INTERVIEW: Can Wall Street’s Stablecoin Push Break Tether and Circle’s Grip on Digital Dollars?

In this interview with Impact Newswire, Utkarsh Ahuja, Founder and Managing Partner at California-based Moon Pursuit Capital, examines what the entry of 21 major banks into the stablecoin market could mean for Tether, Circle and the future of digital payments. Ahuja discusses how bank-issued stablecoins could reshape cross-border payments, institutional liquidity and corporate treasury, while challenging the dominance of crypto-native dollar issuers. He also explores whether stablecoins could accelerate the tokenization of financial assets, change how banks manage deposits and funding, and strengthen the dollar’s role in global markets.

Twenty-one major financial institutions, including Goldman Sachs, Bank of America and Citi, are preparing to launch a U.S. dollar stablecoin in 2027, marking a major escalation in the involvement of traditional finance in digital assets. The consortium, which has expanded from 10 institutions when it was first announced in 2025, also plans to explore stablecoins denominated in the euro and other G7 currencies. 

The move comes as stablecoins continue to grow into a market worth more than $300 billion. CoinMarketCap’s latest market data puts total stablecoin capitalization at about $314 billion, underscoring how far the sector has moved beyond its origins as infrastructure primarily used by crypto traders. 

The market remains highly concentrated. Tether’s USDT and Circle’s USDC together account for nearly 90% of the stablecoin market, according to MacroMicro data. That concentration gives the two companies an important first-mover advantage as banks prepare to enter the market directly.

The banking push is therefore potentially more than an additional source of competition. It could represent a challenge to the business model of crypto-native stablecoin issuers, which have built large businesses around issuing dollar tokens, managing their reserves and providing the infrastructure through which those tokens circulate.

At the same time, the economic use of stablecoins is expanding beyond crypto trading. A BCG analysis with blockchain-data firm Allium estimated that stablecoins were responsible for between $350 billion and $550 billion in annual real-economy payments, after filtering out activity that does not represent genuine economic payments. 

Business payments are emerging as an especially important use case. The Digital Banker, citing BCG research, estimated that stablecoin payments totaled about $390 billion in 2025, with approximately $226 billion, or 60%, consisting of business-to-business payments. 

That makes cross-border payments one of the most important potential battlegrounds. Stablecoins can move around the clock on blockchain networks, potentially reducing settlement times and the number of intermediaries involved in international transactions. For banks with large corporate and correspondent-banking networks, issuing their own stablecoin could provide a way to capture more of that emerging payment activity.

Regulation is also changing the competitive landscape. The U.S. GENIUS Act established a federal framework for payment stablecoins, including requirements governing issuers and their reserves. The U.S. Treasury says the law is expected to take effect on Jan. 18, 2027.

That timing is significant because the banks’ proposed launch comes just as the new regulatory regime is expected to take effect. Regulatory clarity could make it easier for major financial institutions to participate at scale while potentially increasing the compliance burden for smaller or less-regulated issuers.

The central question is whether banks will complement existing stablecoin companies or compete directly with them.

Tether and Circle already have substantial network effects, liquidity and distribution. But banks bring different advantages: established customer relationships, access to payment systems, regulatory infrastructure and large balance sheets. A consortium involving 21 major financial institutions could potentially give a bank-issued stablecoin immediate access to corporate payment flows that took crypto-native issuers years to build.

The development also raises questions about the future of the dollar itself. Dollar-denominated stablecoins allow users outside the United States to hold and transfer digital representations of dollars without necessarily maintaining a conventional U.S. bank account. If banks dramatically expand that infrastructure, stablecoins could become an increasingly important channel for international dollar use.

For emerging markets, the implications could be particularly significant. Faster and potentially cheaper dollar transfers could benefit international businesses and remittance users, but greater availability of digital dollars could also intensify competition with local currencies and domestic banking systems.

Utkarsh Ahuja, Founder and Managing Partner at Moon Pursuit Capital, spoke with Faustine Ngila on whether Wall Street’s entry represents a genuine threat to Tether and Circle, how bank-issued stablecoins could reshape cross-border payments and liquidity, and whether banks are positioned to turn stablecoins from a crypto product into mainstream financial infrastructure.

Here is the full interview: 

1. What has changed in the economics and regulatory environment that makes banks willing to compete directly in a market dominated by companies such as Tether and Circle?

I think banks have reached the point where doing nothing carries its own risk. Stablecoins started as infrastructure for crypto markets, so it was relatively easy for banks to treat them as something happening outside their core business. That is much harder now that the conversation has moved into cross-border payments, corporate treasury and settlement, because those are businesses banks already own and make money from. At the same time, regulation is giving institutions a clearer framework for how these products can exist, so the question inside a bank shifts from “why would we do this?” to “what happens to our payments and deposit franchise if somebody else does?”

The economics are also impossible to ignore. Tether and Circle have shown there is a substantial business in issuing digital dollars and managing the reserves behind them, but banks have another advantage: they don’t have to treat the stablecoin as a standalone product. They can connect it to deposits, FX, treasury, payments and lending relationships they already have. 

2. If banks issue a shared stablecoin, how could the economics differ, particularly around reserve management, deposits, payments revenue and integration into existing banking infrastructure?

Tether and Circle have businesses where the reserve pool itself is a major economic engine. A bank can look at the same product very differently because it already monetizes the customer across several parts of the balance sheet and payments stack. The stablecoin could be less about maximizing the yield on reserves and more about keeping a corporate client inside the bank’s ecosystem when they move money, settle an invoice, exchange currencies or manage treasury.

That also means banks can connect issuance and redemption directly to existing accounts rather than building an entirely separate relationship around the token. The trade-off is that they have to think carefully about whether a dollar moving into a stablecoin is additive or simply moving out of a deposit they were already funding themselves with. That’s where the economics become much more complicated than looking at stablecoin market cap alone.

3. Could banks make cross-border payments more efficient, or could a bank-controlled system recreate the fragmentation stablecoins were designed to bypass?

Putting a payment on a blockchain does not automatically make the payment system better. If I still need three institutions, several compliance checks and a series of closed networks to move a dollar from one country to another, we’ve digitized the existing architecture without really changing its economics. The real gain comes when settlement becomes more direct and you can remove some of the reconciliation, prefunding and intermediary costs that make cross-border payments so cumbersome today.

Banks are actually in a strong position to do that because they already control so much of the underlying infrastructure, but that is also the tension. They have to be willing to build something that moves beyond their own walls. If a bank stablecoin is highly efficient inside the consortium but difficult to use elsewhere, it becomes another closed payment network rather than a genuinely new rail.

4. Does a jointly issued stablecoin create a genuine network effect, or could competing interests between banks make the system less useful than a neutral stablecoin issuer?

Twenty-one banks agreeing to use the same digital dollar is a powerful distribution advantage, but the number 21 cuts both ways. Every institution has its own regulators, risk committees, technology decisions and commercial priorities. Questions that sound technical, like which chains are supported or who can access the network, are actually strategic because they determine where the money can go and who gets to participate.

A consortium works extremely well if the members can agree on common rules and then get out of the way of the product. If every major change becomes a negotiation between 21 institutions, a neutral issuer can move faster and respond to the market much more easily. The network effect comes from having 21 banks connected to the same asset; the risk is allowing 21 banks to become 21 veto points.

5. If large U.S. banks begin issuing their own dollar tokens, how could that change where liquidity sits and how dollars move through global markets?

I don’t think all digital dollar liquidity suddenly migrates back into U.S. banks. USDT, for example, serves enormous demand from people and businesses that want dollar exposure precisely because accessing dollars through the conventional banking system can be expensive, slow or simply difficult. A Wall Street consortium doesn’t remove that demand.

Where I do think you could see a substantial shift is institutional liquidity. Corporates and financial institutions that have been hesitant to hold stablecoins may be much more comfortable holding a digital dollar issued through banks they already deal with. You could end up with different pools of digital dollars serving different markets: bank-issued dollars around institutional settlement and treasury, and crypto-native stablecoins remaining deeply embedded in exchanges, public blockchains and markets where traditional dollar access is weaker.

6. How do you see bank-issued stablecoins affecting the migration of deposits, securities and other financial assets onto blockchain networks, or will payments remain the primary driver?

Payments will probably get banks through the door because the business case is easiest to understand, but I don’t think it stops there. One constraint on tokenized financial markets has always been the cash side. You can put a bond, fund or security on-chain, but if paying for it still requires capital to leave that environment and travel through conventional settlement infrastructure, you’ve only modernized half the transaction.

Once banks put regulated cash on-chain at scale, the economics of tokenizing other assets start to make much more sense. You can begin thinking about securities and cash settling against each other on the same infrastructure, potentially around the clock. To me, that is a much bigger change than simply making an international payment a little faster.

7. If banks themselves issue the tokens, does that resolve the deposit-disintermediation problem, and do you see widespread adoption changing banks’ funding and liquidity models?

It changes the problem, but it doesn’t make it disappear. If a customer moves $10 million from a conventional deposit into a bank-issued token, you still have to ask what happened economically to that $10 million, where the backing sits and whether the bank can fund itself against it in the same way. The fact that the bank remains involved doesn’t automatically make a stablecoin equivalent to a deposit.

At a small scale, that distinction probably isn’t particularly disruptive. At a very large scale, it could be. If companies begin keeping more working capital in tokenized dollars because those dollars can move and settle more efficiently, banks may have to rethink the composition and stickiness of deposits they have historically relied on for funding. Stablecoins don’t necessarily disintermediate banks if banks issue them, but they could still force banks to compete much harder for the form in which customers choose to hold their cash.

8. If banks successfully scale stablecoins, what could the digital asset and payments landscape look like five years from now?

Five years from now, I suspect we will stop talking about “stablecoins” as though they are one category. A corporate treasurer might hold a bank-issued dollar for settlement, use USDC to access a particular market, interact with tokenized securities and move between all of them without caring very much about which blockchain is underneath. USDT could still be enormous because it solves a different problem for users who want access to dollars outside conventional banking channels.

If that happens, the biggest change is that money itself becomes more programmable and portable. Banks don’t disappear, and crypto-native issuers don’t disappear; the boundary between their infrastructure starts getting much harder to see. The companies that do particularly well will be the ones that make moving between those different forms of money feel completely ordinary, because ultimately users don’t want a lesson in blockchain architecture every time they move a dollar.

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