- Key insight: Banks are scrambling to find their place in a rapidly growing market for stablecoins. Before making major commitments, though, they need to be sure of the market segment they're trying to compete in and who their opponents are.
- Supporting data: JPMorgan's internal stablecoin, JPMD, is already processing more than $1 billion daily for its corporate clients.
- Forward look: Those who move with clarity and intent will define their role in the next financial system, while others risk being left reacting to it.
Mastercard recently announced it was acquiring BVNK, a stablecoin infrastructure company, for $1.8 billion. That is the largest stablecoin acquisition in history, eclipsing Stripe's $1.1 billion purchase of Bridge last year. The deal puts Mastercard squarely in the institutional stablecoin settlement layer as it's being built, staking a claim in the market before competitors move in.
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Banks should tune in as this acquisition signals the market they are preparing to enter and the scale of competition they will face.
The banking industry has spent considerable energy in recent months framing the stablecoin question as a deposit defense problem. The American Bankers Association has warned Congress about potential deposit flight. The OCC published 376 pages of proposed rules under the GENIUS Act. Meanwhile, Bank of America has announced plans to launch its own proprietary stablecoin, Wells Fargo has filed a trademark for "WFUSD," while several other major financial institutions are forming a consortium to launch a jointly backed stablecoin. Early movers are taking aggressive steps to prepare for a stablecoin-driven future that is rapidly approaching, while others continue to wait for regulatory details to be finalized.
As most readers are probably aware, the two largest stablecoins today are USDT, issued by Tether, and USDC, issued by Circle (CRCL.US). USDT had a market cap of $189.5 billion as of May 1, compared to $77.2 billion for USDC. Together they account for about 85% of all stablecoins in circulation today. Tether's dominant market capitalization reflects its role as the liquidity backbone of the crypto-native ecosystem. USDT is embedded across decentralized exchanges, centralized trading platforms and DeFi protocols in ways that make it extremely difficult to displace. That network effect did not develop because consumers chose stablecoins over bank deposits. It developed because crypto traders and DeFi protocols needed a stable settlement asset, and Tether was one of the earliest and built the deepest liquidity. Bank-issued stablecoins are unlikely to compete meaningfully in this layer. DeFi protocols are not banking customers and they have little incentive to prefer a regulated, bank-issued stablecoin over the deep liquidity of USDT.
However, for a sector that some estimate will grow to between $1.9 to $4 trillion by the end of the decade, it is clearly still early days. Moreover, while stablecoins have been largely used as part of crypto trading, their potential as the dominant payment rails of the future is only beginning to be tapped. McKinsey estimates that stablecoin usage for real-world payments only amounted to ~$390 billion in 2025, or ~0.02% of global payment volumes. This is clearly the area with the most immediate potential to grow, and exactly the use case that Mastercard acquired BVNK to serve. Visa reports that stablecoin settlement volumes on its network have hit $4.5 billion in annualized run rate, and are growing fast, while JPMorgan's internal stablecoin, JPMD, is already processing more than $1 billion daily for its corporate clients. Payments company Stripe is even building its own blockchain network, Tempo, with prominent Fortune 500 partners, to facilitate high-throughput, low-cost global transactions. These are payment infrastructures across the B2C, C2C and B2B stack, built on programmable settlement rails that traditional correspondent banking cannot easily replicate.
The risk for banking institutions is misreading the challenge posed by stablecoins. While the focus and debate around the CLARITY Act has been to limit the payment of "interest" or "yield" by stablecoin issuers or distributors, they are unlikely to move the needle too much or too far. Tether grew to $189.5 billion in market capitalization without paying out a single cent in yield or incentives. Meanwhile, PayPal invested heavily in incentives for its stablecoin PYUSD, which has allowed it to grow to $4 billion in market cap, but has barely made a dent in the USDT-USDC duopoly. Overemphasizing the risk of stablecoins paying yield, leading to retail deposit flight, misses the forest for the trees. Institutions risk investing in stablecoin products aimed at the wrong layer, and find themselves neither competitive with crypto-native infrastructure nor differentiated from fintech payment rails.
The OCC's proposed framework provides regulatory clarity. It does not address which segment of the stablecoin market an institution is actually positioned to serve. The JPMD model, a deep integration with corporate treasury workflows, is meaningfully different from a Wells Fargo consumer payments product. Both are stablecoins. Both will be regulated under the same OCC framework. But they compete in entirely different markets against entirely different opponents.
Mastercard spent $1.8 billion to answer that question for itself. It chose to play to its strengths and focus on the B2C and B2B payments layer; meanwhile, JPMorgan also leaned into the institutional settlement layer. For bank executives reviewing the OCC's rules and deciding where to deploy capital, these are probably the most instructive data points in the market right now.
The window to make that decision is narrowing quickly as the market takes shape. Those who move with clarity and intent will define their role in the next financial system, while others risk being left reacting to it.
