The fierce competition in stablecoins: From USD1 to banking licenses, who will lead the payment infrastructure?

At the beginning of 2026, the stablecoin market is standing at a critical historical juncture. On one hand, the total global market capitalization of stablecoins has surpassed $300 billion, becoming the core intersection of the crypto world and traditional finance. On the other hand, the market landscape is rapidly evolving from the “dual monopoly” of USDT and USDC to a “Spring and Autumn” period with multiple players entering. The focus of this fierce battle is no longer just about scale expansion but about deeper control over payment infrastructure.

From the deep involvement of the Trump family in USD1’s active application for a U.S. national trust bank license, to the quiet布局 of traditional financial giants, and the accelerated issuance of compliant licenses in places like Hong Kong, a clear signal emerges: competition in stablecoins has entered the “banking” and “compliance” deep waters. This campaign, which concerns future digital dollar dominance, cross-border payment efficiency, and the global distribution of financial power, is unfolding vigorously.

Background of the Battle and Key Timeline

The upgrade of the stablecoin track is not an overnight event but the result of resonance among policy, capital, and technology.

• Establishment of regulatory framework (2025): The passage of a series of stablecoin regulations, represented by the U.S. GENIUS Act, provided federal legal basis for compliant issuance of digital assets. This marked the transition of stablecoins from the “wild west” era to a new era of “licensed operation.”
• Political and capital alliance (January 2026): Deeply involved Trump family’s World Liberty Financial (WLFI), through its subsidiary, officially applied for a national trust bank license from the Office of the Comptroller of the Currency (OCC), after receiving up to $500 million in strategic investment from members of the Abu Dhabi royal family. This move elevated the compliance competition for stablecoins to an unprecedented level and sparked political controversy over conflicts of interest and national security.
• Competition for technological transparency (February 2026): In response to external doubts, WLFI launched an instant reserve proof system for USD1 powered by Chainlink, attempting to address market concerns about reserve risks through on-chain real-time transparency.
• Global regulatory resonance (March 2026): The Hong Kong SAR government announced the issuance of the first stablecoin issuer licenses this month, signaling that the Eastern financial center is actively vying for rule-making authority. Meanwhile, the OCC is trying to close loopholes in stablecoin yield distribution and set a compliance deadline of 2028 for foreign issuers.

Data and Structural Analysis: Strategic Value of Banking Licenses

Setting aside political disputes, from a purely business perspective, the demand for banking licenses among all parties has clear financial and strategic logic.

Subtle shifts in market structure: As of March 3, 2026, although USDT (about $197 billion) and USDC (about $73 billion) still account for nearly 89% of the market share, the second tier is accelerating. Since its launch in 2025, USD1 has circulated approximately 2.15 billion tokens, quickly becoming an influential force. PayPal’s PYUSD, Ripple’s RLUSD, and others are also showing explosive growth.

The “infrastructure” logic of banking licenses: For emerging stablecoins like USD1, obtaining a banking license means a leap from “product” to “platform.”

1. Profit internalization: Currently, USD1’s issuance, custody, and reserve management rely on third parties like BitGo. After obtaining a license, WLFI can internalize core profit segments such as issuance and redemption fees, investment management fees on reserve assets (like U.S. Treasuries), and custody service fees for institutions.
2. Role upgrade: Being a licensed bank means WLFI can directly access the Federal Reserve’s payment system, upgrading from a simple “stablecoin issuer” to a “infrastructure provider” offering compliant custody and settlement for other digital assets, playing the role of a “clearinghouse” in the ecosystem and earning more stable “transit fees.”

Public Opinion and Legitimacy Debate

The public discourse surrounding USD1’s application for a banking license shows a sharp polarization, fundamentally a contest over the definition of “legitimacy.”

• Supporters (Republicans and industry optimists): View this as a sign of the U.S. consolidating digital dollar hegemony and leading global financial innovation. They believe WLFI’s compliance efforts under the GENIUS Act are a reasonable basis for the license application, and foreign investment proves the attractiveness of the U.S. crypto market. The core argument: procedural compliance equals legitimacy.
• Opponents (Democrats and regulatory hawks): Frame this as an “unprecedented presidential corruption controversy.” Senators like Elizabeth Warren raise three main concerns: first, Trump’s family businesses profiting directly from the crypto industry, creating a conflict of interest cycle of “political donations → policy favors → family benefits”; second, whether the $500 million UAE investment was exchanged for policy advantages in AI chip exports and other areas, touching on national security; third, whether OCC’s review has been compromised by political pressure, losing independence.

Reality Check on the Narrative

Behind the heated controversy, a calm assessment of the true motives behind each narrative is necessary.

While Democratic opposition contains partisan elements, their concerns about “conflicts of interest” and “national security” do pose logical questions about the independence of the regulatory system. The facts are that WLFI submitted an application and received substantial foreign investment; the view is that this warrants strict scrutiny for conflicts of interest; and it is widely speculated that OCC’s final decision will inevitably be influenced by this political storm.

On the other hand, WLFI’s characterization of this as “political smearing” is not entirely unfounded. Its application process, alongside five other companies (including Coinbase), follows established procedures. However, WLFI’s “core competitiveness” is widely believed not to be purely technical but its unique connections to power centers. This makes it impossible to escape the narrative trap of “using political resources to obtain regulatory rent,” regardless of how coherent its business logic appears.

Industry Impact Analysis

Whether WLFI’s license is ultimately approved or not, this controversy has already had profound structural effects on the stablecoin payment track.

1. Reshaping the competitive landscape: If approved, WLFI will possess a “federal bank” status most competitors lack. For institutional clients like pension funds and sovereign wealth funds, this means an unparalleled compliance safety net. This could force Circle and Tether to accelerate their own compliance and banking efforts, transforming the institutional stablecoin market from a “dual oligopoly” to a “tripartite competition.”
2. Power centralization of payment infrastructure: WLFI’s case sets a dangerous precedent: access to the heavily regulated banking payment system may depend less on capital and compliance records and more on political resources. This could shift industry focus from technological innovation to political lobbying.
3. Political risks of digital dollarization: When stablecoin issuers are deeply linked to the current president’s family, the digital form of the dollar takes on partisan hues. This could lead to sharp regulatory and market fluctuations with future U.S. administrations.
4. Accelerated entry of traditional finance: Meanwhile, Morgan Stanley is applying for a trust bank license to offer crypto custody, and Barclays is considering building a blockchain-based payment settlement platform. Traditional financial giants are unwilling to cede control of payment infrastructure and are leveraging existing banking licenses and credit to launch countermeasures like “tokenized deposits.”

Scenario Evolution and Forecast

Based on current trends, the battle for stablecoin payment infrastructure may evolve along the following scenarios:

• Scenario 1: Approval (moderate probability): OCC approves WLFI’s license application. USD1 will experience explosive growth, rapidly capturing institutional custody and B2B payment markets. The stablecoin track enters a “bank competition era,” forcing USDT and USDC to accelerate transformation or seek acquisitions.
• Scenario 2: Postponement or delay (higher probability): OCC, citing “further review of foreign influence,” indefinitely delays approval. WLFI’s USD1 business continues to operate, and the controversy itself sustains market interest. Narrative benefits persist.
• Scenario 3: Rejection (lower probability): Under public pressure, OCC officially rejects the application. This would be a heavy blow to WLFI, forcing a retreat from “banking license” logic. However, it could also provoke Republican frustration, leading to reforms of OCC’s regulatory authority or even a rewrite of existing stablecoin regulations.

Conclusion

From USD1’s vigorous pursuit of a banking license to the synchronized tightening of regulatory systems in the East and West, the stablecoin battle has long surpassed technical parameters. The core of this contest is the right to define and control future global payment infrastructure. It raises an unavoidable question for the market: when cutting-edge financial technology merges deeply with traditional power resources, can market fairness, regulatory independence, and technological neutrality still be maintained? The answer remains uncertain, but one thing is clear: the “innocent era” of stablecoins has ended, and the next phase will be a comprehensive contest of compliance depth, capital scale, and global influence.