Discussion on several issues related to stablecoin payments since the Genius Act

This article focuses on the former; the relationship between AI, blockchain, and stablecoins will be discussed later, and the outlook for yield stablecoins will follow after a clear bill is enacted.

Author: Zuo Ye Waiboshan

The future of profitability is uncertain, while payment services are still in their infancy.

Since the passage of the Genius Act in July 2025, yield stablecoins have faced widespread resistance from the banking industry, while payment stablecoins have become increasingly popular.

Traditional payment methods are becoming the new hot topic, with agents and stablecoins representing the complex relationship between Fintech and Crypto.

Revenue is the past, payment is the present, and AI is the future . This is a dangerous and outdated classification, but it provides us with a diachronic framework that is easy to understand.

Meta is embracing stablecoins again, Google has joined forces with more than 60 companies to form the AP2 consortium, and Stripe sees stablecoins and agents as the future. However, the stock prices of PayPal, which has already launched PYUSD, and Coinbase, which proposed the x402 protocol, have both fallen.

We urgently need to address two issues: first, who is fueling the new payment war and fueling market sentiment; and second, are agents and stablecoins truly the next step?

This article focuses on the former; the relationship between AI, blockchain, and stablecoins will be discussed later, and the outlook for yield stablecoins will follow after a clear bill is enacted.

Losers eat dust: Fintech is more anxious than Crypto.

Encryption offers hope, but individuals have no future.

With US stocks and bonds going live on blockchain, and BlackRock and WisdomTree frequently embracing DeFi, token economics is inevitably coming to an end. No one believes in the wealth-creating effect of blockchain anymore. Even if public chains and Vaults are adopted in reality, it does not mean that the prices of tokens will rise.

This viewpoint isn't entirely wrong, but it exaggerates the predicament Crypto is facing, because Fintech is already at a critical juncture.

Yes, this counterintuitive judgment can be made after Stripe broke through the $159 billion valuation.

By following the flow of Peter Thiel's funds, clearing out Wise stock, holding onto NeoBroker projects like Trade Republic, or looking at the impressive investor lineup of Revolut ($75 billion), Europe's most valuable NeoBank project, the valuation logic of Fintech has changed.

After more than 20 years of effort, Fintech's attempt to build payment channels independent of banks has failed . Only the ability to retain or convert user funds has any value. Wise's money transfer and Stripe's acquiring have no real future.

One reason is that they cannot completely bypass the banking industry in handling funds, and another reason is that blockchain can do it cheaper.

This is not just a problem for a single company. The entire Fintech sector reached its peak during the pandemic. PayPal, which is rumored to be being sold today, was worth $340 billion in 2021. By 2026, the entire Fintech sector will be desperately trying to prove that it has more advantages over stablecoins and agents.

Stripe's valuation is 5 times that of Adyen's market capitalization ($35 billion) and about 13 times that of Checkout.com ($12 billion). However, Stripe's business volume is not 5 times that of Adyen. The leverage comes from people's imagination about the concepts of stablecoins and agents.

Fintech companies are far more anxious than Crypto, after all, " public chain + stablecoin " is a self-contained system, and DeFi is a killer application. The new payment war we are seeing now is nothing more than the fire fueled by Fintech's inflated valuation.

Fintech only has an advantage in existing users; the future belongs to the crypto industry.

According to Forbes data, it takes an average of 8.1 years for payment companies, which are considered Fintech targets, to make the list, but Crypto only takes 6.2 years.

From a direct business perspective, long-distance runners like Stripe need to give the capital market an explanation, or even a reason for exiting, as the funds they've tied up need to be allocated to a newer or larger future.

• Larger: Agents will exponentially increase the number of payments; Stripe founders the Collison brothers believe that a chain with 1 billion TPS is needed.
• Update: The use of stablecoins to completely transform the existing payment technology stack represents the biggest technological shift since the API-first model.

But to realize this bright future, Fintech not only needs to prove itself to be better than Crypto companies, but also faces resistance from the banking industry and internet super platforms. With so many participants, Ping'an County has become a complete mess.

Compared to unicorns like Stripe, super platforms like Meta/Google are much larger, with trillions of dollars in market capitalization and billions of users being commonplace. They mainly act as channel providers and participate in profit sharing. You could say they see hope in creating stablecoins or payment protocols, or you could say they rely on their existing advantages to sell at a higher toll.

Under the benevolent leadership of Vitalik Buterin, Crypto proactively relinquished its independent hardware layer to the internet, becoming a subsidiary of AWS. However, at least blockchain technology, as a new infrastructure for money transfer, has gained consensus among the banking industry, the internet, Fintech, and regulators.

The points that need to be agreed upon are whether to completely replace banks, and how payment stablecoins can surround B2C businesses from the C2C/B2B dichotomy.

The two gorillas, Tether and Circle, form a pincer movement.

USDT has faded into obscurity, moving into the Third World and surrounding Europe and America. USDC is focusing on on-chain development, with compliance merely replacing the protective shell of banks.

Blockchain can not only bypass the banking-dominated financial industry and achieve an independent "theoretical minimum" through the underground economy, but also demonstrates a crushing advantage over TradFi in terms of capital efficiency during the 10 years of Ethereum's development.

What's most interesting is that this overwhelming dominance isn't based on the size of the funds. The combined $236 billion in ETH, $300 billion in stablecoins, and $1.32 trillion in BTC don't even exceed JPMorgan Chase's $2.5 trillion in deposits.

The advantage lies in the fact that the banking industry can rely on alliances to block the continuous attempts of Fintech and PSP (Payments service Provider, or third-party payment), because you simply cannot bypass the banking industry and handle the electronic flow of US dollars on your own. But blockchain can. Even the most difficult stablecoin companies to enter and exit the banking system have loopholes, with Silicon Valley Bank in the past and Lead Bank now.

Capitalists can sell their nooses, the banking industry's "traitors" cannot be absorbed by themselves, and Wall Street has no regulatory power.

The regulatory values ​​are very contradictory. On the one hand, after the 2008 financial crisis, the "too big to fail" banking industry was not popular. On the other hand, the crypto industry may be more brutal than Wall Street in terms of financial order.

The strategy of "surrounding three sides and leaving one side open" is an ancient political wisdom that has been skillfully applied by various bureaucratic systems.

A review of the regulatory actions following the Genius Bill reveals that the Fed, OCC, CFTC, and SEC have opened the door wide for payment stablecoins, but at the cost of erasing the foundation for yield stablecoins in response to the banking industry's "deposit outflow" crisis, while simultaneously guiding stablecoins into the existing system.

Since Merrill Lynch invented the MMF (Money Market Fund) of the CMA (Cash Management Account) in the 1970s, the banking industry has accused it of causing deposit outflows from small and community banks. But the die is cast, and the MMF backed by the CMA not only supports flexible access but also offers higher interest rates than bank deposits.

Ultimately, it was only when the banking industry was gradually allowed to engage in mixed operations and provide products similar to MMF (Medium-term Lending Facility) that the outflow of deposits was finally stopped. However, in a rather darkly humorous way, it was ultimately large banks that used their scale advantage to seize deposits from smaller banks.

Heretics are more terrifying than heretics.

Stablecoin yields are not a problem at all. What the banking industry wants is to distribute the yields themselves in order to avoid being eliminated by the course of history. To give another example, when Alipay and WeChat were all the rage in 2013, the US banking industry once again raised the banner of protecting small banks.

Of course, the ultimate victims are American Fintech companies like PayPal, which also sowed the seeds for the false narrative that third-party payments rely on banks to disrupt them.

But Crypto is different, really, she's different.

Faced with the aggressive moves of the banking industry and regulators, Circle is undoubtedly more American and more compliant, while Tether is an underground player from overseas that has made a comeback. However, for a considerable period of time and in a wide range of regions, $USDC and $USDT are not competitors.

Simply put, USDC follows the "+stablecoin" logic of DeFi + B2B, while USDT follows the "stablecoin+" narrative of CEX + P2P.

It sounds strange, but USDC is indeed more widely used in the DeFi field, and is widely used for Quote assets. In mainstream scenarios such as DEX/Lending, it far surpasses USDT. Apart from Coinbase, the vast majority of CEX liquidity is priced in USDT.

In the financial industry, USDC has become the standard stablecoin, and Circle's CCTP stack, which it has built, serves as an entry point for institutions to enter the blockchain.

However, USDT has proven resilient enough that the $80 billion in USDT on Tron supports the global demand for personal transfers. In Argentina and Nigeria, the dollarization of currency is essentially the USDTization of currency.

According to a joint study by Artemis and McKinsey, the $35 trillion in global stablecoin transactions is not real enough, with only about $390 billion (about 1%) being real stablecoin payments, accounting for 0.02% of the total global payments (over $2 trillion).

• B2B payments: $226 billion (the most important use case, accounting for 60%, with a year-on-year growth of 733%), representing only 0.01% of the approximately $1.6 trillion global B2B payments.
• Global salaries and cross-border remittances: $90 billion (<1% of global share).
• Clearing and settlement: US$8 billion (<0.01% of global share).
• U-card: $4.5 billion.

This data is clearly more realistic in everyday experience. Perhaps the adoption trend of stablecoins is more important. You will see Fintech companies actively connecting with banks, but banks will resist stablecoin yields while supporting more stablecoins.

If we observe Tether's recent actions, the alliance with Lutnick and the launch of USAT are just a cover. The $200 million investment in Whop is more authentic and can be interpreted as buying channel fees from 18 million users, using remittances from the Third World to encircle the First World.

Therefore, you'll see that cross-border remittance companies in Latin America ⇄ the United States, South Asia ⇄ the Middle East, and Africa ⇄ Europe more commonly support USDT, while Stripe and Huma use USDC by default.

The underlying nature of the crypto is P2P, and Circle is consciously trying to develop relationships with businesses and banks. The so-called B2B is widely reported today and is even regarded as the future development trend, which misinterprets the direction of payment itself.

As mentioned earlier, pure transfer, clearing, and aggregation channels have little value. The processing volume is always a fixed number, lacking the basis for imagination based on market potential. Everyone needs a graphics card to play games, and at most 7 billion 5090s can be sold, which is obviously not as much as AI, which is the fourth industrial revolution.

" Payment is not a SaaS or feature, but rather an AI-powered payment infrastructure similar to Cloudflare, where the distribution network cannot be valued in terms of quantity. "

This is the story Crypto wants to tell the world: to make stablecoins something beyond payments, allowing money to remain on the blockchain end-to-end .

On-chain precipitation

People are talking about the demise of SaaS and the aging of channel providers, as if decades of Fintech will change hands overnight.

Things won't happen that quickly, especially since it will take time for USDC to be adopted by B2B institutions. Tether's push for USDT and its aggressive buying of old channels may not necessarily lead to a future.

If we're looking to set up an observation point for Crypto's payment story, the only useful one is how to handle the relationship between payments and revenues, which is now very clear:

• To achieve profitability, one can only stay in on-chain DeFi, just like MetaMask U Card partnered with Aave to bypass the US market and enter the broader consumer system.
• To achieve significant payment volume, one should obtain a banking license from the OCC, issue compliant, non-yielding stablecoins, and enter the vast financial derivatives field of the CFTC and SEC.

As for BitGo's Asian institutional-grade USD stablecoin $FYUSD and Circle's Euro stablecoin $EURC, they have both chosen to confine themselves to a small corner of the world.

The essence of B2B is a pipeline, the essence of C2C is scale, and the essence of B2C is a plugin.

Looking at the history of stablecoins in the payment sector, the hope of replacing "card organizations" with new channels is provided by public chains/L2, but compared to the advantage of Fintech "replacing" banks, it must be a new product with MMF+ payment functions, that is, surpassing banks in terms of capital efficiency.

Peter Thiel is bullish on Neobank and Neobroker, while Vitalik is bullish on ETH-backed yield stablecoins.

On this point, Vitalik actually sees it more clearly: if there is no yield-bearing stablecoin based on ETH to diversify holding risks, at the very least, one should consider diversifying income sources based on RWA assets.

In short, lacking payment functionality based on on-chain revenue , it cannot escape the dominance of dollar assets and will eventually be domesticated into the banking industry by the OCC. Those who are willing to give up freedom in exchange for security will ultimately gain neither freedom nor security.

Here's a second risky assessment: existing B2B enterprise use cases based on USDC, and cross-border remittance projects incorporating USDT transfers, are insufficient to bring payment stablecoins into the global adoption stage. They are only of temporary significance and will not become the main players in the next era.

With the revenue-generating function of customer acquisition coming to an end and the banking industry blocking its way, not only will off-chain transactions be affected, but on-chain transactions will also come to a standstill after $USDe and $xUSD. It is indeed time to study the adoption of payments in the real world.

However, it's important to note that if you only focus on payments and ignore the return characteristics, you'll miss the most valuable 50% of this wave. USDT/USDC is being used to leverage government bond interest rates, allowing the banking industry to win the third wave and continue to wield its power with the cheapest demand assets.

Conclusion

Following in the footsteps of Fintech, we hope Crypto will forge a different future.

Four driving forces have fueled a new payment war: Stripe and others are frantically embracing new narratives in pursuit of IPOs; Meta/Google sees their bargaining power as channel providers; the banking industry wants to retain channel fees and cheap assets; and Tether is investing heavily in payment companies in the fantasy of surrounding Circle.

Two new narratives are packaged into future visions: stablecoins are seen as the natural agent payment tool, and no one has ever asked whether agents necessarily need them.

This issue will be discussed later.

Disclaimer: As a blockchain information platform, the articles published on this site represent only the personal views of the authors and guests and do not reflect the position of Web3Caff. The information contained in the articles is for reference only and does not constitute any investment advice or offer. Please comply with the relevant laws and regulations of your country or region.