Could A Stablecoin Company Acquire Western Union?

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Introduction

Welcome to the Tokenized newsletter, brought to you by the creators of the Tokenized Podcast; Simon Taylor of Fintech Brainfood and Pet Berisha of Sporting Crypto, written by Jeremy Batchelder.

We are the newsletter for institutions that need help preparing for a Tokenized future.

We run through the headlines every week, what it means for you and a market readout. Always with an institutional, business-focused perspective. 

Join us every week as we meet your Tokenization needs.

Pssst. Sign up to our inaugural Tokenized Event on Sept 11th in London here!

Simon’s Market Readout 💬 

There’s a new blockchain Blockchain Trilemma in town:

Privacy, throughput and compliance.

This week saw Nuvei join the likes of Remitly, WorldPay, DLocal, and countless other companies, like Western Union, in announcing further stablecoin capabilities.

It’s easy to assume this is just another headline. But if these are this is what is playing out publicly, just imagine the conversations happening at major financial institutions behind closed doors. Many readers of this newsletter won’t have to imagine.

One of the biggest conversations happening is from large-scale payments players and, indeed, merchants and large-scale banks all figuring out what they should be doing with stablecoins.

And the economic thesis tends to coalesce around one core idea:

if you could issue your own token or have your own chain, then you get to own your own economics.

Why would you give that to the issuer of another stablecoin?

Well, if that stablecoin has a lot of distribution, then it's more likely to be accepted— that is one part of that argument.

But if that distribution issue could be solved, then the conversation changes.

The second pushback against issuing your own stablecoin or creating your own chain is often fragmentation.

If there are as many chains as there are stablecoins, every wallet will have to support them.

You've got to think about bridging.

But if you speak to LayerZero and other infrastructure builders in 2025, they'll tell you that, unlike in 2021, that issue is increasingly solved, especially in the Ethereum and EVM ecosystem, where L1s and L2s are sort of becoming like a big family at Thanksgiving.

Sometimes there's a weird uncle. Sometimes it's a bit awkward, but we all sort of get along and make do and make plans for next year.

So the ecosystem is evolving, to say the least.

But if you step back and think about it — if banks around the world were meaningfully going to come into this space, what would they want?

(1) Step one: They might try and launch their own consortia chain, but it will take them forever, and they might miss the market, but they'll also potentially have a distribution win.

(2) Step two: They might all go ahead and create their own infrastructure.

(3) Step three: They may instead look to partner, and the early pilot work of JPMorgan with Coinbase on Base says that it looks to me like these large financial institutions are in learning mode, and nobody's quite met their requirements yet.

So I sat down and I thought about what those requirements would be.

And I think fundamentally it comes down to this:

You've got to be able to be backwards compatible with the existing payment systems, technically, and most importantly, with all of the compliance rules and regulations that a financial institution has to manage.

No stablecoin chain has solved the Rubik's Cube puzzle:

How do I maintain privacy in a public network, and also ensure that as a global tier 1 bank, I can maintain all of my KYC, AML obligations under the law?

I think this design space is going to be where all of the action is over the next few years.

How do I maintain the trilemma of privacy, throughput and compliance?

Whoever can do that has a giant, giant opportunity in front of them.

Then the question is: Can you get network effects?

It's interesting to me that the US Treasury, under Scott Bessent, has just put out a call for participation and a call for information on how you would solve this exact puzzle.

Everybody is talking about and thinking about this issue.

Nobody's solved it.

We are still so unbelievably early, which tells you, dear reader, that we're still probably at the peak of inflated expectations, that in two years, all of your friends will not want to hear about this anymore.

They'll want to hear about some quantum computing thing.

I might even have to launch a quantum computing newsletter to stay relevant.

Who knows, but this will come back, and when it does, it will be genuinely the most game-changing thing to happen in financial services.

Stories You Can't Miss 📰

🚀 Western Union Explores Stablecoin Launch as Remittance Wars Heat Up

Western Union, the 175-year-old remittance giant, is considering launching its own dollar-backed stablecoin as cryptocurrency projects increasingly compete with traditional cross-border money transfer services.

Key Points:

• Exploring non-US market launch: CEO Devin McGranahan confirmed Western Union is exploring issuing a stablecoin "particularly in non-US markets" that could function "almost like a savings account in US dollars" for international customers

• Partnership approach planned: Rather than building independently, Western Union would likely partner with a major cryptocurrency company and is currently in conversations with most major players in the sector

• Traditional banking alternative: The stablecoin could help Western Union move away from correspondent banking networks that currently take 2-3 days for transfers, enabling faster settlement times

The Tokenized Take:

• First-mover advantage among legacy players: Western Union could become the first major remittance specialist to issue its own digital token, potentially beating competitors like MoneyGram (which only accepts USDC) and Remitly (which partnered with Bridge/Stripe)

• Strategic defensive move: With Western Union's stock down 21% this year amid crypto competition and analysts suggesting it could become an acquisition target for companies like Circle, launching a stablecoin represents both innovation and survival strategy

• Inflation hedge for emerging markets: The stablecoin would allow recipients to hold USD-denominated value rather than converting to potentially volatile local currencies, addressing a key pain point in remittance corridors with high inflation

• Crypto-fiat bridge opportunity: Western Union's global network could provide crucial on/off ramps for digital wallets, positioning the company as infrastructure for the growing stablecoin ecosystem rather than just a competitor to it

💸 Stablecorner ⚖️ → The Infrastructure Wars: Why Every Major Player Wants Their Own Chain

The blockchain landscape is experiencing a fundamental shift as major financial institutions and payment companies increasingly launch their own Layer 1 blockchains. As Chainlink CEO Sergey Nazarov explained in the latest Tokenized Podcast episode, we're witnessing the emergence of a multi-chain world where "the cost and complexity of making your own chain is rapidly dropping" while "the value and benefit that you get from launching a chain is going up rapidly."

Why companies are choosing custom chains over existing infrastructure comes down to real operational challenges. Circle's new Arc blockchain aims for 3,000-10,000 transactions per second with USDC-denominated gas fees and regulated validators. Fortune reported that Stripe is exploring similar infrastructure. As Visa's Cuy Sheffield noted on the podcast, companies face the "noisy neighbor problem" on public chains where NFT mints or other activity can impact their customers' experience. These aren't vanity projects – they're strategic responses to control, speed, and cost requirements that existing chains can't fully address.

However, this fragmentation creates new infrastructure demands that are far more complex than simple blockchain deployment. Nazarov predicts we'll see "thousands of chains" requiring sophisticated cross-chain connectivity. Chainlink's Cross Chain Interoperability Protocol (CCIP) demonstrated this complexity in their work with ANZ Bank and Fidelity International through Hong Kong's EHKD project, coordinating currency conversion, cross-chain transfers, compliance verification, and tokenized fund purchases in a single atomic transaction. Without robust interoperability solutions, custom chains risk becoming isolated islands.

The trend mirrors early internet infrastructure development, where database deployment costs fell dramatically through the 1990s and 2000s, leading to initial fragmentation before connectivity solutions emerged. Nazarov compared the current chain dynamics to early database fragmentation that required companies like Cisco to provide connectivity solutions. The difference today is that cross-chain protocols like CCIP are being built from the ground up to handle institutional-grade compliance, identity verification, and settlement requirements that traditional DeFi bridges can't support.

What's driving this infrastructure arms race is the convergence of institutional capital, regulatory clarity, and technological maturity. With bipartisan U.S. stablecoin legislation, pro-crypto regulatory leadership across government branches, and major asset managers like BlackRock bringing trillions in assets under management to tokenized products, Nazarov sees this as "the lowest doubt period in our industry that I've ever seen." When institutional capital meets mature infrastructure and supportive regulation, the result is every major player needing their own optimized blockchain stack to compete effectively in the tokenized economy.

📰 Some More News:

🏦 Tokenization, Stablecoins & Finance

• FIS Eyes Tokenized Deposits and Stablecoins to Move Money Faster (Read more here)

• Nuvei Adds Stablecoins to Expand Money Movement Operations (Read more here)

• Citi exploring stablecoin custody (Read more here)

• Norway’s sovereign wealth fund boosted bitcoin exposure by 83% in Q2 (Read more here)

• Ripple Extends $75M Credit Facility to Gemini as Exchange Pursues IPO (Read more here)

• Blockchain Lender Figure Joins Crypto IPO Rush With Nasdaq Listing Bid Under 'FIGR' (Read more here)

• Why Circle and Stripe (And Many Others) Are Launching Their Own Blockchains (Read more here)

• Tether Appoints Former White House Crypto Council Executive Director Bo Hines as Strategic Advisor for Digital Assets and U.S. Strategy (Read more here)

• SkyBridge Capital Tokenizes $300M In Hedge Funds on Avalanche (Read more here)

🤑 Funding and M&A

• Circle Acquires Malachite to Power Its Upcoming Arc Blockchain (Read more here)

• PayPal, Coinbase Ventures back crypto payments firm Mesh (Read more here)

• Stellar Development Foundation Invests in Archax, Aiming to Boost Tokenization (Read more here)

💼 Government & Policy

• Thailand rolls out pilot program for tourists to convert crypto into baht for spending (Read more here)

• South Korea’s financial regulator to submit stablecoin regulation bill in October (Read more here)

• Slovenia Becomes First European Union Nation to Issue Sovereign Digital Bond (Read more here)

• Japan to approve its first yen-denominated stablecoin as early as this fall: report (Read more here)

Tweet of the Week 🐤 

From Bullish

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