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

Author: Charlie Liu, Partner at Generative Ventures

When I finished writing “CRCL: Wild Price Swings, COIN Jumping into the Water: The True Battle of Interests Behind the CLARITY Act” at the end of March, I set the question as “Who owns the USD accounts.”

At that time, that perspective was correct. Because the most sensitive issue in the market, and what banks and the crypto industry were fighting over, was whether stablecoins would be allowed to continue evolving toward “on-chain savings accounts.”

The fluctuations in CRCL and COIN stock prices, the public pressure from the banking sector, the White House bringing banks and the crypto industry to the table—what everyone was really fighting over was the same thing: whether the U.S. is willing to allow on-chain USD to develop an appeal close to that of deposit accounts.

But after the past few weeks, I increasingly feel that the fundamental development of the situation has changed.

It’s not because yield terms suddenly became unimportant, but because the real focus of all parties in the U.S. has gone beyond just the bill text in Congress.

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

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

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

On the same day, the White House Economic Advisory Council released a study on the impact of banning stablecoin yields.

Going further back, OCC at the end of February had already solicited comments on implementation rules for stablecoin issuers and related custodial activities.

What the U.S. is truly starting to push forward around stablecoins is no longer whether the “CLARITY Act can pass,” but rather “what kinds of institutions and business models can enter the implementation phase.”

This is also why today we should revisit the stability of the U.S. stablecoin landscape.

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

It is becoming a bigger issue: the U.S. is transforming stablecoins from a financial product with crypto characteristics 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 the debate was “who owns the account,” by April, the more important questions have actually become two:

• First, if end users cannot access the short-term government bond yields backing stablecoins, who ultimately owns that money?

• Second, if stablecoins are ultimately written into a legal layer of on-chain cash, who can integrate them into default payment pathways, corporate systems, and internet request flows?

The first question determines profit sharing. The second determines routing control.

Over the past few weeks, the White House, Treasury, FDIC, OCC, along with recent trust license applications and approvals, have been collectively answering these two questions.

What the U.S. is truly rewriting is no longer whether stablecoins resemble accounts, but whether they will be formally shaped into a layer of on-chain cash supported by short-term government bonds.

April’s real progress is not just slogans but the start of implementation

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

Sometimes it’s about legislation, sometimes about bank pushback, sometimes about platform growth logic, and other times about market policy risks for trading.

But by April, this situation started to change.

The Treasury Department’s April 1 proposal actually begins to fill in another piece that was previously only at the principle level: how much must state-level regulation be “substantially similar” to federal standards to be considered comparable and to remain on the map.

In other words, the new element on April 1 is not a new direction, but a step forward in turning the dual-track framework written into law into a practically executable administrative standard.

On April 7, the FDIC’s prudential regulatory framework further clarifies the boundaries.

It covers reserve assets, redemptions, capital, and risk management, and clarifies a previously easily confused issue: stablecoin holders do not automatically enjoy deposit insurance because of the issuer’s reserve arrangements; but if a tokenized deposit itself meets the legal definition of a “deposit,” then it is legally a deposit.

This distinction may seem technical, but it actually draws an important line.

The U.S. is saying that stablecoins can exist legally, but they are not the same as bank deposits; they cannot be marketed as such, nor compete as such.

On April 8, the Treasury, FinCEN, and OFAC jointly proposed rules for AML and sanctions enforcement.

This move’s implication is straightforward: stablecoin issuers are no longer just “financial innovation entities,” but must be integrated into the existing U.S. AML and sanctions machinery, with obligations akin to financial institutions.

Meanwhile, the OCC’s late February implementation proposal also covers foreign payment stablecoin issuers and related custodial activities, indicating that the U.S. is concerned not just with “who issues domestically,” but with “how USD exists, is custodized, and is introduced into U.S. jurisdiction globally.”

Putting these actions together, the real progress in April is not just a slogan but the activation of a comprehensive implementation machine.

This means that the issue of stablecoins is no longer just about “policy approval,” but about “what kind of institutional machinery they will be embedded into.”

The real advancement in yield debate is not about “whether yields can be provided,” but about “who owns the yields”

If we only look at market discussions, the hottest focus in the past one or two months remains the yield terms. Many analyses still revolve around the boundaries of “passive yields” and “behavioral rewards.”

But a study released by the White House on April 8 actually pushes the discussion forward.

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

This logic sounds compelling and easily persuades regulators.

However, the White House’s benchmark estimate shows: if stablecoin yields are fully banned, bank lending would indeed increase, but only by about $2.1 billion, roughly 0.02%; meanwhile, this would bring about approximately $800 million in net welfare costs, and the new loans would still mainly flow to large banks.

This conclusion doesn’t mean banks’ concerns are entirely unfounded, but it clarifies one thing: “If yields are not banned, the banking system will face big problems”—this strongest public interest narrative isn’t as solid as it seems at the quantitative level.

Once this premise is weakened, the question naturally shifts.

The real question is no longer just “can yields be provided,” but “who owns the yields.”

The reserve assets backing stablecoins—short-term government bonds, repos, bank deposits, and other highly liquid assets—continue to generate interest.

If end users cannot access this yield, it doesn’t disappear; it just changes ownership.

It can stay on the issuer’s profit statement, be used by platforms for merchant subsidies, membership benefits, points budgets, and user growth, or become the issuer’s continued holding of short-term government bonds.

Therefore, the true progress of the yield terms today is no longer just a product design issue but a value distribution issue: how to allocate the interest spread generated by a layer of on-chain cash supported by short-term government bonds.

The Treasury Department sees not just payments but a layer of growing demand for government bonds being institutionalized

If you look at the Treasury Borrowing Advisory Committee’s materials from February this year, you’ll find that the Department’s perspective on this issue is more forward-looking than most market discussions.

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

Over the past year, whether in legislation design, market research, or discussions with primary dealers, this point has been repeatedly mentioned.

What’s truly noteworthy is that today, this matter is increasingly being embedded into institutional and implementation frameworks.

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

This means that what the U.S. is pushing forward now is not just legalizing a digital dollar product but more systematically integrating a short-term government bond-backed layer of on-chain cash into its financial infrastructure.

As a result, stablecoins are no longer just a payments issue or a crypto industry concern; they will also influence fiscal financing structures, bank liabilities, money market structures, and how the dollar expands on-chain.

From this perspective, revisiting the yield debate, state-federal division, licensing wave, and regulation of foreign issuers reveals that these seemingly scattered news items are actually serving the same overarching goal: the U.S. is moving stablecoins from a controversial crypto product toward a layer of regulated, scrutinized, and fiscally integrated on-chain cash.

The recent licensing wave isn’t about “everyone wanting to be a bank”

Looking at the recent OCC licensing surge again.

If you only read headlines, it’s easy to interpret this as “more and more companies want to get a U.S. banking license.”

But that understanding misses the core.

The publicly listed applications for digital asset-related licenses by OCC now include not just native crypto firms but also payments, custodial, brokerage, market infrastructure, and large institutional platforms.

The applications include Bastion, Revolut, zerohash, Morgan Stanley Digital Trust, World Liberty, among others, and these are new entity applications; conversions are not publicly listed.

This indicates that this wave is no longer isolated cases but increasingly a trend where different types of institutions are moving in the same direction.

Moreover, what’s being approved isn’t traditional commercial banking licenses.

Last December, Circle and Ripple received conditional approval for new national trust bank charters; BitGo, Paxos, Fidelity Digital Assets received conditional approval for state-to-national trust conversions. These licenses allow them to manage and hold assets for clients and facilitate faster payment settlements but do not permit accepting retail deposits or issuing loans.

In February, Stripe’s subsidiary Bridge also received preliminary approval for a national trust bank. If approved, Bridge could offer digital asset custody, stablecoin issuance and orchestration, and reserve management for enterprises, fintechs, crypto firms, and financial institutions.

In early April, Coinbase also received conditional approval for a national trust company license. Coinbase emphasizes that this will not turn it into a commercial bank, nor will it accept retail deposits or do certain reserve loans; but it also states that federal regulation will lay the foundation for new products including payments.

So, the core logic behind this wave of licensing isn’t “everyone wants to be a bank,” but rather “more and more institutions want to occupy the most valuable position next to the on-chain cash layer.”

That position isn’t the full capability of traditional commercial banks but nodes closer to the new cash layer—custody, reserve management, issuance orchestration, compliance distribution, and regulated settlement.

Once a whole new cash form is institutionalized, the first to build a moat won’t just be those issuing tokens but those who can hold, manage, and connect this layer of cash into larger systems.

The essence of the change: the U.S. isn’t just giving stablecoins an identity but reshaping their form

Looking at the rules, studies, and licenses from April together, the change is quite clear: the U.S. isn’t simply saying “stablecoins are legal” or “illegal”—that’s what other countries and markets are chasing—the U.S. is shaping their form.

This form isn’t a savings account, insured bank deposit, or a high-yield cash substitute on the internet.

It’s more like a layer of on-chain cash supported by short-term government bonds and high-liquidity reserves, which can be regulated, scrutinized, orchestrated, and integrated into the dollar system.

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

Therefore, the most important developments in recent months are no longer just “who issues,” but two bigger issues:

• First, who takes the yield behind this layer of cash.

• Second, who controls the flow of this cash through whose pathways.

The first is about profit distribution; the second about routing control.

Once stablecoins are no longer just a controversial product but are written into a real new layer of on-chain cash, their value won’t just stay in the issuance rights.

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

A study from the Kansas City Fed on April 10 highlights a dislocation that industry and public opinion are currently overlooking: Today’s stablecoins are rarely used for payments, and the infrastructure is lacking interoperability; the entire ecosystem remains mainly within crypto finance.

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

And because of this, the next stage’s most valuable aspect won’t just be “who issues,” but who can embed this institutionalized layer of on-chain cash into real business processes—enterprise systems, APIs, automation workflows, cross-system calls, and increasingly, machine-to-machine payment requests.

This is why the establishment of the x402 Foundation by the Linux Foundation on April 2 is worth connecting.

As I mentioned in “Coinbase pushes x402 to neutrality, Stripe continues to bet on both sides outside MPP,” x402 will remain neutral under Linux Foundation governance, serving transparency, interoperability, and community governance. It will host open protocols from Coinbase, embedding payments directly into network interactions, enabling applications, APIs, and smart agents to exchange value as easily as data.

Connecting the dots of recent months’ changes:

• The previous phase was about “who owns the account”—who can legally issue stablecoins.

• The current phase is about “who owns the yield”—how the profits behind the on-chain cash layer are distributed.

• The next phase will be about “who controls the routing”—through whose protocols, APIs, and orchestration pipelines this cash flows.

Each layer’s competition is more subtle and more valuable than the last.

What’s truly worth watching today is that rules, licenses, and pathways are all changing simultaneously

So, looking again at U.S. stablecoins today, if you only focus on the yield terms themselves, that’s not enough.

What’s truly worth watching is that the U.S. has already begun deploying a comprehensive implementation machine, transforming stablecoins from a crypto-colored financial product into a layer of on-chain cash supported by short-term government bonds, capable of being managed by the state machinery.

The Treasury Department is redrawing the federal-state division and incorporating AML and sanctions obligations; the FDIC is clarifying the boundary between stablecoins and deposits; the Office of the Comptroller of the Currency (OCC) is integrating domestic and foreign issuers, custodial activities, and licensing pathways into a unified regulatory framework; and more institutions are competing for custody, reserve management, orchestration, and distribution positions next to this layer of cash.

On the surface, Washington is still discussing stablecoin yields; in reality, it is already deciding two bigger issues: how to redistribute the yields from short-term government bonds, and how the on-chain dollar will flow through different pathways in the future.

The real competition has already begun to move beyond issuance rights.