U.S. Bancorp, which does business as (and is better known as) U.S. Bank, has begun testing its own stablecoin on the Stellar blockchain. The pilot, detailed in a recent Bloomberg report, focuses on using the token for faster and cheaper cross-border payments while incorporating safeguards like customer verification and transaction reversals. Mike Villano, the bank’s senior vice president for digital asset products, pointed to Stellar’s suitability for traditional financial services as a key selling point for the bank.
While U.S. Bancorp CEO Gunjan Kedia noted demand for stablecoin payments from customers remains muted, these dollar-backed digital assets have emerged as crypto’s primary pitch in recent years, serving as the main use case beyond bitcoin’s role as a long-term store of value and gambling in the oftentimes-rigged memecoin casino.
And for crypto networks like Ethereum focused on decentralized finance (DeFi), stablecoin volume drives most of the financial activity and user adoption. In fact, these blockchains are so reliant on these centrally-issued dollar tokens that it brings into question the true differences between this new blockchain technology and traditional fintech, in addition to whether DeFi may be mostly decentralized in name only.
DeFi skeptics have long cautioned against leaning on stablecoins as a shortcut for user adoption, a dependency now glaring as fintech firms like Stripe, Coinbase, Robinhood, and various stablecoin operators roll out blockchains optimized for speed and ease of use at the expense of peer-to-peer financial sovereignty.
And this merger between crypto, fintech, financial services companies, and traditional banks via stablecoins is accelerating.
Here are just a few of the endless examples of this phenomenon: Klarna just became the first fintech to issue a stablecoin, KlarnaUSD, on Stripe’s Tempo chain. MoneyGram is expanding its use of stablecoins for remittances after a quick test of the technology, according to Crossmint co-founder Rodrigo Fernández Touza. Revolut rolled out fee-free, one-to-one fiat-to-stablecoin swaps for its 65 million users a couple of weeks ago. Deel’s new head of crypto announced a new crypto vertical for the payroll provider a couple of days ago. Citi and JPMorgan Chase both have stablecoin-related partnerships with Coinbase.
These launches show how the tech is evolving into an efficiency booster for incumbents, not necessarily a true disruptor. One line from the Bloomberg report on U.S. Bancorp’s stablecoin interest should cut particularly deeply for Bitcoin veterans: Villano called the ability to freeze assets on Stellar “particularly appealing.”
This control mechanism directly flips Bitcoin creator Satoshi Nakamoto’s vision of trustless, censorship-resistant money on its head by prioritizing bank oversight over user sovereignty. On a related note, Circle CEO Jeremy Allaire also drew ridicule last week for posting “Circle ♥️ Banks.”
Growing tensions between the cypherpunks and those simply building technology for banks boiled over in October when Ethereum Foundation researcher Dankrad Feist jumped to Tempo, prompting accusations that the space is drifting too far from decentralization towards bank-friendly infrastructure.
The stablecoin phenomenon also sheds light on political enthusiasm for crypto from the Trump administration. From Washington’s view, stablecoins can be used to extend dollar hegemony globally, as codified in the GENIUS Act signed by President Trump in July.
Yet, in recent weeks, the co-founders of the Bitcoin privacy wallet Samourai Wallet were sentenced to multiple years for money transmission violations. The prison time the Samourai Wallet developers have been given is particularly troublesome when contrasted with the pardon the former CEO of crypto exchange Binance received for somewhat similar charges.
It’s clear crypto has simply lost the plot at this point, assuming it ever had one.
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