The stablecoin war you're not watching (but should be)

Following a week where Bitcoin's volatility reminds us why we're all here, the real revolution continues to unfold beneath the headlines.

Stablecoins are silently reshaping global finance with Tether commanding a staggering $167 billion in circulation, while institutional players from BlackRock to Robinhood are no longer dipping toes but diving headfirst into digital asset infrastructure. Meanwhile, as CBDCs advance worldwide, the battle for the future of money intensifies—raising profound questions about privacy, control, and financial sovereignty.

This issue cuts through the noise to bring you the developments that matter, the strategies that work, and the insights that could shape your portfolio in the days ahead. The crypto landscape isn't just changing; it's maturing before our eyes. Are you positioned to capitalize on what comes next?

As always, feel free to send us feedback at [email protected].

Stablecoins have quietly taken the driver’s seat in crypto’s bid to modernize global payments—and the numbers suggest they’re not just keeping pace with traditional finance, but rewriting its playbook.

Tether, now controlling over $167 billion in issuance and generating up to $5 billion in quarterly profit, is rumoured to be chasing a $500 billion valuation. The competition is far from idle: Circle $CRCL ( ▼ 2.63% ) , Paxos, and Europe’s major banks are deepening integrations, while upstarts like Rain and Plasma are architecting fintech rails where users barely notice digital dollars humming beneath the surface. As Farooq Malik of Rain observes, “We are seeing every single customer that goes live grow... Every single customer cohort is growing. It's complete insanity.”

The fragmentation is striking. USDT dominates emerging markets and exchanges. USDC finds favour in regulated DeFi and enterprise, while local initiatives—like a nine-bank European euro stablecoin—signal diversification by geography and use case. Carl Vogel of 6th Man Ventures calls them “fundamentally technology businesses... The growth rate is essentially unlimited.” Indeed, each corridor—B2B settlements, 24/7 payroll, even AI-driven payments—favours a different issuer or adaptation as stablecoin rails embed into fintech platforms from the Americas to Southeast Asia.

Institutions are moving from pilot to production. Stripe, Cloudflare, and Robinhood $HOOD ( ▲ 2.04% ) are rolling out stablecoin products; Finality and others are raising nine-figure rounds to wire stablecoins into the infrastructure of capital markets. Regulators, meanwhile, are both ratifying and scrutinizing—ushering in the era of GAAP-level disclosure and network-effect moats. Bhau Kotecha at Paxos says, “Applying code, automation, and technology to money is such a massive opportunity... The world at large hasn’t yet internalized how big this can be.”

The most valuable crypto product is neither an investment nor a protocol, but a settlement engine—the primitive layer for fintech’s next act.

Wall Street’s quiet capitulation has set a new tempo for crypto markets—where capital, caution, and creativity now intersect.

The $86 billion surge into BlackRock’s iBit ETF typifies an era where institutional product launches, from traditional brokers to yield-centric ETFs, have yanked digital assets into mainstream portfolios. Yet beneath the blockbuster headlines, the real story is one of uneven adoption: current data suggests just 3% of hedge funds have direct Bitcoin $BTC.X ( ▲ 0.63% ) exposure, leaving 99% of institutional capital poised on the sidelines, eyes trained on clarity from Congress and cues from compliance.

“It's so simple to just take what works in TradFi and apply it to crypto,” argues Martin Toman of Milk Road, pointing to the rich inefficiencies that reward investors who bring discipline, cash flow awareness, and skepticism for “casino” tokens. Meanwhile, market realists like TC warn that the rush for yield products could rekindle old risks: “A fool and his Bitcoin are separated when you use leverage.” The specter of BlockFi and Three Arrows looms, even as risk-hungry products proliferate.

Macro strategists highlight a shifting calculus: as regulatory chill thaws in Washington, career risk for money managers is receding—ushering broad-based allocation from pensions and sovereign funds ever closer. Still, correlations remain stubborn, with Bitcoin’s price action tracking global liquidity more than “digital gold” theory would suggest; volatility persists, as evidenced by the CME’s record $6 billion in Bitcoin options open interest.

As new products emerge and old stalwarts soften their stance (witness Vanguard’s rumored policy pivot), the institutionalization of crypto appears both inevitable and irrevocably complex. The future belongs to those ready to bridge the gap—armed not with bravado, but with balance sheets.

Bitcoin’s center of gravity is shifting, as Wall Street titans—and their imitators—turn the world’s most contested digital asset into the backbone of portfolios and financial infrastructure.

This year, the institutional flood has become unmistakable. BlackRock’s iBit ETF has soared to $86 billion AUM—outpacing even Bitcoin’s mined supply, as ETF flows swallow ~14 BTC for every 1 BTC produced. “Companies are buying even more than the natural supply being created by the miners, which is putting upward pressure on the price,” observes Michael Saylor, whose playbook is now emulated from Tokyo to Frankfurt. Meanwhile, MetaPlanet’s pivot to a Bitcoin treasury model pushed its market cap from $15 million to $8 billion, a reminder that corporate strategy, not just retail fandom, can move markets.

Options traders are taking notice: CME open interest in Bitcoin options crossed $6 billion, the highest on record. Jeff Park at ProCap is unruffled by the volatility, calling recent $2 billion liquidations “par for the course,” and believes “there’s still a lot of excitement for imagining volatility could pick up. I still think it's a generational opportunity.” Not far behind, asset managers such as Morgan Stanley and Vanguard—long dismissive—are quietly onboarding digital asset products to meet swelling client demand. Product innovation is brisk: covered call ETFs, stablecoins as derivatives collateral, and Google’s $3 billion commitment to Cypher Mining reveal how Bitcoin is seeping into the very wiring of financial infrastructure and cloud computing.

Yet, not all market participants cheer from the same hymn sheet. The new class of custodial intermediaries invites classic trade-offs: liquidity and legitimacy come at the price of concentration and the erosion of Bitcoin’s self-custodial ethos. Some Bitcoiners see the “BlackRock endgame”—corporate powers asserting soft governance over protocols. For skeptics, the risk isn’t volatility but co-optation.

DeFi no longer trades in pyrotechnics; now, it quietly powers the plumbing of global finance.

The numbers demand attention: $150 billion in DeFi TVL, $270 billion in circulating stablecoins, and a daily volume arms race among decentralized exchanges—Aster has clocked $30B per day, though with just $1.25B open interest, raising the specter of points-farming excess. Meanwhile, Hyperliquid’s $10B in daily trades signals intensive competition over both liquidity and user allegiance.

“The single biggest factor that impacts DeFi yields is Fed monetary policy…when the T bill rate goes down, [on-chain yields] become a lot more interesting,” notes Sanat Rao of Monarq Asset Management—a sign that DeFi’s fate is bound to macro, not just memes. Institutional players—from Stripe to Robinhood—are circling, drawn by turnkey yield models and robust stablecoin rails, as on-chain real-world assets enter the billions and compliance barriers ease.

Yet the market now prizes protocol sustainability over raw hype. As Mike Anderson at Framework Ventures cautions, “You’re not going to have a sustainable model if you don’t have some sort of fundamental revenue generation.” The industry is turning from emission-fueled yield farming to tokenomics that echo mature capital markets: transparent supply, equity-style governance, and GAAP-like disclosures.

Points farming remains rife—Aster may outpace incumbents in fees ($14M/day), but Tom Schmidt of Dragonfly warns, “It’s always a mistake to just nakedly incentivize volume…liquidity is durable. That’s what makes an exchange win in the future.” The real test is retention, not churn.

Stablecoins are quickly becoming more than settlement tools—Cloudflare and Coinbase’s X402 hints at a future of agent-to-agent, machine-driven payments, and Tether, gunning for a $500B valuation, has outpaced Goldman Sachs in market cap per employee.

The next era of DeFi is about building platforms that last—and shedding the casino for genuine market infrastructure. For global capital, the question isn’t whether to enter DeFi, but which protocols will deliver not just returns, but resilience.

Central banks are digitizing the quid—but with each codebase, the politics of money grows more immediate and fraught.

If the future of currency once belonged to code-slinging entrepreneurs, today it’s a tug-of-war between supranational regulators, legacy banks, and the insurgent crypto vanguard. Nowhere is this more evident than in the race to launch Central Bank Digital Currencies (CBDCs), whose promise—efficiency, sovereignty, inclusion—is shadowed by hard questions of control. Europe’s digital euro, for example, presses ahead despite 43% of ECB survey respondents ranking privacy as their top concern, while in the Netherlands, an entire parliament’s objections proved no match for the executive pen.

In Beijing, the realities bite harder: 23 million citizens on China’s social credit blacklist face real economic disenfranchisement. “Dependency is crushing to the human soul… you have a way of literally controlling swaths of people at the point of their transactions,” notes Oceans, host of Beyond Bitcoin. For many investors, the programmable dollar is not just an upgrade, but a risk vector—one with profound implications for agency and autonomy.

Meanwhile, regulatory clarity in the US has sparked a stablecoin renaissance. Summer Mersinger, Blockchain Association CEO, calls federal rulemaking “so important to this market right now.” While America courts capital, Europe’s MiCA regime demands capital ratios so high that only the largest banks need apply—pushing crypto-native challengers back to the fringes.

This competitive divergence isn’t lost on traditional banks, whose lobbying power is now trained on limiting stablecoin yields—4%+ APY easily outpaces the 0.7% found in legacy accounts. Yet the pace of global adoption is relentless: Tether, with just 100 employees, is targeting a $500 billion valuation, exemplifying how software scale trumps old-world friction.

Behind the skirmishes, macro forces churn. Institutional flows are blurring digital and real assets: Bitcoin, now clocking a $2.18 trillion market cap, increasingly stands as a “digital gold,” while central banks accumulate bullion and strategists eye $4,000/oz as the next logical waypoint. In this landscape, the dividing line between political action and market signal is thinner—and more investable—than ever.

Just as protocols compete for capital, so do regimes. The next allocation decision won’t simply weigh volatility and yield, but sovereignty, surveillance, and systemic resilience.

Disclaimer: The information provided in this newsletter is for informational purposes only and should not be considered investment advice. Cryptocurrency investments are speculative and involve significant risk. Please conduct your own research and consult with a financial professional before making any investment decisions.