Friends of Factor,

In the last six weeks alone, we've witnessed a massive shift in how mainstream finance views blockchain-based dollars. Circle filed for a $5 billion IPO, Coinbase acquired Deribit for nearly $3 billion, and payment giants from Visa and Mastercard enabling merchants to receive stablecoin payouts show the emergence of scalable stablecoin infrastructure. As we’ve discussed previously, stablecoins have now formally evolved from a crypto-native solution for traders and venue for experimentation to the likely onramp of billions of new crypto users over the next several months.

The “Stableization” of Global Finance

Since April 1st, the market has seen multi-billion-dollar crypto IPOs alongside the largest acquisition in digital-asset history. Circle's NYSE listing will put USDC's $60 billion reserve under public-market scrutiny. Meanwhile, Coinbase's $2.9 billion Deribit acquisition instantly adds a $1 trillion-per-year derivatives franchise to its arsenal.

On the payment front, the velocity is equally striking. Over the past couple of weeks we saw: Visa partnering with Stripe-owned Bridge to launch stablecoin-linked cards, Stripe now offers Stablecoin Financial Accounts in 101 countries. Mastercard announced "360-degree" stablecoin rails from wallet issuance to merchant settlement. Even Meta is reportedly exploring jumping back into crypto to revitalize the original concept of Diem, by integrating stablecoins across its 3-billion-user ecosystem on WhatsApp, Instagram, and Facebook.

This isn't merely about new tokens—it's about infrastructure maturation. BlackRock and BNY Mellon filed to tokenize a $150 billion U.S. Treasury trust, extending blockchain's reach into regulated fixed income. Standard Chartered forecasts stablecoin supply to jump from $230 billion to $2 trillion by 2028.

The "Stable Account" Revolution

Before 2025 ends, we'll see the first wave of traditional banks following Stripe and Ramp's lead by offering what I call "stable accounts"—effectively replacing the outdated checking account with blockchain-native dollars. These accounts will enable customers to send and receive stablecoin payments globally, 24/7, at near-zero cost.

The implications are profound. Traditional checking accounts—with their limited hours, geographic constraints, and friction-filled interfaces—suddenly look like landline phones in the smartphone era. Stable accounts inherit all the advantages of blockchain infrastructure: constant availability, programmability, and seamless cross-border functionality. The frequent pain point faced by many businesses and individuals with failed, erroneously flagged international payments and account closures will be a thing of the past.

Why now? The regulatory picture has clarified, payment rails have matured, and the economic incentives for banks have aligned. JPMorgan Chase alone earns billions annually from payment friction that stablecoins eliminate—but they're now calculating that capturing stablecoin issuance yield outweighs protecting legacy revenue streams.

The Merchant Adoption Flywheel

The second-order effect of stable accounts will be merchant adoption. Here's why:

1. Cost reduction. Merchants currently pay 2-3% on credit card transactions and 10%+ on international payments; stablecoin payments already slash that to basis points.

2. Settlement time. Card payments take days to settle; stablecoins settle in seconds to minutes.

3. Programmability. Smart contracts enable features like automated escrow and conditional payments.

4. Working capital efficiency. Merchants can immediately deploy received funds into yield-generating protocols.

As more consumers hold stablecoins in their stable accounts, merchants will increasingly accept them—creating a virtuous cycle that accelerates adoption across the economy.

The Bank-Issued Stablecoin Landscape

Each major bank will likely issue its own stablecoin to capture the issuance benefits that Tether currently enjoys—an estimated $5+ billion in annual profit from treasury yields backing their stablecoin. This creates an interesting interoperability question.

The most probable evolution follows one of two paths:

• The "Collateral Swap Network" model: JPMCoin balances become interoperable with BOFACoin through behind-the-scenes collateral exchanges. When I send JPMCoin to your Bank of America account, BofA and JPM swap the underlying collateral, allowing each bank to maintain yield on their customer deposits.

• The "Banking Consortium" approach: Major banks form a Zelle-like consortium with a proportionally shared capital pool backing all member-issued stablecoins. This creates immediate interoperability while distributing yield benefits according to issuance share.

We've Seen This Movie Before

People wonder what happens when thousands of individual stablecoins emerge. The answer: we already live in that world, just without blockchain benefits.

Your Venmo balance is effectively a centralized stablecoin confined to Venmo's ecosystem. Your Chase checking account balance is an undercollateralized stablecoin backed by the bank's balance sheet and FDIC insurance. We mentally bucket these as "dollars," but they're actually siloed claims on dollars with limited interoperability.

The difference? When these claims move onto crypto rails, they inherit free 24/7 settlement, programmability, and composability with the entire digital asset ecosystem. The traditional dollar gets an API.

The Stable-First Future

The next twelve months will be defined by stablecoin adoption in developed markets—likely becoming the biggest driver of crypto utility to date. This isn't about speculative assets; it's about the world's reserve currency gaining internet-native properties.

In traditional finance these adoption cycles always come because early adopters force innovation on the part of the bigger incumbents. Upstart banking solutions that start appealing to customers of the legacy banks because they first offer the value of these stablecoin offerings will drive the bigger banks to follow into the market. Just the way that in mobile and online banking first movers started to attract a shift in deposits from customers valuing the convenience of these offerings and leading to there quick, ubiquity across all banks.

At Factor, we've been positioning for this since launching our fund two years ago, investing in companies like Koywe, Dinari, CoalaPay, Jolly, Nevermined and our latest investment, Shield, that sit at the cutting edge of this trend. The mainstream adoption curve creates both massive tailwinds for these early investments and uncertainty for startups now competing with financial giants.

For founders building in this space: the opportunity remains enormous, but the strategic calculus has changed. It is now without question the most crowded and active part of the early stage funding market. The winners probably won't be those creating yet another stablecoin, but those building the bridges, interfaces and applications that make stable transactions as intuitive as sending a text message or who sees opportunities to leverage these rails to shrink the cost of producing targeted solutions for businesses on top of these free, crypto-enabled inputs.

As always, feel free to reach out to discuss questions on any of these developments - and thanks for reading.

-Jake

Jake Dwyer
Founder - Factor Capital
[email protected]