Why is it necessary to revisit U.S. stablecoins today?

Written by: Charlie Little Sun

The article reflects the author’s personal opinions and does not represent the positions of any related companies.

I finished writing this at the end of March, when CRCL surged and then plunged, and COIN followed the drop: when the real battle of interests behind the CLARITY Act kicked in, I framed the issue as “who owns the USD accounts.”

That angle was right at the time. Because what the market is most sensitive to—and what banks and the crypto industry are really fighting over—is whether stablecoins will be allowed to continue evolving toward “on-chain savings accounts.”

The stock price swings of CRCL and COIN, the public pressure from the banking industry, the White House bringing the banking and crypto industries to one table—what everyone is fighting over is actually the same thing: whether the United States is willing to let on-chain dollars develop appeal close to that of deposit accounts.

But over the past few weeks, I’ve increasingly felt that the underlying nature of how things are unfolding has changed.

Not because the yield terms suddenly became unimportant, but because the true focus of all parties in the United States has shifted to something beyond just the bill text in Congress.

On April 1, the Treasury Department proposed a rule framework for when state-level regulation can be considered “substantially similar” to the federal framework.

On April 7, the FDIC released a prudential regulatory framework.

On April 8, the Treasury Department again proposed implementation rules for anti-money laundering and sanctions requirements.

On the same day, the White House Council of Economic Advisers issued research on banning stablecoin yields from affecting outcomes.

Going a bit further back, at the end of February, the OCC had already sought comments on implementation rules regarding stablecoin issuers and related custodial activities.

What the United States is truly moving forward on regarding stablecoins is no longer “whether the CLARITY Act can pass,” but “what kinds of institutions and what kinds of business models can enter the implementation phase.”

That’s also why today we should revisit U.S. stablecoins.

Because this is no longer just an industry debate about yield terms, nor only a market story about who wins or loses among Circle, Coinbase, or banks.

It’s starting to become a bigger issue: the U.S. is rewriting stablecoins—from a crypto-flavored financial product—into a layer of on-chain cash that can be regulated, scrutinized, orchestrated, and integrated into the dollar system.

If at the end of March people were fighting over “who the account belongs to,” then after April, the more worth-asking questions have actually become two:

First, if end users cannot access the portion of short-term government bond yields behind stablecoins, who does the money ultimately belong to?

Second, if stablecoins are ultimately written into a layer of legitimate on-chain cash, who can connect it into the default payment pathways, enterprise systems, and internet request flows?

The first question determines how yields are distributed. The second question determines routing control.

Over the past few weeks, the White House, the Treasury Department, the FDIC, the OCC, and also the recent wave of state trust license applications and approvals—have essentially been answering these two questions together.

What the United States is truly rewriting is no longer whether stablecoins resemble accounts; it’s whether they will be formally shaped into a layer of on-chain cash backed by short-term government bonds.

What is truly being advanced in April is not slogans, but implementation

Over the past year, the biggest characteristic of U.S. stablecoins has been “fast narrative, slow institutional development.”

First it’s the legislative window, then a bank backlash, then the platform growth logic, and then it turns into a policy risk topic that the market uses for trading.

But by April, this matter has started to look a little different.

The Treasury Department’s proposal on April 1 is, in fact, not the first time it has discussed how states and the federal government should divide responsibilities, because this dual-track structure was already embedded in the GENIUS Act and was also taken up by the OCC’s late-February implementation proposal.

What the bill lays out first are principles: below a certain size threshold, qualified state-level issuers can still exist; what the Office of the Comptroller of the Currency (OCC) cares about more is, once you enter the federal framework, or once you exceed the threshold requiring federal supervision, the specifics of how you are reviewed, how you are managed, and how you are charged.

What the Treasury Department is starting to add this time is another piece that had previously stayed at the principle level: to what degree state-level regulation must “resemble” the federal system, to count as meaningfully comparable, and to be able to remain on this regulatory map.

In other words, the novelty of April 1 is not that it proposes a new direction, but that it pushes the original dual-track framework—previously written into statutory language—one step closer to becoming truly executable administrative standards.

On April 7, the FDIC’s prudential regulatory framework drew another boundary line even more clearly.

It covers reserve assets, redemptions, capital, and risk management, and it also explicitly clarifies a problem that had been easy for the market to confuse: stablecoin holders will not automatically receive deposit insurance due to the issuer’s reserve arrangements; but if a tokenized deposit itself meets the legal definition of a “deposit,” then legally it remains a deposit.

This distinction may look technical, but in fact it is drawing a very important line.

The U.S. is saying that stablecoins can exist legally, but they are not the same thing as bank deposits; you can’t market them as the same kind of product, nor can you compete with them as if they were the same.

On April 8, the Treasury Department, FinCEN, and OFAC jointly proposed implementation rules for anti-money laundering and sanctions requirements.

The meaning of this move is also very direct: stablecoin issuers are no longer just “financial innovation entities,” but will be inserted into the existing U.S. anti-money laundering and sanctions machinery, required to take on obligations by financial-institution standards.

At the same time, the OCC’s late-February implementation proposal also covered foreign payment stablecoin issuers and related custodial activities, showing that what the U.S. wants to regulate is no longer only “who issues tokens domestically,” but also “how dollars exist on-chain globally, how they are held in custody, and how they are introduced into U.S. legal jurisdiction” itself.

Taken together, viewed as one package, what is truly being advanced in April is not a single bill slogan, but a full set of implementation machinery that has begun to turn.

This means the stablecoin issue is no longer just “whether policy will give approval,” but has started to become “what kind of institutional machinery it will be placed into.”

Where the yield battle is truly moving forward is not “whether it can be granted,” but “who the yield belongs to”

If you look only at market discussions, the hottest focus over the past one or two months is still yield terms. Many analyses have stopped there as well, continuing to circle around the boundaries of “passive yield” and “behavioral incentives.”

But a White House study released on April 8 pushed the discussion one step further.

Over the past year, the strongest argument from banks has been: if stablecoins can pay yields, depositors will move money from bank accounts onto the chain, increasing banks’ liability costs, weakening lending capacity, and ultimately harming the real economy.

This logic sounds strong and is easy to persuade regulators.

However, the White House’s benchmark estimate shows: if stablecoin yields are banned in full, bank lending would increase by only about $2.1 billion, roughly 0.02%; at the same time, doing so would bring about approximately $800 million in net welfare costs, and the bulk of the additional lending would still flow to large banks.

This conclusion does not mean banks’ concerns are entirely unfounded, but it does make one thing clearer: “If yields are not banned, the banking system will have major problems.” At the quantitative level, this strongest public-interest narrative is not as solid as people may imagine.

Once this premise is weakened, the question naturally changes.

What is truly worth asking is no longer just “can yields be provided,” but “who exactly the yield belongs to.”

The reserve assets behind stablecoins—short-term government bonds, repos, bank deposits, and other highly liquid assets—are continuously generating interest.

If end users do not receive it, that yield does not disappear; it simply changes hands.

It can remain on the issuer’s profit and loss statement; it can be used by platforms for merchant subsidies, membership benefits, points budgets, and user growth; or it can be retained as ongoing motivation for the issuer to keep holding short-term government bonds.

So when the yield terms are pushed forward to today, it is no longer just a product design question, but a value distribution question: in a new cash layer supported by short-term government bonds, how should the yield spread it generates be divided?

What the Treasury sees is not only payments, but a layer of government bond demand being institutionalized

If you look at the Treasury’s materials from the Treasury Borrowing Advisory Committee earlier this February, you’ll find that the Treasury’s perspective on this issue is one step more forward than most discussions in the market.

The idea that stablecoins would bring demand for short-term government bonds is not a new judgment.

Over the past year, whether in bill design, market research, or discussions between the Treasury Department and primary dealers, this point has been raised repeatedly.

What is truly noteworthy is that today, this matter is becoming more and more clearly written into institutional and implementation logic.

The Treasury Borrowing Advisory Committee has already explicitly listed stablecoins as an “additional demand area” for short-term government bonds; and the GENIUS Act and its subsequent implementation have also locked qualified reserves more clearly into high-liquidity assets such as dollars, deposits, repos, short-duration U.S. Treasuries, and similar money market funds.

This means that what the U.S. is advancing now is not merely legalizing a digital dollar product, but systematically incorporating a layer of on-chain cash backed by short-term government bonds into its own financial infrastructure.

In that way, stablecoins are no longer just a payments issue and no longer just a crypto industry issue. They will also affect fiscal financing structures, the bank liability side, the money market structure, and how the dollar expands on-chain.

From this perspective, looking back at the yield battle, the state-federal division of responsibilities, the wave of licenses, and regulatory treatment of foreign issuers, you’ll see that these news items—which originally look dispersed—are actually serving the same single goal: the U.S. is pushing stablecoins from a controversial crypto product toward a layer of on-chain cash that can be regulated, scrutinized, and absorbed into the Treasury system.

This wave of licensing is not proving that “everyone wants to become a bank”

Now look at the recent OCC licensing wave.

If you only look at news headlines, it’s easy to interpret this as “more and more companies want to obtain U.S. bank licenses.”

But that understanding does not capture the essence of what’s really happening.

The lists of applications related to digital asset activities that the OCC has publicly posted are no longer limited to a few native crypto companies; they have expanded to include payment, custody, brokerage, market infrastructure, and large institutional platform-layer entities.

Among the publicly listed applications are Bastion, Revolut, zerohash, Morgan Stanley Digital Trust, World Liberty, and others. Also, what is shown in the public list is new applications; conversion applications are not within the scope of public comments.

This shows that this wave is no longer a set of scattered cases, but an increasing number of institutions from different backgrounds moving in the same direction.

And the licenses being approved here are not traditional commercial bank licenses in the usual sense.

In December last year, Circle and Ripple received conditional approvals for new national trust bank charters. BitGo, Paxos, and Fidelity Digital Assets received conditional approvals to convert state trust licenses into national trust charters. These licenses allow them to manage and hold assets on behalf of clients and complete payment settlement faster, but they do not permit accepting cash deposits or issuing loans.

In February this year, Bridge, Stripe’s subsidiary, also received preliminary approval for a national trust bank license. If ultimately approved, Bridge will be able to provide enterprises, fintechs, crypto firms, and financial institutions with digital asset custody, stablecoin issuance and orchestration, and stablecoin reserve management.

In early April, Coinbase also received conditional approval for a national trust company license. Coinbase itself emphasized that this will not make it a commercial bank; it will not accept retail deposits and will not do partial reserve lending. But it also clearly stated that federal supervision will lay the groundwork for new products and related services, including payments.

So the real logic behind this wave of licensing is not “everyone wants to become a bank,” but “more and more institutions want to occupy the most valuable position next to the on-chain cash layer.”

That position is not the full capabilities of traditional commercial banks, but rather nodes closer to the new cash layer: custody, reserve management, issuance orchestration, compliance distribution, and regulated settlement.

Once an entire new layer of cash form is institutionalized, the first moat will not be formed only by people who simply issue tokens, but by those who can hold and manage this layer of cash and connect it into bigger systems.

The essence of the change: the U.S. is not giving stablecoins an identity—it is reshaping their form

If you put these April rules, studies, and licensing developments together, the change is actually already very clear: the U.S. is not simply saying “stablecoins are legal” or “stablecoins are illegal”—that is only the point other countries and markets are trying to catch up on—the U.S. is shaping stablecoins’ form.

This form is not a savings account, not insured bank deposits, and not an internet balance that can freely grow into a high-yield cash substitute.

It is more like a layer of on-chain cash supported by short-duration U.S. Treasuries and high-liquidity reserve assets, which can be regulated, scrutinized, orchestrated, and also integrated into the dollar system.

Once this form is institutionalized, issuance itself will become increasingly homogeneous, and differentiation will naturally move elsewhere.

So over the past few months, what is most worth watching is no longer just “who issues,” but two bigger things.

The first is who takes the yield behind this layer of cash.

The second is who controls the flow of this layer of cash through whose pathways.

The former is the right to the yield distribution; the latter is the right to control routing.

Once stablecoins are no longer just a controversial product and are written into a truly existing new cash form, value will not stay confined to issuance rights alone.

From “who owns the account” to “who owns the yield” to “who controls the routing”

A study by the Federal Reserve Bank of Kansas City on April 10 highlights a mismatch that the industry and public discourse have currently been ignoring: stablecoins today are actually rarely used for payments, and the related infrastructure lacks interoperability; the entire ecosystem still mainly remains within crypto finance.

This statement is important because it means regulators are working to shape stablecoins into payment and settlement tools, but in reality they are still a long way from a mature payment layer.

And because of that, what will be most valuable in the next stage won’t just be “who issues,” but who can connect this institutionalized layer of on-chain cash into real commercial processes—enterprise systems, application interfaces, automated workflows, cross-system calls, and an increasing number of paid request flows between machines.

That’s exactly why the formation of the x402 Foundation by the Linux Foundation on April 2 is worth connecting the dots on.

As I pushed x402 toward neutrality at Coinbase, and as Stripe continued to bet on both sides beyond MPP, x402 will remain neutral under Linux Foundation governance, serving transparency, interoperability, and community co-governance. It will host open protocols from Coinbase, embed payments directly into network interactions, and enable applications, interfaces, and smart agents to exchange value the way they exchange data.

If you string together the changes over these past few months:

In the previous phase, the fight was over who owned the account—who could legally issue stablecoins.

In this phase, the fight is over who owns the yield—how the yield behind the on-chain cash layer is divided.

In the next phase, the fight will be over who controls the routing—through whose protocols, whose interfaces, and whose orchestration pipelines this cash flows.

Competition at each layer is more covert and more valuable than the last.

What is truly worth watching today is that rules, licenses, and pathways are all changing at the same time

So today, when looking at U.S. stablecoins, if you are still only fixated on the yield terms themselves, it’s not enough to capture the essence.

What is truly worth watching is that the U.S. has already begun using an entire set of implementation machinery to rewrite stablecoins—from a crypto-flavored financial product—into a layer of on-chain cash supported by short-term government bonds, which can be truly managed by government machinery.

The Treasury is redrawing state-federal responsibility, and also writing anti-money laundering and sanctions obligations into it; the Federal Deposit Insurance Corporation is clarifying the boundary between stablecoins and deposits; the Office of the Comptroller of the Currency is bringing domestic issuers, foreign issuers, custodial activities, and licensing pathways into a single regulatory machine; and more and more institutions are starting to compete for positions next to this layer of cash in custody, reserve management, orchestration, and distribution.

On the surface, Washington is still discussing stablecoin yields; in reality, it is already deciding two bigger issues: how short-term government bond yields will be redistributed, and through whose pathways future on-chain dollars will flow.

The real competition has already started moving away from issuance rights itself.