection on crypto assets must use sophisticated anomaly detection techniques such as machine learning to detect the “unknown unknowns.”

Legislation should also continue to adopt the guiding principles of industry organizations like the Financial Action Task Force (FATF) and the Wolfsberg Group. Both groups advocate for a risk-based approach to AML and countering the financing of terrorism.  

A United, Global Front

Financial criminals operate across borders and are indifferent to national boundaries. By establishing cryptocurrency guidance and a harmonized approach under an organization like the FATF, complemented by strong regional legislation, governments and organizations can better tackle the global problem of financial crime. What’s more, such an approach enables financial institutions involved in the digital and crypto asset ecosystem to better understand and fulfill their obligations on a global basis.

Crypto operates globally without any centralized oversight. These borderless assets can facilitate the cross-border transfer of value without involvement from central banks, for example. Criminals will take advantage of the opaque nature of these assets. They are not subject to compliance obligations, so they are singularly focused on perpetrating crime. Also, data sharing is essential. We need to establish mechanisms to share insights globally across the industry.

What the Future Holds

Financial crime prevention needs to be more prescriptive in legislation. Overall, legislation must establish harmonized approaches and mechanisms to share insights between all participants, both public and private, and provide the tools and technologies to see the currently obfuscated data involved in crypto transactions.

As witnessed, crypto and blockchain usage has rebounded in 2024. And while there is value to consumers, the risks continue to evolve. To effectively manage risk, we need a synchronized approach. This involves publishing details of known typologies and sharing data and insights to ensure that the data and technologies we use are fit-for-purpose and not just “check-in-the-box” activities. This foundation will help foster an approach that supports our moral imperative to stop financial crime—whether that be money laundering, fraud, terrorist financing, human trafficking, or other predicate crimes.

The post Why the U.S. Needs to Strengthen Crypto Regulations appeared first on PaymentsJournal.

The incoming U.S. Senate will have its first-ever subcommittee on digital assets, chaired by longtime bitcoin advocate Cynitha Lummis (R-Wyo.). This will complement the Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence, which will be chaired in the new Congress by Bryan Steil (R-Wisc.). Both incoming chairs have a strong history of support for cryptocurrency.

Senator Lummis is most noted for her bill proposing a federal bitcoin reserve. The Boosting Innovation, Technology and Competitiveness through Optimized Investment (BITCOIN) Act, which she introduced last summer, would require the government to purchase one million bitcoin over a five-year period, amounting to roughly a $95 billion investment at current prices.

The reserve would not be funded by taxpayer money but would instead use existing funds held by the Federal Reserve and the Treasury. Lummis has suggested selling off the government’s gold reserves to fund the project.

Lummis was also a co-sponsor of the Virtual Currency Tax Fairness Act, which excludes small gains or losses from sales of virtual currency from a taxpayer’s gross income. She also co-founded, along with departing Senator Kyrsten Sinema (I-Ariz.), the Senate’s Financial Innovation Caucus.

The House Counterpart

Steil has also been instrumental in the advancement of crypto, particularly in last year’s passage of FIT21, which would designate the Commodity Futures Trading Commission (CFTC) as the leading regulator of digital assets in the U.S. It would also establish consumer protections for the U.S. crypto markets by mandating comprehensive disclosure requirements for digital asset issuers. Although the bill was passed by the House, it never came up for a vote in the Senate.

Steil has also fought to roll back SAB 121, the proposed SEC legislation that would require companies holding customers’ cryptocurrencies to record them on their balance sheets.

After the collapse of the crypto brokerage FTX, Steil suggested that the U.S. should be more hospitable to crypto operations, allowing for greater oversight of their operations.

“We have a large number of crypto companies that have chosen to domicile outside the United States,” Steil said during congressional hearings. “A lack of a regulatory framework inside the United States is moving people to be offshore, and when they’re offshore, a fraud like this occurs, to the detriment of Americans who have placed their money in trust of a company like FTX.”

Some analysts of the crypto industry see rapid changes ahead from these subcommittees. “There’s been a significant shift underway from how things were done before and how they’re going to be done moving forward,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “In a digital economy, things need to move much faster and more transparently. Lummis is looking to position the U.S. as the leader in the digital economy and digital asset industry. I think this is just the beginning of what’s to unfold over the next four years in favor of this industry.”

The post Congress’ New Digital Assets Chairs Have a Crypto-Friendly History appeared first on PaymentsJournal.

As cryptocurrency adoption continues to grow, understanding how consumers interact with digital wallets is essential for financial institutions and payment providers. With the rise of digital assets influencing both retail and institutional finance, analyzing wallet usage can provide valuable takeaways for businesses looking to navigate the evolving payments landscape.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Javelin Strategy & Research’s Report: Stablecoins and the Path to Innovative Money Movement

Percentage of Respondents Reporting No Cryptocurrency Wallet Use

• Ages 18 – 24% – 50%
• Ages 25 – 34 – 37%
• Ages 35 – 44 – 46%
• Ages 45 – 54 – 63%
• Ages 55 – 64 – 90%
• Ages 65 and up – 97%

Source: Javelin Strategy & Research

About Report

Cryptocurrency adoption in the U.S. continues to evolve, though significant hurdles remain. Regulatory uncertainty creates a complex landscape, while consumer sentiment fluctuates between skepticism and enthusiasm, even as bitcoin’s value rises. Institutional interest is growing, prompting some regulatory movement, yet the widespread use of digital currencies for everyday transactions remains a distant prospect. Stablecoins, however, are gaining traction. With their ability to resist volatility and facilitate programmable transactions, they present a range of promising applications.

This Javelin Strategy & Research report explores U.S.-dollar-backed stablecoins, the expanding ecosystem of service providers supporting their implementation, key industry players, and the innovative use cases driving stablecoin adoption. For more details, refer to the original article on Javelin Strategy & Research.

The post Who are the Users of Cryptocurrency Wallets? appeared first on PaymentsJournal.

2024 began with the launch of bitcoin ETFs, and just months later came the unexpected approval of Ethereum ETFs. Bitcoin hit an all-time high, shattering the long-awaited $100,000 threshold. Institutional interest in digital assets technologies like blockchain, tokenization, and stablecoins soared higher than ever before. However, despite the year’s positive development for crypto, it may well be just the beginning.

The potential developments in the industry were examined in the 2025 Digital Asset and Cryptocurrency Trends report, co-authored by Javelin Strategy & Research’s James Wester, Co-Head of Payments, and Joel Hugentobler, Cryptocurrency Analyst. The most significant trends in 2025 will include the decentralization of AI, the growing tokenization of deposits, and the increased use of decentralized physical infrastructure (DePIN).

The Year of AI

Artificial intelligence has taken center stage, with businesses of all shapes and sizes exploring ways to leverage the technology into their operations. The crypto industry is no exception. Decentralized, open-source AI can offer benefits that differ from the centralized options that have gained precedence so far.

“Open-source AI is what we’re watching out for as an alternative or a hedge to traditional AI,” Hugentobler said. “With the centralized players, things like censorship or false information or bias can come into the picture, whereas open-source AI should provide a more objective look at the data. For example, the traditional polls for this recent U.S. election were skewed, where with open source blockchain options like Polymarket, the polls were more accurate.”

Blockchain can provide a better repository for AI to obtain its knowledge because on-chain records are immutable and decentralized. These records can be easily verified and  visible to all users. Every action on the blockchain can be traced, increasing reliability, and this transparency is especially critical when dealing with financial data.

Installing AI on the blockchain puts the community in control of future developments, allowing users to decide how AI leverages the data. This increased accountability helps mitigate the risk of misuse.

Decentralized Energy

One of the challenges with artificial intelligence is it requires vast amounts of energy. The technology relies primarily on centralized data centers powered by supercharged chips. An emerging solution is decentralized physical infrastructure—a  network of blockchain nodes that replaces the need for a single massive data center.

“There is a lot of geopolitical risk out there right now, including natural disasters and war,” Hugentobler said. “A distributed network of computing power is much more resilient to things like that. If a node in Africa goes out, the overall network will continue to work. Whereas you look at companies like PayPal or Mastercard that have centralized servers, if an earthquake or tornado hit that centralized location, the network is out until they get it resolved.”

The DePIN approach also makes it possible for smaller businesses to access AI and leverage its benefits. A decentralized model allows these companies to adopt technology suited to their specific needs, and easily scale up as they grow.

While this model offers clear benefits, challenges remain. Latency and regulatory issues need to be addressed, but these concerns are unlikely to keep the sector from continuing to gain traction next year.

On-Chain Assets

The tokenization of real-world assets has been central to many institutional initiatives in 2024, and that is likely to continue. Use cases so far have included creating digital representations of everything from stocks and property deeds to art and collectibles.

One of the most impactful trends in 2025 will be the tokenization of deposits. Tokenized deposits are digital versions of bank deposits, issued by a bank and tracked like funds in bank accounts.

Because they are both representations of fiat currency on blockchains, tokenized deposits are often confused with stablecoins. However, stablecoins are usually issued by non-bank companies, and are backed by a reserve of fiat currency held by those firms. Stablecoins can be transferred between users like cash, with ownership determined by whoever holds it.

Stablecoins have been viewed as a powerful alternative for unbanked or underbanked individuals, as well as for citizens of countries with volatile currencies. They offer instant payment settlement and minimal fees, making them more attractive than card- or ACH-based payments.

Tokenized deposits can deliver the same speedy settlement and low fees as stablecoins, but in a regulated banking environment.

“I think tokenized deposits will be a big focus for financial institutions because private lending has grown immensely, just in the last year,” Hugentobler said. “More banks are putting assets like HELOCs and personal loans on chain, and it is much faster and more transparent for banks and consumers. It’s a trend that’s going to continue—companies are going to continue to put funds and assets on-chain.”

Where Things Are Headed

There has already been an increased emphasis on tokenization and digital assets in regions like Europe, where the Markets in Crypto-Assets (MiCA) regulatory framework is going into effect. The MiCA regulations should make it easier for crypto companies in the region to navigate the rules of the road.

In contrast, the lack of tangible crypto regulation in the U.S. has been a source of much criticism and controversy over the past year. While there is speculation that a more favorable environment is on the way, it will take time for any significant digital assets framework to be approved and implemented.

“At the same time, this is a very fast-moving and evolving industry,” Hugentobler said. “I like that saying, ‘Gradually, then suddenly.’ It’s all unfolding right before our eyes, and individuals and companies need to pay attention and prepare their portfolios. They should look for opportunities to gain market share and integrate this technology into their existing systems and businesses because, to me, it’s very clear that this is where things are headed.”

The post After a Banner Year, Crypto and Digital Assets May Just Be Getting Started appeared first on PaymentsJournal.

Amid controversy surrounding the central bank digital currency (CBDC) model, the Bank for International Settlements (BIS) has proposed a new solution for the digital asset that would incorporate both a central bank and retail financial institutions.

In the BIS model, the CBDC would be issued and governed by the central bank, while retail banks would provide services to consumers. For example, banks would offer the CBDC  through their existing app or digital wallet. To provide the CBDC, banks would have to undergo a certification process and maintain compliance with their central bank’s regulations.

BIS is a consortium of seven central banks that includes the Bank of England and the Federal Reserve Bank of New York. The organization was built to identify and leverage synergies among its members that can benefit global financial systems. The group recently led efforts to streamline cross-border payments systems and explore how CBDCs could coexist with tokenized commercial bank deposits on a shared platform.

Forging Ahead

The group is forging ahead with its proposal for a CBDC, despite opposition to the model. One of the main arguments against CBDCs revolves around privacy, as digital currencies could provide governments with protected transaction and user data.

Due to privacy concerns, a French lawmaker and member of the EU parliament Sarah Knafo recently decried CBDCs. Since governments still want to leverage the benefits of digital assets and crypto technologies, Knafo said a bitcoin reserve would be better solution.

Guaranteeing Privacy

The BIS group, which proposed the hybrid CBDC model, said that these privacy concerns would not factor into its solution, which will use tokens to replace personal information and keep users anonymous. The CBDC design will also support account-based models, where users have specific accounts tied to their financial institution.

The authors of the proposal noted that “privacy can be guaranteed by separating transaction from identity information, such that the latter remains with private intermediaries and users. This helps to reduce risks and ensure greater privacy protections than in other models.”

The post BIS Proposes Hybrid Model for CBDC That Includes Retail Banks appeared first on PaymentsJournal.

As European lawmakers continue to discuss the merits of a digital euro, a French magistrate said that plans for the central bank digital currency (CBDC) should be scrapped in favor of an EU bitcoin reserve.

In a speech before the legislature, Sarah Knafo, who joined the European Parliament in June, said that a digital euro would not do enough to protect EU citizens from inflation and the poor economic decisions made by the region’s governments. Knafo also cited the privacy and security concerns that have been consistently raised since the European Central Bank (ECB) began considering a CBDC four years ago.

“There is a paradigm shift happening after the U.S. elections and it looks to be spreading to the EU,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “That’s a bold move to just cut the development off cold turkey and focus on building a bitcoin reserve. From a historical perspective, bitcoin’s annualized returns are between 50% and 60%, depending on how you measure it.”

“That includes the large drawdowns during the bear market period, so it’s kind of a no-brainer for central banks and governments to build a reserve,” he said. “At the same time, an increasing number of large holders may lead to other risks down the road due to concentration. For now, it is a positive sign for the industry as a whole that lawmakers are accepting bitcoin as a viable asset.”

Privacy and Security

The EU has been an early adopter of many payment innovations, while the ECB has continued to assert that its digital euro would be an entirely private and secure payment option. The CBDC would use pseudonymization technology to replace real users’ data with fictitious data, ensuring that the ECB or other government agencies would not be able to identify or track users.

However, EU lawmakers have also proposed implementing anti-money laundering and fraud prevention measures, which could potentially jeopardize users’ anonymity.

In her speech, Knafo also noted that “it is time to say no to the totalitarian temptations of the European Central Bank, which wants to impose a digital euro entirely in its hands. We do not want this dystopian world where a European bureaucrat will be able tomorrow to ban certain transactions and even eliminate us from the banking system with a click for a simple comment made on social networks or for an opinion that displeases. It is time to bet on freedom.”

Highlighting the Decentralized

In contrast with her concerns about a CBDC, Knafo praised bitcoin, and noted several efforts around the world that have led to the flagship cryptocurrency’s continued adoption. She highlighted the decentralized nature of bitcoin and said that the regulatory efforts in the EU have been more stifling than supportive, and focused more on taxation and control.

The EU’s Markets in Crypto Assets (MiCA) regulatory framework is just days away from launch, and European lawmakers have been largely praised for creating early standards for digital assets in crypto. However, the MiCA regulations do not address a CBDC. The EU is hoping to finalize its plans for the digital euro by the fall of next year.

The post Lawmaker Says a Bitcoin Reserve Is a Better Alternative to an EU CBDC appeared first on PaymentsJournal.

India has been at the forefront of adopting emerging payments, and recent comments from a central bank official suggest that a central bank digital currency (CBDC) could play a vital role in the country’s future economy.

The remarks were made during a farewell speech by Shaktikanta Das, the governor of the Reserve Bank of India. Das said that the country’s CBDC, the digital rupee, “has a huge potential in the coming years, in the future. In fact, it is the future of currency.”

Das also highlighted the country’s strides in payment innovations, applauding the RBI for its leadership as a trailblazer among central banks. Notably, India is one of the few countries that has launched a CBDC.

“The economy of India is very accepting of new technologies—namely the digital identity program there that has over a billion people using it,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It really comes down to the consumer’s willingness to use it and the implementation of it.”

Phased Adoption

Das has previously expressed caution regarding the widescale implementation of a CBDC, citing concerns about the technology’s ramifications on consumers and the economy. However, the former governor now believes that a deeper understanding of these implications can be gained through user data generated in pilot programs. Additionally, Das suggests that the introduction of a CBDC could be phased in gradually to mitigate any risks.

After the eventual adoption of a CBDC, Das is confident that it could be the underpinning for both domestic and cross-border payment systems in India’s future economy.

No Barriers

India has already established itself as a forerunner in instant payments, thanks to its widely popular UPI platform, which has become the most dominant payment method in the country. This success has enabled India to export its instant payments system to other countries, including South America and Africa.

Though there has been speculation about whether the digital rupee and UPI instant payments can coexist, Das made previous comments that there should be no competition between the two. Consumers could make either a UPI or a CBDC payment from the same QR code, so there should be no barrier to the adoption of either payment method.

“Whether it’s a retail or wholesale CBDC will dictate some of those factors, but India has led the world in some areas of innovation,” Hugentobler said. “If they are seeking real adoption of users for their CBDC, they will focus on privacy, security, and interoperability between existing systems. It will be interesting to see if their roll out is successful, and if so, which central bank will be next.”

The post A CBDC Could Be the Foundation of India’s Future Economy appeared first on PaymentsJournal.

A wave of crypto regulations is set to take effect worldwide, and Circle has announced that USDC is the first digital asset to reach compliance with Canada’s new stablecoin laws.

The Canadian Securities Administrators has passed a set of standards defining Value-Referenced Crypto Assets (VCRA), which will go into effect next year. These laws describe VRCA as a crypto asset that maintains a stable valuation by referencing the value of a fiat currency or other asset.

The new rules require all crypto exchanges in Canada to delist any stablecoins that aren’t compliant with the regulations by December 31. Circle said that it has not only met the VCRA requirements, but that it has also reached full compliance with the Ontario Securities Commission.

“Circle is taking steps in the right direction,” said Joel Hugentober, Cryptocurrency Analyst at Javelin Strategy & Research. “Tether is so large because everyone outside of North America uses it. Circle’s partnership with Coinbase, coupled with it becoming compliant in other jurisdictions, gives them a leg up.”

The Race for Market Share

Tether’s global dominance has made its USDT stablecoin the dominant product in the market, holding a $201.2 billion share compared to USDC’s $40.3 billion. These two coins face plenty of competition in the race to dominate a stablecoin market that saw a 10% increase in November alone, with monthly trading volumes nearing $2 trillion.

Institutional investments are fueling this momentum, with some of the largest payments players now joining in. PayPal recently launched its PYUSD stablecoin, and Stripe just acquired stablecoin company Bridge in one of the largest acquisitions in crypto history.

With so many digital tokens that track the U.S. dollar, there has been much speculation about which stablecoin will win out.

“At the end of the day, they’re all pretty much the same product, but they’re not managed the same,” Hugentobler said. “If Circle continues to gain compliance in other jurisdictions, retail users will likely jump ship because their platform faces less risks. A lot of institutions prefer USDC over Tether currently, and this trend will continue as well.”

The post Circle’s USDC Is the First to Meet Criteria for Canada’s New Stablecoin Rules appeared first on PaymentsJournal.

After taking a cautious approach to crypto for years, Apple will now integrate with Coinbase to allow crypto purchases in Apple Pay.

Coinbase said that app makers will soon be able to integrate the capability to buy crypto through Apple Pay directly within their apps using its Coinbase Onramp product. Previously, converting fiat currencies into crypto on Apple Pay was often onerous, requiring fees or redirecting users to external sites or apps. The upcoming integration—which is now available—will not require app developers to take any additional steps to incorporate crypto services.

“Coinbase has been a proactive leader in the U.S. for years, and the integration with Apple Pay is just one of many examples,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “They don’t wait for regulatory clarity; Coinbase has tried their hardest to act compliantly while taking steps to push innovation.”

“Coinbase wouldn’t exist if they would have waited for a regulatory framework, and both crypto-native and traditional finance companies should take note,” he said.

A Major Step

The union between Apple Pay and Coinbase is expected to further accelerate the mainstream adoption of crypto, highlighting the continued convergence of two emerging payment trends—crypto and digital wallets.

The Coinbase integration is a major step for Apple, which has been somewhat reluctant to grant digital assets and crypto platforms access to its expansive ecosystem. Just a few years ago, Coinbase CEO Brian Armstrong said that Apple would not allow many features within the Coinbase app on its platform, even suggesting that there were potential antitrust issues in Apple’s stance toward crypto.

Far-Reaching Implications

Though Apple Pay has had other crypto app integrations with Binance and MetaMask, the Coinbase integration could have much more far-reaching implications due to the tech giant’s massive user base and the crypto exchange’s U.S. dominance.

The Coinbase integration should help Apple Pay users who aren’t as familiar with crypto concepts learn more about the array of cryptocurrencies that are available and develop a comfort level with crypto.

To foster that adoption, Coinbase will offer free USDC stablecoin transactions for both crypto on- and off-ramping. The integration will also give Apple Pay users access to more than 60 fiat currencies, 100 cryptocurrencies and over 20 blockchains.

The post Apple Pay Users Can Buy Crypto Through Coinbase Integration appeared first on PaymentsJournal.

The success of options trading on BlackRock’s iShares Bitcoin Trust ETF (IBIT) serves as yet another signal that cryptocurrencies are here to stay as a viable investment class.

The ETF traded 73,000 options contracts within its first 60 minutes on the Nasdaq market, ranking it among the top 20 most active nonindex options, reports CNBC. The crypto firm Grayscale reacted quickly, offering its own bitcoin ETF options the very next day.

With the crypto-friendly Trump administration set to take office in January, many investors are anticipating more opportunities for individual investors to incorporate cryptocurrency in their portfolios. However, the approval to trade bitcoin options came in September, well before this year’s election.

“The options are independent of regulatory issues, since the underlying ETFs were approved already in January,” said James Wester, Co-Head of Payments at Javelin Strategy & Research. “This is just one more indication that institutional investors are becoming more comfortable with bitcoin as an asset class on its own.”

A Different Way to Play

Options trading allows investors to take advantage of an asset’s volatility by giving them the right to buy or sell it at a predetermined price, depending on whether they expect the price to rise or fall over a set period. These options are divided into puts, which are bets that the asset’s value will decline, and calls, which are bets that the asset’s value will appreciate. The put/call ratio for IBIT’s first day of trading was 0.225, meaning 82% of investors bet that bitcoin’s price would rise, compared to 18% who wagered it would fall.

The iShares Bitcoin ETF was one of 11 such vehicles that began trading in January. Although there was some skepticism about their long-term performance, their success has fueled speculation about the industry’s next move.

“Tying crypto, meaning tokens, to underlying assets will be the next hurdle,” said Wester. “That’s the longer-term view of how tokenizing things will change markets. How that will play out in terms of retail investors is still to be determined.” While the incoming administration is expected to be supportive of the crypto industry, Wester warns that the chains won’t come completely off. “The market being allowed to operate with clear rules and oversight will certainly help,” he said. “But crypto-friendly regulators still need to be regulators.”

The post After the Success of the Bitcoin ETF Options, What Comes Next? appeared first on PaymentsJournal.

Tether, the producer of the highly successful USDT stablecoin, has announced the launch of its long-awaited tokenization platform.

The new service, Hadron, will create digital copies of real-world assets like stocks, bonds, and commodities on blockchains. In addition, the platform could enable the conversion of assets like loyalty points or other stablecoins. Hadron will also support “basket-collateralized products,” allowing organizations to combine commodities or other assets into a single token.

“Tether’s USDT, which has nearly a $100 billion greater market cap than the next stablecoin, Circle’s USDC, is so active throughout the industry and now they are pushing to innovate in the tokenization space,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research.

“Tether is much more prominent outside of the United States, so I would imagine other countries will leverage Tether’s platform first, to tokenize assets specific to their jurisdiction,” he said. “Circle and other stablecoin issuers will need to expand their services to compete in this fast-paced, evolving industry.”

Building on Success

Hadron will include tools to help organizations manage risks and conduct Know Your Customer and anti-money laundering checks. According to CoinDesk, Hadron will initially support Ethereum, Avalanche, and Liquid by Blockstream, but plans to add support for the TON network and other smart contract chains.

Tether’s USDT has reached a market capitalization of $127.3 billion, leading an accelerating stablecoin market that has seen a multitude of new offerings. Building on that success, the crypto firm has launched a token that tracks the price of gold. Tether has also proposed a token to the Turkish government that would track the price of boron, a mineral used in the manufacture of everything from fertilizers to cleaning agents.

Driving the Future

The company’s new platform could surpass all these endeavors, as the tokenization industry has the potential to be a market worth trillions of dollars. Tokenization has become a central focus for institutional investors who recognize the powerful benefits the technology offers.

Tokenized assets have also been at the heart of several initiatives by world governments. The technology was recently spotlighted by the Bank of England as one of the key innovations that will drive the future of the financial industry.

The post Tether to Expand Beyond Stablecoins with Tokenization Service appeared first on PaymentsJournal.

Next year, Detroit will become the largest U.S. city to accept crypto payments for taxes and fees.

This feat will be accomplished with the assistance of PayPal, which will handle the crypto payments and convert them into U.S. dollars. Detroit will not hold any digital assets, as all conversions will take place before funds are received by the city.

“They are trying to be innovative, and accepting a variety of payments should make it easier for citizens to pay taxes and fees,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “However, by receiving all payments in dollars, the excitement ends there. If at the federal level there are strategic bitcoin or other cryptocurrency reserve plans, it will be interesting to see if cities like Detroit will follow suit.”

An Invitation to Technologists

In a phone interview with the Detroit Free Press, Detroit’s Treasurer, Nikhil Patel said that the city was concerned about the volatility of crypto, which is why Detroit decided to convert all payments immediately. Despite those apprehensions, the city is forging ahead with its crypto ambitions, a movement that has been spearheaded by its mayor.

“His conception was to send a signal to the rest of the world, frankly, that Detroit is the place where we want to invite technologists to build, to create, to develop,” Patel said. “And from my perspective as treasurer, my goal is to make it as easy as possible and as efficient as possible for people to make payments.”

A Key Force

To enhance this efficiency, Detroit is also considering alternate ways for residents to pay taxes and fees, including digital platforms like Venmo. The city’s support for crypto payments is set to launch mid-next year, with  initial options including payments via bitcoin, Ethereum, Lightcoin, and PayPal’s PYUSD stablecoin.

Cryptocurrences have emerged as one of the key forces that are driving the payments industry. To meet the growing demand, Colorado and Louisiana already allow their residents to pay taxes using digital assets. While there are some U.S. cities, such as Miami Lakes, FL, that support crypto payments, Detroit would be the largest to do so by far.

The post Detroit to Accept Crypto Payments with PayPal’s Aid appeared first on PaymentsJournal.

JPMorgan has rebranded Onyx, one of the world’s first bank-operated blockchains, and plans to enhance the platform to drive broader adoption of blockchain technology and tokenization across mainstream financial services.

The platform will now be called Kinexys, and the company’s payment settlement system, JPM Coin, will be rebranded as Kinexys Digital Payments. In addition to the rebrand, JPMorgan announced plans to introduce on-chain foreign exchange conversions to the platform next year. Initially, the program will facilitate U.S. dollar to euro conversions, with plans to add more currencies in the future.

At the Singapore Fintech Festival, Kinexys CEO Umar Farooq stated that these changes are intended to automate real-time, multicurrency clearing and settlement.

“This is big,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “The forex market is one of the largest and most liquid markets in the world, and 24/7 instant settlement has been much needed. This will help reduce counterparty risk in multi-bank transactions and should provide greater transparency to the participants involved.”

Facilitating the Exchange

JPMorgan has been one of the most significant institutional investors in digital assets technologies, including tokenization, which has become a central focus for many of the world’s largest financial institutions because it can substantially facilitate the exchange of physical assets.

The banks’ early adoption of digital assets has paid off. JPMorgan’s blockchain platform has processed over $1.5 trillion since its launch a few years ago, and the bank estimates that Kinexys now handles roughly $2 billion per day.

Potent Solutions

Digital assets technologies are among the most potent emerging payment solutions, and JPMorgan has continued to push for their integration into financial services. The banking giant recently joined efforts to establish a network for multi-asset blockchain transactions. The Regulated Settlement Network would create a framework in which commercial bank funds, central bank funds, and securities like U.S. Treasuries could be tokenized and settled.

JPMorgan has also recently disclosed its significant exposure to bitcoin ETFs and welcomed fellow crypto player Fidelity International to Kinexys.

“We live in a digital world, but we still largely operate on a financial infrastructure that is at least five decades old,” Hugentobler said. “This upgrade is much needed. What is your bank doing to stay competitive?” 

The post JPMorgan to Rebrand and Expand its Blockchain and Tokenization Platform appeared first on PaymentsJournal.

Robinhood, Galaxy Digital, and Kraken will collaborate on a network to support Paxos’ newly launched stablecoin, USDG.

The consortium of crypto companies said the Global Dollar network is designed to accelerate worldwide stablecoin adoption. USDG is currently available only on the Ethereum blockchain, though Paxos said the stablecoin could be available on other blockchains soon.

“The collaboration between this list of partners is impressive,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “These firms are taking an approach that is more like Tether than Circle. They are launching USDG out of Singapore, because there is a greater serviceable addressable market outside of the U.S. right now.”

A Crowded Field

Paxos said USDG is compliant with the Monetary Authority of Singapore’s stablecoin framework, which was established last year. The stablecoin is backed one-to-one with the U.S. dollar in deposits, short-duration U.S. government securities, and other cash equivalents. The company’s USDG reserve will be held and managed at DBS Bank, Singapore’s largest financial institution.

The stablecoin is joining a crowded field dominated by Tether’s USDT and Circle’s USDC. Paxos also offers its Pax Dollar, and the company manages PayPal’s PYUSD stablecoin, which has quickly reached a $1 billion market cap.

A Golden Age

The multitude of use cases for stablecoins has fueled the surge in offerings, so much so that the digital assets could be on the cusp of a golden age. There are especially promising stablecoin use cases in cross-border payments and in countries with more volatile fiat currencies.

“Comparatively, the U.S. economy is doing well,” Hugentobler said. “There are relatively low rates of inflation, it is easy access to the dollar (world reserve currency), and there are dozens of ways to send payments and transact. That isn’t the case in many countries around the globe.  This backs our thesis at Javelin that stablecoins will continue to grow and provide a great alternative to traditional fiat currencies, particularly in areas with economic uncertainty.”

He added: “However, Tether and Circle have dominated most of the world’s stablecoin market share, so there are plenty of challenges ahead for the Global Dollar network.”

The post Robinhood, Galaxy Digital, Kraken Unite for New Paxos Stablecoin Network appeared first on PaymentsJournal.

Even as bitcoin surges in values and institutional investors move heavily into crypto, widespread adoption of digital currencies as a mainline payment vehicle remains on a distant horizon. Then there are stablecoins. These programmable digital currencies are coming into their own, as their resistance to volatility and ability to be programmed in transactions open up a range of compelling use cases. 

In a new report, Stablecoins and the Path to Innovative Money Movement, Javelin Strategy & Research Analyst/Content Specialist Craig Lancaster examines the world of service providers who are rising up to help financial services implement stablecoin programs. He also explores the use cases for stablecoins, which are now mostly apart from consumer payments, although this is expected to change dramatically.

The Stablecoin Moment

Stablecoins are having a moment right now, in part because of the major players that have entered this landscape. Tether and Circle remain far and away the leaders, but PayPal made a big splash when it introduced its own currency last year. JPMorgan Chase, MasterCard, Visa, and other major financial institutions are offering stablecoins programs of various kinds.

“If you’re a player in these in these areas and you’re not developing a stablecoin program, you’re missing something,” Lancaster said.

The most popular and useful stablecoins are generally pegged one-to-one to an underlying asset, like the U.S. dollar. That makes them less prone to volatility and more suitable for a variety of payment use cases.

“The holder of it essentially holds the dollar,” Lancaster said. “You can store value with it, and you can employ it in a transaction.  In a country with a currency that is not at all stable, an asset like the U.S. dollar is highly desired.”

Developing Use Cases

The most compelling present-day use cases for stablecoins reside in commercial payments, closed-loop payment ecosystems, and stored value for investors. Consumer-facing use cases for stablecoins and other cryptocurrencies have been slower to develop, but as decentralized finance and legacy systems of money movement increasingly intermingle, consumer adoption should rise.

Using stablecoins for cross-border payments is one highly promising use case. These have long been historically difficult transactions that are opaque, slow, and costly. They incur fees at each step of the old correspondent banking system and can be made more complex by fluctuating exchange rates. Stablecoins stand to alleviate many of these problems.

There are other potential use cases as well. “Any kind of lending that involves escrow is ripe for stablecoins,” Lancaster said. “They’re programmable and stable, which is good news for anyone who sweated out a house purchase, and all the liquidity issues and risk that go along with that. You can transform that by essentially programming the money, so when the thresholds and criteria are met, it funds the loan and completes the transaction.”

Stablecoin as a Service

An entity looking to create a branded stablecoin will often engage a service provider for the underlying design and architecture. PayPal worked with blockchain technology provider Paxos to design and develop its PayPal USD stablecoin, which reached a $1 billion market cap little more than a year after launch. Stablecoin service providers, such as Paxos and Netherlands-based Quantoz, provide the technological underpinning and know-how to administer stablecoin programs.

One area that has been especially fertile for stablecoin-as-a-service operations has been loyalty programs. Through branded stablecoins, companies can use blockchain technology to gain better insights into who their customers are and engage them in ways that are more effective than legacy loyalty programs. This allows companies to let the architecture work in the background while customers reap the benefits on the front end.

Like branded reward cards, through which consumers pick an airline, hotel chain, or retailer, this raises the potential for stablecoins to fade into the background and turn into loyalty points. Starbucks holds over $1 billion of customers’ money in its app, and one could easily imagine Walmart or Amazon entering the fray. Target’s successful RedCard program could be replicated with a stablecoin by anyone with a loyal customer base, driving revenues away from the card companies.

“Stablecoin-as-a-service providers can be a big help in getting those conceived and launched,” Lancaster said. “Take a lesson from banking as a service, which has gotten a little battered lately because of compliance issues. You might be able to outsource the compliance, but it’s all going to roll back to your door if there’s a problem. We urge companies to adopt the most stringent regulatory compliance stance as a starting point. If you’re compliant with the most stringent regulations, you’re compliant with all of them.”

Regulatory Concerns

Regulation, particularly in the United States, remains challenging at best and inscrutable at worst. This is to the detriment of companies that wish to explore the space, as well as to the consumers and commercial enterprises that could benefit from innovation.

Clarity is coming in other parts of the world, however, and that inspires some hope that a course can be charted here. There is still no guarantee that even the most scrupulous participant in stablecoins will not run afoul of regulators in the short term. Despite the likelihood of regulatory overreach, Lancaster predicts that stablecoins are an inevitable part of the future of financial technology.

The post Are We Approaching a Golden Age for Stablecoins? appeared first on PaymentsJournal.

Asia has become the top region for crypto and digital assets developers after increasing its share to 32%, up from 13% in less than a decade.

At the same time, the number of North American developers was cut in half, according to an X post by Maria Shen, a general partner at Electric Capita. Though more blockchain developers are moving beyond America’s borders, the U.S. still has the highest number of developers of any country.

The news comes amid increasing concerns about the lack of a crypto and digital asset framework in the United States. Without a consistent set of rules to follow, U.S. regulators like the Securities and Exchange Commission have taken an enforcement-first approach to the crypto industry.

“The only thing that is clear is that nothing is clear,” said James Wester, Director of Cryptocurrency at Javelin Strategy & Research, in a conversation with PaymentsJournal. “It’s becoming tough for companies to build products in this space, because they don’t know they’re doing anything wrong until they get an enforcement notice. Imagine not knowing the speed limit until you get pulled over for a ticket. That’s the way things are shaping up right now.”

An Exodus of Crypto Talent

The U.S. regulatory uncertainty has led to concerns that there could be an exodus of crypto talent to other regions of the world. The European Union will roll out its comprehensive crypto framework, Markets in Crypto-Assets (MiCA), later this year, which will make the EU an attractive alternative for crypto talent.

There have also been a variety of crypto efforts in Asia, where innovations like instant payments, digital wallets, and contactless payments have quickly gained traction. China has long pushed for its central bank digital currency, commonly called the digital yuan, to gain more precedence in a culture dominated by mobile payments.

India has been a powerful player in instant payments with its UPI system, which has quickly become the predominant method of payment in the country. Now India is making headway with crypto—according to Shen, though 18.8% of all crypto developers are based in the United States, India is next with 11.8%.

The post Asia Overtakes North America as Leading Crypto Development Hub appeared first on PaymentsJournal.

Many merchants are hesitant to take the plunge on new payment methods because they are concerned about the time or resource investment, as well as the ever-present threat of fraud.

However, in many cases, the benefits of adopting emerging payments dramatically outweigh the drawbacks. For instance, many younger consumers might not qualify for a credit card, but they can qualify for a buy now, pay later loan, which typically requires only a soft credit check. Adding BNPL support could aid a merchant in making inroads with a younger clientele.

Though mobile payments might often be associated with a younger demographic, contactless payments and digital wallets have reached ubiquity among all ages. The current use cases for these methods are only the tip of the iceberg—tap-to-phone contactless technology could revolutionize payments for small businesses, and digital wallets can give loyalty programs a substantial edge.

Instant payments are a fixture of daily life in many countries, and the open-banking staple has the potential to be just as impactful for U.S. merchants. The same goes for crypto and digital assets, which can connect merchants to a global highway.

Because these five payment trends—contactless payments, BNPL, crypto, digital wallets, and open banking—will dominate the future payments landscape, merchants should consider ways to integrate them.

Contactless Prevalence

The heartbeat of emerging payments is the mobile phone. Contactless payments gained traction during the pandemic because they are more hygienic than other payment methods. After the pandemic faded, contactless payments have continued to pick up steam because they are effective and secure.

Tap-to-pay transactions don’t include a customer’s account details, so a consumer must physically initiate the transaction, which makes it more difficult to send a contactless payment accidentally.

They are also faster—contactless transactions usually require a single action, like tapping a card or pushing a button on an app. Point-of-sale card transactions can often lag due to card approval times or PIN entry, and cash transactions are even less efficient.

Due to those benefits, customers have come to expect contactless options, and the demand will only increase. Though contactless payments are here to stay, tap-to-pay transactions are only half of what a mobile phone can do in the payments realm. The technology exists for tap-to-phone payments, in which the same contactless payment chip that smartphones use to transmit payment data can receive payments, giving almost any phone the capability of being a payment terminal.

Adopting tap-to-phone is a game-changer for smaller businesses or gig economy merchants who don’t have the need or the resources to purchase regular terminals. A business owner could receive contactless payments on their phone from contactless-enabled cards and mobile devices.

“Once the use cases manifest themselves, tap-to-phone will become increasingly popular,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, in a conversation with PaymentsJournal. “There is a growing middle ground where individuals need some business capabilities on their personal account. We’re at a tipping point where, even going into next year, we’re going to see tap-to-phone become far more prevalent than it has been.”

A Path for Digital Wallets

Though many contactless payments are made without digital wallets, ease of use has made digital wallets an increasingly popular option. Mobile wallets like Apple Pay and Google Pay give customers a way to store their credit and debit cards and make faster transactions at the point of sale.

Simpler transactions will reduce wait times and increase customer satisfaction, and digital wallets also offer an additional way for businesses to interact with customers. For instance, Starbucks’ mobile app integrates directly into a digital wallet that allows customers to make payments, earn rewards, and order ahead.

The loyalty aspect is critical because it can drive engagement and fuel repeat purchases. Digital wallets also provide merchants with invaluable data about consumer spending habits, allowing for targeted marketing and personalized offers.

Beyond loyalty, digital wallets can store a range of items useful to consumers, including coupons, tickets, and gift cards. However, one of the barriers to digital wallet adoption is that many consumers still have to carry their physical wallet to house their ID. For digital wallets to surpass their physical counterparts, digital IDs must become more prominent.

Digital ID programs have lagged in many U.S. states, and merchants likely feel they have no power to move legislation forward. However, digital identification regulations are often developed with merchants’ preferences in mind, so business owners can have a say in digital ID acceptance, standards, and training in their industry.

“Those are all good things, but most businesses aren’t going to take that initiative on their own, especially smaller businesses,” said Christopher Miller, Lead Emerging Payments Analyst at Javelin Strategy & Research. “There’s an opportunity here for payments providers to supercharge digital ID acceptance by providing guidance to their merchants. It could differentiate them from other financial companies and potentially create a path forward for digital wallet acceptance.”

BNPL Expansion

Another key trend for digital wallets is support for more payment types, such as BNPL services. BNPL has become an established payment method in a short time, and brands like Klarna, Affirm, and Afterpay make deals with large merchants on a near-daily basis.

Consumers of all walks of life have been attracted to the plans because they can split a purchase into installments and avoid the high interest rates and late fees that often come with credit cards. Even in brick-and-mortar stores, customers increasingly expect to break their transactions into installments.

“The main selling point for merchants is that BNPL has been touted to increase the average order volume by 2% to 3%,” said Ben Danner, Senior Credit and Commercial Analyst at Javelin Strategy & Research. “However, the business has to pay a fee to support BNPL, which can range from 3% to 10%, depending on the type of financing that’s offered. The merchant will have to decide if the sale is worth the fee.”

Though it might not be right for every merchant, BNPL is a must-have for businesses that have traditionally supported installments or financing, such as appliance and electronics stores. BNPL has also gained traction in the travel industry.

BNPL companies have worked to expand beyond big-ticket items to everyday spending categories. Because consumers are increasingly returning to stores, many BNPL companies have adapted to offer physical cards, but there are still more use cases for BNPL.

“The big BNPL companies like Affirm and Klarna are moving beyond simply partnering with merchants, and they are aggregating information from many businesses into their e-commerce platform,” Danner said. “It’s like their own marketplace, which of course features the financing options they offer at various businesses. For merchants, there is the opportunity to be featured in Affirm or Klarna’s marketplace, which can drive sales.”

Opportunities in Open Banking

The emerging open-banking model also offers new ways for merchants to reach customers. In open banking, consumer financial data is opened to third parties—through the approval of the consumer—to hasten digital transformations. Merchants can also realize that benefit, and it comes with substantial freedom. Businesses are able to shop around for the best rates on loans and financial products.

Instant payments are the pulse of open banking, and merchants can leverage them to make secure and efficient payments to suppliers and partners. Real-time settlement also facilitates reconciliation and other accounting functions.

Instant refunds can bolster customer satisfaction in the event of a warranty claim or a return. If a merchant relies on contractors or gig workers, it can offer real-time payouts to keep those partners engaged.

Though some merchants might be hesitant to adopt bank-to-bank transfers, there are two instant payment rails—FedNow and RTP—that are firmly established and connected to an increasing number of financial institutions.

Adoption of Instant payments will gain traction as more Americans become comfortable with paying by bank and as there is a more established regulatory framework. To the latter end, the Consumer Financial Protection Bureau has just released its long-awaited rules to govern open banking, which are set to go into effect in just two years.

Digital Assets

The regulatory environment around digital assets and crypto has been much more contentious, and that could be one reason merchants might shy away from accepting crypto payments. However, key innovations in digital assets offer substantial benefits for businesses.

For instance, blockchain technology can be much more than a highway for crypto; it can be a secure infrastructure for digitizing and verifying all sorts of assets. Tokenization is the process of creating a digital version of a physical asset, and it can be a boon for merchants in industries that rely on paper documentation.

An auto title or a house deed could be tokenized and transferred in the fraction of the time it takes to conduct the process through physical documentation. A tokenized asset can be bought and sold in real time, and it can also be easily fractionalized and sold to multiple parties.

Stablecoins might be the digital asset technology that has the most widescale impact on merchants. The volatility of cryptocurrencies is well-documented, but major stablecoins are built to track a fiat currency, such as the U.S. dollar, one-to-one.

One of the most compelling use cases for stablecoins lies in cross-border payments. Despite increased demand for cross-border transactions, there can often be issues with sluggish payment settlement, difficult currency conversions, and country-specific regulations.

Stablecoins can be an instant cross-border solution, which is one of the reasons some of the biggest companies in the financial industry have invested heavily in the technology. PayPal has launched its proprietary stablecoin, PayPal USD (PYUSD), which has quickly gained traction.

Stripe initiated support for Circle’s USDC stablecoin on its platform and saw transactions processed in 70 countries on the first day of the service. The company then made one of the largest acquisitions in crypto history with its $1.1 billion purchase of stablecoin company Bridge.

As stablecoins receive more support from payments processors, they become a compelling option for merchants who have, or wish to realize, a global reach for their businesses.

Early Adopters

Though emerging payment methods can make an impact on a global scale, they can be just as significant for a local artist who sells paintings at a farmer’s market. Merchants that support multiple forms of payment can increase customer satisfaction and save significant time and expense in the long run.

Though there are always concerns with new payment methods, the well-established use cases for BNPL, digital wallets, contactless payments, crypto, and open banking will keep them relevant for years to come, and new use cases will continually emerge. As the future regulatory framework takes shape, merchants that are early adopters of emerging payments could reap powerful benefits.

The post Why Businesses Should Pay Attention to Emerging Payment Solutions appeared first on PaymentsJournal.

The Pennsylvania House of Representatives has passed a bill designed to establish a framework for transactions involving crypto and digital assets.

The crypto bill received overwhelming support from both parties in Pennsylvania, one of the battleground states likely to decide the upcoming U.S. presidential election. House Bill 2481, which has also been called the Bitcoin Rights bill, received only 26 votes against among the 202 members of the House. It is estimated that roughly 12% of the 13 million Pennsylvanians are crypto holders.

Crypto, stablecoins, and non-fungible tokens would fall under the proposed law’s purview, but the bill excludes any government-controlled digital assets like CBDCs. If the bill is passed, state and local governments in Pennsylvania won’t be able to restrict consumers or businesses from accepting digital assets as payment. In addition, any crypto transactions in the state will be taxed like fiat transactions, and additional taxes or fees on crypto payments would be prohibited.

Establishing a Framework

The Pennsylvania bill was developed in conjunction with the Satoshi Action Fund (SAF), a bitcoin advocacy group. Bill 2481 will now move to the Pennsylvania Senate, though it won’t receive a vote until after the election.

Lawmakers in 20 other states are considering crypto and digital assets regulations, and many of those efforts have been led by the SAF. Crypto regulations have already been enacted in Oklahoma, Louisiana, Montana, and Arkansas. Louisiana also recently became the first state to accept crypto payments for all state services.

Crypto Innovators

Crypto has become an important topic for regulators that has factored into the U.S. elections more significantly than ever before. The United States has fallen behind other regions like the EU, which launches its Markets in Crypto Assets (MiCA) regulations later this year.

Though there are no federal crypto laws on the books, the U.S. Securities and Exchange Commission has made it clear through a series of enforcement actions that it considers crypto a security and crypto exchanges as unregistered securities brokers.

Because of such actions, there have been concerns that digital assets trailblazers will move elsewhere and the United States could lag behind the world in financial innovation.

The post Pennsylvania Passes Bipartisan Bill to Establish Crypto Framework appeared first on PaymentsJournal.

An executive at crypto firm Circle said UK regulators could be rolling out stablecoin legislation in the next few months.

Stablecoins have surged onto the digital assets scene in the past few years, led by Tether’s USDT and Circle’s USDC. However, UK regulators have been slow to release stablecoin-specific rules.

After Dante Disparte, Global Head of Policy at Circle, met with officials at the Bank of England, he was reassured by their digital asset strategies. Disparte told CNBC that UK stablecoin laws could be on the books in a matter of “months, not years.” There has been no comment from the Bank of England or the UK Treasury.

Crypto Resistance

The UK has lagged behind the European Union in creating a regulatory framework for crypto. The EU’s Markets in Crypto Assets (MiCA) regulations are set to take effect by the end of the year. MiCA is an overarching set of rules for crypto and digital assets and includes regulations specific to stablecoins.

The UK has been less enthusiastic about establishing a similar framework for crypto. According to Disparte, much of the UK’s crypto resistance stemmed from concerns in the wake of the collapse of crypto platform FTX, as well as apprehension about fraud and risk.

“You could also look back, and I think many in the UK and in other countries would argue that they’re vindicated in not having jumped in too quickly and fully regulating and bringing the environment onshore because of all the issues we’ve seen in crypto over the last few years,” Disparte said.

The Money of the Future

Because many stablecoins track a fiat currency one to one, they don’t carry as much volatility and risk as other cryptocurrencies. As the use cases for stablecoins have grown, major players in the payments industry have invested in the technology. PayPal rolled out its PayPal USD stablecoin earlier this year, and Stripe just made a billion-dollar investment in stablecoin specialist Bridge.

The proven capabilities of the technology mean the UK could miss out on the benefits of stablecoins if it doesn’t create an infrastructure for them.

“In the spirit of protecting the U.K. economy from excess risk and crypto, there’s also a point in time in which you end up protecting the economy from job creation and the industries of the future,” Disparte said. “You can’t have the economy of the future unless you have the money of the future.”

The post Circle Expects UK Stablecoin Regulation in the Coming Months appeared first on PaymentsJournal.

Stripe has made another substantial investment in crypto, buying stablecoin platform Bridge in a reported $1.1 billion deal.

After speculation about the acquisition swirled last week, TechCrunch founder Michael Arrington recently confirmed that the deal was finalized. The Bridge acquisition will be the largest purchase Stripe has made to date and one of the largest acquisitions the still-nascent crypto industry has witnessed.

“This proves again our strong stance that stablecoins will continue to proliferate in areas like access, usage, applications, global reach, and regulatory developments,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Stripe provides payment services to roughly 1% of global gross domestic product, so stablecoins will be an efficient payment option that helps them grow their client base and payment volumes around the globe. “

Worldwide Support

Stripe has attempted to incorporate crypto into its popular platform since it added bitcoin as a payment option a decade ago. However, the company was forced to discontinue bitcoin support because of high costs and processing bottlenecks.

However, the company recently announced that it was working with Coinbase to bring stablecoin support to its platform. Stripe now supports Circle’s USDC on the Ethereum, Solana and Polygon blockchains and Pax Dollar on Ethereum and Solana. On its first day of stablecoin support, Stripe processed transactions in 70 countries.

Stablecoin Ambitions

However, the Bridge deal hints that Stripe has ambitions beyond simply supporting stablecoin transactions. Bridge is a payments network that was founded two years ago by former Coinbase executives. The platform gives businesses the capabilities to create, store, send, and receive stablecoins.

In fact, Bridge has been called the web3 version of Stripe, and the startup has received $58 million in funding from some of the industry’s biggest names. However, the crypto company has not yet been valued anywhere close to the $1.1 billion Stripe will reportedly pay.

Still, stablecoins are one of the key payments innovations that have emerged in recent years. Stablecoins track a fiat currency, like the U.S. dollar, on a one-to-one basis, and they have often been touted as a potential solution for cross-border payments. Tether’s USDT is currently the leading stablecoin, with USDC in distant second place.

However, payments giant PayPal recently and successfully issued its own stablecoin, PayPal USD (PYUSD). It’s unclear if Stripe plans to follow suit after the Bridge acquisition.

The post Stripe Furthers Crypto Initiatives with Bridge Acquisition appeared first on PaymentsJournal.

Worldcoin, the blockchain identity verification company created by OpenAI co-founder Sam Altman, announced its updated biometric authentication devices that utilize optical scanning.

The company’s Orb device, powered by Nvidia hardware, is reported to be five times more powerful than its earlier iteration. The new Orb will also be smaller, more efficient, and require fewer parts. The company envisions the Orb becoming an integral part in self-service checkouts and kiosks in the future.

In addition, Worldcoin will now be known as simply World. World also announced identity verification partnerships with apps like FaceTime, WhatsApp and Zoom.

“It looks like World pivoting is to building out, rather than focusing on token or coin valuation,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “While there are privacy concerns with this project, at the end of the day, it’s not much different than using facial recognition software to unlock a phone.”

“The difference here is World is leveraging blockchain technology to verify on an immutable record identification,” he said. “World has gained significant traction in demographic areas outside of the U.S., where there is higher inflation, a lower standard of living, and there are often identification issues.”

Biometric Inevitability

World’s flagship offering is World ID, which operates similarly to a digital passport. After a consumer uses the Orb to scan their iris, they will be recorded as a human and a World ID will be issued. Participants in certain countries will also receive a crypto token called WLD as proof of their verification.

World has said that nearly seven million people have signed up to have their irises scanned, but there has been some pushback from privacy advocates. There are concerns about how the company will collect, store, and manage the personal data it collects for World IDs. Spain and Portugal have gone so far as to ban World IDs temporarily, and Argentina and the UK have considered a ban as well.

Despite privacy concerns, biometric authentication has been considered an inevitability for some time because it offers a simple and secure way to verify identity. Many consumers are already familiar with biometric identification through facial recognition and fingerprint scanning software on many mobile devices. However, iris scanning is not as prevalent, which could present an obstacle for World.

The post Worldcoin Rebrands and Announces Biometric Identification Strategy appeared first on PaymentsJournal.

Grayscale has requested approval from the U.S. Securities and Exchange Commission to convert a fund that tracks multiple cryptocurrencies into an exchange-traded fund.

The crypto manager’s Digital Large Cap fund holds over $524 million in assets, with more than three-quarters invested in bitcoin. Roughly 18% of the fund is allocated to Ether, while the remainder is divided among Solana, XRP, and Avalanche. While bitcoin and Ether ETFs have been approved by the SEC, this would be the first time other tokens are included in a spot ETF.

“Grayscale doesn’t have enough assets under management to significantly move markets on its own,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “However, I think markets would move if the fund receives approval because it will open the door for similar ETFs to be launched down the road,”

A Landmark Win

Grayscale was instrumental in securing the approval of bitcoin ETFs last year. The SEC acknowledged that it was wrong in denying the crypto firm’s previous requests for an ETF conversion, and Grayscale’s victory in that case was hailed as a landmark win for the crypto industry.

After the wider approval of bitcoin and Ether ETFs, the SEC gave Grayscale its blessing to convert its Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE) into ETFs earlier this year.

The Foreseeable Future

In the wake of bitcoin and Ether ETF approvals, there has been much speculation about which digital asset will be the next to get the ETF treatment. In anticipation of future approvals, Grayscale has created funds based on Solana, XRP, Aave, and Avalanche over the past few months. The company has also compiled a list of over 35 cryptocurrencies it is considering for future funds.

“We saw this coming once the first bitcoin ETF was approved, and, at the end of the day, these issuers are playing a game of who can capture the most fees while offering solutions to invest in digital assets in a traditional way,” Hugentobler said. “This trend will continue for the foreseeable future.”

The post Grayscale Files for Crypto Index ETF Approval appeared first on PaymentsJournal.

Stripe initiated its long-awaited support for stablecoin transactions, and the payments company reported facilitating transactions in 70 countries on its first day of operations.

The company didn’t disclose the number of stablecoin transactions or the amounts transferred. Stripe now supports Circle’s USDC on the Ethereum, Solana and Polygon blockchains and Pax Dollar on Ethereum and Solana. Any stablecoin payment made on Stripe’s platform will be converted to U.S. dollars upon receipt and stored in a user’s Stripe wallet, minus a 1.5% transaction fee.

“The integration of multiple blockchains is key here,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Polygon and especially Solana have much faster and cheaper transactions than Ethereum based products that don’t leverage a Layer 2. The 1.5% fee is rather steep in my opinion, but I’d imagine as more payment providers enter the stablecoin space Stripe might get more competitive.”

Centering Around Stablecoins

Stripe has been advocating for crypto adoption since it added bitcoin as a payment option a decade ago. However, the company had to reverse its stance a few years later, citing high costs and difficulties in processing bitcoin transactions.

Earlier this year, Stripe announced it was working with Coinbase to bring crypto back to its platform, this time focusing on stablecoins, with a particular emphasis on USDC in its digital assets strategy.

Uniquely Suited

Stripe’s clientele, which is dominated by businesses in the e-commerce space, are constantly looking for ways to reach more customers at lower costs. The company believes stablecoins are uniquely suited to fit that need.

“This news is another piece of evidence that substantiates our thesis at Javelin, and that thesis, simply put, is the use of stablecoins will proliferate in the months and years ahead, particularly for cross-border payments such as remittances,” Hugentobler said. “It is telling that participants from 70 countries used this new payment solution.”

“The U.S. economy is stable, relatively speaking, but many other countries have much higher rates of inflation and/or debasement of fiat currencies, limited access to dollars or more stable currencies, or even limited access to viable savings instruments,” he said. “These issues point to a dollar-pegged stablecoin, such as USDC, as a legitimate solution—it’s a faster and more cost-effective way of making payments.”

The post Stripe’s Stablecoin Integration Sees Blockbuster First Day appeared first on PaymentsJournal.

Ripple will broaden the reach of its newly launched Ripple Custody platform to provide digital asset storage services for financial institutions.

The crypto firm’s leadership told CNBC that its custody platform is its fastest-growing segment, with year-over-year customer growth exceeding 250%. Ripple Custody now operates in over 20 countries.

The new custodial services will include integration with Ripple’s XRP Ledger blockchain platform, anti-money laundering measures, and a streamlined user interface. Additionally, Ripple said customers can use the platform to tokenize assets and trade them on XRP Ledger.

“Despite the challenges Ripple has faced over the last several years in taking regulators head on, Ripple has focused on the bigger picture,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Rather than focusing on token valuation, they have continued to build relationships, participate in pilot projects involving CBDCs or tokenization, and they continue to build out projects.”

Pressing Forward

Ripple is moving forward after a series of highly publicized legal battles with the U.S. Securities and Exchange Commission. The SEC first sued Ripple four years ago its flagship XRP token, alleging that the token is a security and Ripple is an unregistered securities broker.

A judge ruled in Ripple’s favor last year in what was hailed as a landmark victory for the crypto industry, but the SEC recently announced its intentions to appeal the decision. Ripple responded that it will cross-appeal the case in an effort to stay ahead of the regulator.

Increasing Institutional Investment

While Ripple is at the forefront of this issue, the entire crypto and digital assets industry has come under scrutiny in the U.S. Still, crypto and digital assets technologies have quickly emerged as key innovations driving the financial industry, and institutional investment is expected to continue growing.

“As a result of the company’s efforts, Ripple provides real value to their clients in both traditional finance and crypto native industries,” Hugentobler said. “The digital asset industry is so fast paced and constantly evolving, and Ripple has demonstrated over and over again that it has what it takes to be a leader in the space, by continuing to innovate and deliver value.” 

The post Ripple to Expand Offerings for Surging Crypto Custody Space appeared first on PaymentsJournal.

Institutional investors have played a key role in driving global crypto adoption, pushing digital assets into the mainstream.

Roughly 7.5% of the world’s population has used digital assets, with that number expected to reach 8% by next year, according to a report from MatrixPort. The launch of bitcoin and ether ETFs earlier this year drew billions in investments from major financial institutions like BlackRock, Fidelity, and Franklin Templeton.

Bitcoin has maintained its position as the flagship cryptocurrency, hitting an all-time high earlier this year. Aside from institutional investing, another factor driving its rise is its value as a hedge against the stock market during uncertain economic times.

“According to BlackRock’s research, Bitcoin has a low long-term correlation with stocks and bonds—with periods of dislocation—so it can serve as a great portfolio balancer,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Bitcoin also acts as a hedge to fiscal, monetary, and geopolitical risks.”

“During the U.S./Iran escalation a few years ago, COVID-19, the previous U.S. election cycle, Russia’s invasion of Ukraine, and last year’s U.S. regional banking crisis, bitcoin returned an average of nearly 44% on a 60-day return basis,” he said.

Here to Stay

Although crypto is increasingly seen as a hedge against market volatility, digital assets have faced their share of uncertainty, especially in the U.S. Because digital assets are traded on decentralized exchanges, criminals have used crypto platforms for fraud and other illegal activities.

The potential for criminal activity has led many U.S. regulators to crack down on crypto and hold digital assets firms accountable to the same laws as brokerage firms. Instead of taking action against crypto companies, the UK and EU have instead worked to create a better regulatory framework to guide investors and the crypto industry.

The backing of investors, governments, and the growing crypto community means digital assets are here to stay.

“Bitcoin’s price has a strong correlation to global money supply, and some refer to bitcoin as the global liquidity index,” said Hugentobler. “Bitcoin therefore is a solid hedge to fiat currency debasement, also known as inflation.”

The post Mainstream Crypto Adoption Expected to Accelerate Next Year appeared first on PaymentsJournal.

It’s increasingly common for consumers to pay at the point of sale using Apple Pay or Google Pay. This transaction is made possible by two emerging payments technologies: contactless payments and digital wallets. If a customer has integrated a buy now, pay later option into their digital wallet, that single transaction could include three payments innovations.

Many digital wallets have also begun to support crypto transactions, but the infrastructure behind digital assets is equally crucial to the future of payments. Tokenization, stablecoins, and blockchain have been adopted by financial companies and are increasingly being used to drive innovation and build global connections.

Connectivity is also central to the open banking model that has emerged in recent years. This system is built on financial technology companies that serve as intermediaries between banks and their clients. It’s best exemplified by instant payments, also known as pay-by-bank or account-to-account transactions, where funds move from one bank account to another in seconds.

These five forces—contactless payments, BNPL, crypto, digital wallets, and open banking—have dominated headlines in recent years, and for good reason. These emerging payments trends are driving the future of the financial industry.

Introduction of Emerging Payments

BNPL is often seen as an evolution of layaway, but unlike traditional layaway, consumers don’t have to wait until an item is fully paid off to receive it. Instead, they can split their purchase into smaller installments at the point of sale and receive the product immediately.

BNPL loans have soared in popularity because they often come with no interest or fees, making them an attractive alternative to high-APR credit cards. However, customers who miss a payment may face late fees.

While BNPL is often associated with e-commerce checkout, it is increasingly being supported by digital wallets for a myriad of transactions. A digital wallet is an application that stores payment details and passwords for multiple payment methods in onr plsvr. Popular digital wallets, such as Apple Pay and Google Pay, originate from mobile platforms, which is why they are often referred to as mobile wallets.

The bridge between point-of-sale devices and digital wallets is contactless payment technology. Contactless payments, also known as tap-and-go, use radio frequency identification, near-field communication (NFC) or quick response (QR) code technology to process transactions.

In the U.S., most consumers use NFC to transmit payment data from their smartphones, wearable devices, or cards. In other regions, such as China and India, it is more common for customers to pay by scanning a QR code.

While digital wallets in the U.S. most frequently integrate with credit cards, mobile payments in Brazil or India more often rely on instant payments. These payments are facilitated by third-party technology companies that function as intermediaries between consumers and banks.

Third-party developers drive these transactions, and for the open banking system. One of the central tenets of open banking is unlocking customer banking data for third parties through application programming interfaces (APIs).

Some of the most well-known third-party fintechs are peer-to-peer platforms like Venmo and Cash App. In addition to allowing users to send payments to friends and family, both Venmo and Cash App have added support for cryptocurrency transactions in recent years.

Cryptocurrency is a digital currency that is not issued by any government or central bank. It is supported by blockchain, a network of computers that constantly validate and authenticate transactions. The goal of crypto is to create a decentralized platform where funds can be exchanged without the need for third parties.

Key Trends in Emerging Payments

Although designed to be decentralized, some of the world’s largest financial institutions have increased their involvement in digital assets. Institutional investing has accelerated since the approval and launch of bitcoin and ether ETFs, which allow retail investors to buy and sell crypto as easily as they would buy stocks.

Many of these institutions are finding innovative ways to use blockchain technology beyond crypto. There are a multitude of use cases for tokenization, which is the digitalization of physical assets. A house deed, for instance, could be tokenized, placed on the blockchain, and then bought or sold in near real-time. A token can also be fractionalized and sold to multiple parties.

Along with the growing adoption of digital asset technology, more organizations are leveraging open banking platforms to lower costs and increase efficiency. Instant payments, being secure and real-time, help businesses reduce fraud while enabling faster and more accurate reconciliation.

Another emerging trend for non-financial companies is offering financial products on their platform, known as embedded finance. For example, when a company provides a buy now, pay later option at their e-commerce checkout, the customer isn’t redirected to a separate payment system. Instead, the transaction is embedded within the company’s platform.

BNPL has become a popular addition for companies like Apple, which shuttered its in-house BNPL operations and integrated BNPL options from Affirm into Apple Pay. This integration highlights another trend for digital wallets: they are increasingly storing many of the same items found in physical wallets, including gift cards, loyalty cards, and even driver’s licenses in certain states. Digital wallets can go beyond physical wallets, also storing everything from coupons and tickets to crypto.

The continued adoption of digital IDs is a key trend for digital wallets. One factor hindering wider adoption is that consumers still often have to carry a physical wallet, often simply to house their ID. This duplication leads many consumers to question the need for both a physical and a digital wallet. However, as digital IDs gain ground, digital wallets have the potential to become the only wallet a consumer needs.

Contactless payments will be the primary method for these transactions as digital wallets gain traction. Verifying a digital ID through NFC technology also offers more security. When a customer purchases an age-restricted item like alcohol, they can verify their age without sharing any other personal data with the merchant.

The Opportunities of Emerging Payments

While contactless technology is driving the new payment paradigm, there is still ample room for growth. One of the most important benefits of contactless payments is its simplicity—customers can make purchases while leaving their cash or card in their wallet.

However, QR codes can transmit more payments data, which is why they have been widely adopted in countries where open banking is prevalent. QR codes offer both merchants and consumers added protection against fraud, as well as increased ease of use. When a customer scans a QR code, they can send the relevant payment data without compromising their personal details.

One of the key opportunities for digital wallets is integrating instant payments into the U.S. market. FedNow and RTP are instant payments rails that launched in the U.S. last year. While many financial institutions have joined the networks, their connectivity is often limited. The number of banks fully integrated with these rails is still just a fraction of the U.S. banking system.

BNPL has come much further in the U.S., but there is still the opportunity for expansion, especially among different demographics. BNPL has been most widely adopted by younger and lower-income consumers, leaving an opportunity for the tech to make inroads with older and more affluent consumers.

One of the reasons why many U.S. consumers still use credit cards is the airline miles and cashback perks they offer. These rewards aren’t currently an option with buy now, pay later services, but they could be in the future. There is also the potential for BNPL to become a viable option in cross-border payments.

Cross-border payments are in high demand, yet issues persist with slow payment settlement, complex currency conversions, and country-specific regulations. One of the most promising candidates for facilitating cross-border transactions is stablecoins. A stablecoin is a type of crypto that tracks the value of a fiat currency, such as the U.S. dollar, one-to-one.

Stablecoins are an attractive alternative for organizations because they are less volatile than many other cryptocurrencies. They can be a reliable way to send instant cross-border payments in the situations where they are accepted.

Challenges Facing Emerging Payments

The insufficient regulatory framework surrounding digital assets has become an increasingly urgent issue for the crypto industry, especially in the U.S. The U.S. Securities and Exchange Commission has taken the position that cryptocurrencies are securities, not  commodities, meaning that digital assets fall under securities laws. The SEC has initiated enforcement actions against many major crypto players, alleging they are operating as unregistered securities brokers.

Regulators worldwide are concerned that bad actors might use crypto and digital assets to conduct nefarious activities like money laundering and fraud. There has been a rise in fraud attacks across the industry, with decentralized protocols making crypto holders more vulnerable to criminals. Once a crypto owner transfers their assets, the transaction is irrevocable and there are often no consumer protections in place.

That irrevocability is also a challenge for instant payments. Users can be manipulated into sending an instant payment to criminals, leaving no framework for reimbursement. The potential for fraud or misrouting increases with cross-border instant payments.

Another challenge to the adoption of instant payments is that many financial institutions aren’t equipped to invest the time and money required to upgrade their systems. The U.S. has a well-established and efficient banking system, so  many businesses and consumers don’t see the benefit in switching.

While many banks and credit unions have successfully undergone digital transformation, they often rely on third-party companies for an increasing number of functions, which can lead to gaps in service. Such was the case with Synapse, where the fintech company failed to do their due diligence with compliance. There is also increased potential for fraud when there are multiple parties that have access to customers’ banking data.

Digital wallets also carry risks of fraud. As digital wallets contain more sensitive data, they become targets for hackers. If a user’s phone is stolen, a criminal can  gain access to all the data stored in the wallet.

Though contactless payments are generally more secure, there have been concerns that hackers could intercept contactless payment details at the point of sale, either by installing a device at checkout or standing nearby with a mobile phone.

Fraud isn’t as much of a concern with BNPL, but the industry has attracted regulatory scrutiny because of its lack of consumer protections. BNPL providers aren’t required to report their loans to the New York Federal Reserve like credit card companies, and the skyrocketing growth of BNPL debt has led many to speculate that there is a mounting amount of “phantom debt” that could soon spiral out of control.

The U.S. Consumer Financial Protection Bureau recently issued rules stating BNPL companies must conform to the same standards as credit card companies. BNPL services will have to send monthly billing statements, fully disclose their fees, and handle disputes like their credit card counterparts. 

The CFPB has also become apprehensive about the massive amounts of consumer financial data that is available to non-bank companies. To that end, the CFPB has proposed rules that would require digital wallet providers to abide by the same laws that govern banks.

What’s Next for Emerging Payments

Those regulatory concerns aren’t likely to hinder the growth of digital wallets or BNPL. Instead, BNPL services have increasingly expanded their efforts to make BNPL a payment option at brick-and-mortar stores.

There may also be growing support for instant payments at U.S. One factor that will drive the traction of instant payments is collaboration between instant payment networks and merchants to offer loyalty rewards or discounts that can compete with credit cards. The industry also has room to improve its consumer protections.

One way to ensure transactions are accurate and secure is through biometric authentication. While contactless payments are currently accomplished through a mobile device, there have been pilot programs for customers to pay by facial recognition or fingerprint verification. These purchases are faster and much more secure, which is why biometrics have been adopted by many digital wallet providers.

Digital wallets are set to become the central hub of payments behavior, and one of their main integrations will be increasing support for crypto, stablecoins, and central bank digital currencies. CBDCs are like stablecoins that are issued and backed by a government instead of a private company.

Conclusion

In addition to tokenization and stablecoins, blockchain will be a powerful driver for payments because it provides a highly secure infrastructure for real-time transactions. Although there has been some uncertainty in the U.S. about digital assets technologies, the EU has begun to define a framework for crypto regulation that could serve as the blueprint for other countries to follow.

Any emerging payment method will be subject to regulatory scrutiny, but a clearer framework should only serve to guide the financial technology industry as it shapes the way forward. There are proven use cases for BNPL, digital wallets, contactless payments, crypto and open banking, and that will continue to drive these technologies—and the payments industry—forward for years to come.

The post Emerging Payments: Trends, Technologies, and the Future of Transactions appeared first on PaymentsJournal.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) will begin trials of digital asset transactions across its global messaging network.

SWIFT Chief Innovation Officer Tom Zschach stated that the organization’s goal is to build a network that supports both emerging and traditional payment systems. However, the current landscape is fragmented across a considerable amount of networks and currencies.

“As Zschach said, there are likely to be multiple blockchain networks that prevail from these early stages,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “The key to a successful trial is focusing on interoperability and successful execution—scaled at live higher volumes—across various institutions, types, and networks.”

Coexisting with Currencies

Zschach emphasized that the goal for digital assets and currencies is to coexist with traditional currencies, not replace them. SWIFT’s trials will involve financial institutions from North America, Europe and Asia and will cover “multiple digital asset classes and currencies,” though specific banks and asset types weren’t detailed.

SWIFT said it has already proven its ability to transfer tokenized value across blockchains, link CBDCs, and integrate crypto and cash networks. These trials will focus on providing banks with a single hub for handling various currencies and digital asset types.

The Feedback Loop

Cross-border payments have long been a challenge, and SWIFT has often been seen as a leading contender to spearhead a better cross-border system. The organization recently joined Project Agorá, a collaboration between leading financial institutions and multiple central banks, facilitated by the Bank for International Settlements.

The project’s goal is to explore how tokenized commercial bank deposits can be integrated with CBDCs on a single platform.

“Swift has worked with multiple blockchains, central and commercial banks, and other major payment players for several years,” Hugentobler said. “They’re continuing to push these types of trials to locate specific weaknesses and collaboratively build out the best fit and most secure solutions. This feedback loop has been going on for years, so it’s just a matter of time before they (and other major players) decide on the best solution and implement near-real-time global payments.” 

The post SWIFT to Pilot Cross-Border Digital Asset Transactions Next Year appeared first on PaymentsJournal.

Robinhood will bolster its crypto services for European users in anticipation of a more transparent regulatory framework in the region.

EU users have been able to buy, hold, and sell crypto within Robinhood’s app since last year. However, they were previously unable to transfer tokens from another exchange or withdraw their crypto to an external wallet.

The new functionality will support 24 cryptocurrencies, including bitcoin, Ethereum, Solana, and USDC. In an interview with CNBC, Robinhood’s leadership said that the European market “can become a very attractive market next year,” due to the EU’s Markets in Crypto-Assets (MiCA) regulations.

“Robinhood is going to see first mover advantages from tapping into the European markets,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “The MiCA regulations are expected to be fully in place by December, and they should provide solid guidance on operations for companies.”

An Attractive Alternative

There has been much anticipation for MiCA, which is expected to establish  guidelines for issuing and trading digital assets, as well as specify how companies must authorize, supervise transactions, and provide disclosures.

A transparent legal framework will make the EU an attractive option for crypto companies. According to Robinhood, the EU rivals the U.S. in terms of total addressable crypto market. To encourage initial adoption, the company plans to offer EU customers 1% of their deposit’s value back in crypto.

A Comprehensive Crypto Framework

Many crypto industry experts believe MiCA could serve as a template for crypto regulation worldwide. However, the regulatory environment in the U.S. hasn’t been as conducive as in the EU.

The U.S. Securities and Exchange Commission believes crypto falls under existing securities laws and has taken action against major crypto players, alleging they operate as unregistered securities dealers.

The increased spotlight on crypto has only intensified as the U.S. elections approach, marking a significant shift from previous years. Regardless of the election outcome, all eyes will be on the EU as MiCA takes effect.

“It’s the first comprehensive crypto framework to be established, so there may be some challenges to overcome,” Hugentobler said. “However, it’s still a big step in the right direction overall. The EU is running laps around the U.S. in the crypto space.”

The post Robinhood Expands EU Crypto Scope Ahead of MiCA appeared first on PaymentsJournal.

PayPal announced that its business customers can now buy, hold, and sell crypto with the same functionality as consumer accounts.

The crypto service will be available to all PayPal Business Accounts in the U.S., except for clients in New York state. Along with on-platform transactions, PayPal will also support withdrawals to external wallets for added security.

“This is a pretty cool announcement from PayPal’s crypto product team,” said James Wester, Director of Cryptocurrency at Javelin Strategy & Research. “To this point, there was a need for ‘on and off ramps’ for any crypto payments to merchants and businesses. For PayPal account holders to pay a merchant ‘with crypto’ required the crypto to be exchanged for U.S. dollars and then that money was settled into the merchant’s account.”

Expanding Reach

PayPal’s leadership noted that its experience in the consumer crypto market has positioned the company well for expanding its reach to businesses.

“Business owners have increasingly expressed a desire for the same cryptocurrency capabilities available to consumers,” said Jose Fernandez da Ponte, Senior Vice President of Blockchain, Cryptocurrency, and Digital Currencies at PayPal. “We’re excited to meet that demand by delivering this new offering, empowering them to engage with digital currencies effortlessly.”

Significant Inroads

The payments giant has made substantial investments in digital assets since it first enabled crypto transactions for consumers four years ago, including the launch of the PayPal USD (PYUSD) stablecoin last year. While PYUSD has made significant inroads in a short time, it still trails Tether’s USDT and Circle’s USDC considerably.

The adoption of PayPal’s stablecoin accelerated after the company added support for PYUSD in Xoom, PayPal’s cross-border payments platform. Momentum also picked up after PayPal added PYUSD to the Solana network, which offers significantly lower transaction fees compared to Ethereum. The company hopes this move will entice consumers to use PYUSD for smaller purchases, a shift further supported by the new crypto functionality for businesses.

“This change allows businesses to accept crypto, including PYUSD, natively into their accounts,” Wester said. “Businesses can also pay their vendors using crypto. It effectively creates an ecosystem where PYUSD can be used for instant, free payments. Given the size of PayPal’s consumer and merchant reach, it could be important.”

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With the blessing of the SEC, BNY Mellon will be allowed to hold assets for investors who own its crypto exchange-traded products (ETP), without needing to reflect these assets on its balance sheet. BNY aims to be the first bank to offer cryptocurrency custody services for its bitcoin and ether ETP clients.

The offering highlights the ongoing drama surrounding the SEC’s SAB 121 rule, which requires companies holding customers’ cryptocurrencies to record them on their balance sheets. Earlier this year, the SEC’s Office of the Chief Accountant reportedly reviewed BNY Mellon’s approach to crypto custody and said it had no problem with the bank’s decision not to list crypto assets as liabilities.

According to BNY, the SEC’s waiver of SAB 121 is specific to this particular use case for ETPs. It remains unclear whether other asset managers offering crypto investment products, like Fidelity, will apply for similar exemptions.

For many observers, this has raised the question of why this exemption has been carved out.

SEC chief Gary Gensler stated in his congressional testimony earlier this week that he won’t repeal SAB 121. In support of that position, he cited the FTX and Terraform bankruptcies and argued that crypto represents a liability for banks and asset managers offering ETPs that hold digital assets.

“Earlier today, Chair Gensler indicated that he would not rescind SAB 121,” responded Congressman Mike Flood (R-Nebraska). “Now that the office of the Chief Accountant is picking and choosing who needs to comply with SAB 121, why wouldn’t SEC simply rescind SAB 121 entirely?”

A Controversial Measure

SAB 121 has been controversial since the SEC adopted it in 2022. The goal aimed to enhance transparency in financial statements, clarifying the risks for those investing in crypto assets. However, the additional regulation and complexity have deterred some banks from entering the crypto space.

In May, the Senate rejected SAB 121 in bipartisan fashion, intending to expand opportunities for retail investors to hold digital assets in their bank accounts. However, this reversal of the regulation was subsequently vetoed by President Biden.

The BNY decision cracks open the door for more banks to custody crypto—provided they can obtain the proper permissions.

“BNY Mellon and so many others have been in the business of custodying people’s assets for 200 some years,” Flood told CoinTelegraph earlier this year. “They don’t want to be left on the sidelines.”

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Last year, the U.S. Securities and Exchange Commission denied Coinbase’s request for more transparent crypto regulations, prompting the crypto exchange to take its case to the Court of Appeals for the Third Circuit.

The SEC has often asserted that cryptocurrencies are securities and should be regulated accordingly. This stance led the commission to bring enforcement actions against many crypto marketplaces, including Coinbase, alleging they were operating as unregistered securities brokers.

“The current SEC’s stance toward crypto is unfortunate,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “Here is an asset class that has over $2 trillion in market capitalization and little guidance to go off.”

An Insufficient Rationale

Two years ago, Coinbase petitioned the SEC to create a regulatory framework around digitally native securities and define which digital assets would be classified as such. The petition was dismissed, with the SEC issuing only a two-page explanation.

Coinbase argued that the SEC’s rationale was insufficient and that the commission’s refusal to establish clear guidelines makes it very difficult for these digital asset companies to properly register with the SEC or for digital assets to operate as they were designed.

The panel of appeal’s court judges said that while the SEC isn’t required to issue a sizable attestation, the commission’s response should have included more substance.

“There’s an argument here that this is pretty darn close to vacuous,” said Judge Thomas Ambro according to a report from Law360. “I don’t really understand why it is that you’re denying rulemaking, even though I realize you don’t have to give a whole lot. It’s a brief reasoning, but I don’t see the reasoning.”

A Source of Frustration

The SEC argued that it should not have to create new rules for the crypto industry when existing regulations are adequate.

“If Coinbase wants to arrange its business in a way that does not comply with the existing regulatory framework, that does not establish a right to have the framework adapted to meet their business,” said SEC lawyer Ezekiel Hill.

The appeals judges agreed that the SEC isn’t obligated to make rules at Coinbase’s request, but they were unable to discern why crypto regulations aren’t a priority for the SEC, especially given the commission’s continued enforcement actions against crypto companies. This enforcement-first approach has been a source of persistent frustration for the crypto industry in the U.S.

“Fortunately, companies have a template to work from with the new MiCA regulations in the EU, but that’s no guarantee the SEC won’t continue to act vacuously towards the industry,” Hugentobler said. “If there isn’t a change in the SEC’s leadership and perspective, the progress of the crypto industry will be limited, and organizations and developers will continue their mass exodus out of the U.S.”

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There have been numerous innovations and breakthroughs in the crypto industry this year. Institutional investors have made significant investments in bitcoin and Ether ETFs, and the price of bitcoin hit an all-time high. The vast potential of tokenization, stablecoins, blockchain, and other digital asset technologies has captured the attention of financial companies worldwide.

Yet, in the U.S., the absence of a clear regulatory framework continues to hinder crypto innovation. In his latest report, Crypto Gets Political, James Wester, Director of Cryptocurrency and Co-Head of Payments at Javelin Strategy & Research, examines how regulatory uncertainty is affecting the U.S. crypto industry, and the impact crypto can have on upcoming elections.

Enforcement First

There is little argument that existing U.S. digital asset laws are inadequate to govern the crypto industry. Without a framework in place, U.S. regulators have taken  an enforcement-first approach to crypto oversight.

“The only thing that is clear is that nothing is clear,” Wester said. “It’s becoming tough for companies to build products in this space, because they don’t know they’re doing anything wrong until they get an enforcement notice. Imagine not knowing the speed limit until you get pulled over for a ticket. That’s the way things are shaping up right now.”

Meanwhile, the European Union is developing a regulatory framework for crypto and digital assets through its Markets in Crypto Assets (MiCA) rules. Set to take effect later this year, MiCA aims to provide  an all-encompassing set of regulations governing the issuance, purchase, and trading of crypto and digital assets within the EU.

A transparent legal structure will make the EU an attractive alternative for crypto companies. As marketplaces become increasingly global, countries will continue to compete for technology investment and development.

The lack of regulatory clarity in the U.S. raises the real possibility  that the country could lose digital asset technology to regions with more established legal frameworks. This might not concern those  who believe that crypto and digital assets are nothing more than the domain of criminals and scammers.

“The problem with that approach is that financial institutions, capital markets, and infrastructure players like the DTCC, Swift, and the Bank of International Settlements don’t agree with that assessment,” Wester said. “All those entities believe this technology is more efficient and less expensive than conventional means, and in fact they are betting on it.”

“Considering how important capital markets, financial institutions, and financial infrastructure are to the U.S. economy, the belief that crypto and digital assets are just a haven for scams and Ponzi schemes is clearly inaccurate,” he said.

Building the Engine

However, crypto fraud continues to occur and was a key point of discussion at a recent U.S. House Financial Services Subcommittee meeting on decentralized finance. The main question raised was: if a criminal commits a rug pull or a Ponzi scheme on a decentralized protocol, does the platform bear any responsibility?

“There’s a famous letter where bank robber Clyde Barrow, of Bonnie and Clyde fame, praised Henry Ford for creating the V-8 engine because it was fast enough to help him get away from the police,” Wester said. “Was Henry Ford responsible for Clyde Barrow? Ford built the engine, but Barrow was the bad guy. Right now, in the crypto industry, it seems like if a company builds an engine and someone misuses it, the company is being held responsible.”

An Electoral Issue

Despite looming regulatory hurdles, the most important takeaway is that crypto and digital assets have become a significant topic in an election year. While it might not be the number one issue on voters’ minds, it is on their lists, and that is a dramatic shift from years past.

“Could crypto make an impact in a very close election?” Wester said. “It might. That’s likely not because of the million or so voters who work in the crypto industry. Could the election turn on the approximately 20% to 25% of voters who own crypto? Possibly. The difference in the 2020 election was roughly 50,000 votes across six states, which is quite narrow.”

Regardless, digital asset technology has become a meaningful topic that has risen to such prominence that it is an electoral issue.

“Just the fact that there was a presidential nominee for a major party who appeared at arguably the largest bitcoin conference in the U.S., if not the world, is a big deal,” Wester said. “This is not some local race; we have presidential politicians who are actively discussing crypto and digital assets technology. If you told me that a few years ago, I would not have believed it.”

The post Crypto Is on Voters’ Minds More Than Ever appeared first on PaymentsJournal.

After selling out its first crypto phone, Solana will release its highly anticipated follow-up, Seeker, next year.

Seeker is expected to feature a lighter build than its predecessor, Saga, along with an improved camera and longer battery life. It will also include advanced crypto capabilities like an integrated wallet designed to streamline crypto transactions.

“I’ve considered switching to the Solana phone, but until Seeker has a 5x to 10x improvement in UI and crypto navigation, I’m not ready to give up my iPhone,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It’s simple and relatively inexpensive to use a web-based app like Phantom to conduct transactions on a desktop or an app. Until Solana builds out a significantly better crypto user experience, I won’t make the move.” 

Airdropping Aspects

The less-than-intuitive design was one of the key reasons for Saga’s sluggish sales following its launch. It wasn’t until Solana began airdropping BONK memecoins to its phones that Saga sold out. The value of BONK tokens soared into the hundreds, often rewarding Saga users with more than they had paid for the device.

Solana has leaned into the airdropping feature in its initial marketing for the upcoming Seeker model, though it’s unclear how aggressively the company will pursue this strategy. However, Solana has said that its new phone will track token rewards more efficiently.