Why Banks Are Entering the Stablecoin Landscape
What it means for payments companies when the world's most regulated institutions start issuing digital dollars.
Cyclops built our stablecoin platform for payments companies, and the entry of banks into the stablecoin landscape is a huge shift. For years the stablecoin market was dominated by non-bank issuers — Circle's USDC and Tether's USDT together account for the large majority of the roughly $300 billion stablecoin supply. That is changing. Banks are now issuing their own stablecoins, joining stablecoin partnerships and building stablecoin settlement infrastructure at a pace that would have been difficult to predict even 18 months ago. For payments companies, this shift has real implications for which stablecoins to support, how to think about infrastructure decisions and where the market is heading.
What changed
The catalyst was regulatory. On July 18, 2025, the GENIUS Act was signed into law, creating the first comprehensive federal framework for payment stablecoins in the United States and giving US banks a clear path to issue dollar-backed tokens under their existing regulators. Before the GENIUS Act, the path for banks was uncertain enough that most stayed on the sidelines. After it, the question shifted from whether banks could issue stablecoins to which ones would move first.
Who is moving and how
The activity since the GENIUS Act passed has been significant. SoFi Bank became the first US nationally chartered bank to issue a stablecoin on a public blockchain, launching SoFiUSD in December 2025 and expanding it to nearly 15 million consumer members in May 2026. SoFiUSD is live on Ethereum and Solana, redeemable 1:1 for US dollars from SoFi Bank, and used for Mastercard transaction settlement. JPMorgan's JPM Coin, issued through its Kinexys blockchain unit, has moved beyond its original institutional-only permissioned chain and expanded to Coinbase's Base network, opening dollar settlement to a broader set of counterparties. Fiserv issued FIUSD in partnership with Mastercard and Paxos for merchant settlement across Mastercard's global network. Japan's three megabanks — MUFG, SMFG and Mizuho — are forming a consortium to issue a jointly operated stablecoin by the end of fiscal 2026. And more than a dozen banks including BNY, Standard Chartered, DBS and U.S. Bank joined as founding partners of Open USD, the consortium stablecoin backed by 140+ companies announced in June 2026.
Why banks are making this move
The reasons are straightforward when you look at what banks stand to gain. First, reserve income. USDC and USDT have generated billions in yield on the reserves backing their tokens — income that went to non-bank issuers rather than the regulated institutions holding the underlying dollars. Bank-issued stablecoins let banks capture that economics directly. Second, settlement efficiency. Banks have been managing the same correspondent banking friction as everyone else — cut-off windows, multi-day settlement, pre-funded accounts across jurisdictions. Stablecoin rails offer 24/7 settlement and instant interbank transfers that reduce operational overhead and free up working capital. Third, competitive positioning. Non-bank stablecoins have been capturing payment flows that traditionally moved through the banking system. Banks entering the stablecoin market is partly a defensive move to ensure they remain relevant in the infrastructure layer of digital payments. Fourth, regulatory credibility. A bank-issued stablecoin backed by FDIC-insured reserves and supervised by the OCC carries institutional trust that non-bank issuers cannot replicate. As SoFi CEO Anthony Noto put it at launch, the goal is to combine the speed and versatility of blockchain with the trust of a bank to improve how money moves around the world.
What this means for PSPs
Bank entry into stablecoins adds a new tier to a landscape that was already complex. USDC remains dominant in Europe. USDT leads in emerging markets. EURC is growing as a euro-native option. Open USD is positioning itself as an enterprise standard. And now bank-issued stablecoins are entering the stack with regulatory credibility and institutional distribution behind them. Most stablecoins will find their role in different corridors, contexts and use cases. PSP's infrastructure will need to be able to support the stablecoins your merchants and clients need, in the markets where they operate, without rebuilding every time the landscape evolves.
Bank entry into stablecoins is ultimately good news for PSPs. It validates the market, accelerates regulatory clarity and deepens the liquidity and distribution available across stablecoin rails. It also makes the infrastructure decision more complex — another reason to have a platform that handles the orchestration rather than managing it yourself.
How Cyclops approaches this
Cyclops built our platform to navigate exactly this kind of evolving landscape. We are the only stablecoin and crypto infrastructure platform built exclusively for payments companies — orchestrating across the best available infrastructure for each corridor and use case, and building the capabilities that don't yet exist for the payments use case. As bank-issued stablecoins mature and enter the payments stack, Cyclops will be there to integrate them, ensuring our payments company clients always have access to the right stablecoin for each market through a single integration. PSPs working with Cyclops do not have to track every new issuance or rebuild their infrastructure to support it.
