Currency Wars 2.0: When Money Gets Product Managers

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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. A warm welcome to our new editor, Shwetabh Sameer of Molten Ventures, writing alongside Simon and Pet.

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.

Tokenized will be at DAS: London, crypto’s premiere institutional conference, returns to London on October 13th - 15th. Use code Tokenized200 if you want £200 off at checkout!

Simon’s Market Readout 💬 

The institutional awakening is accelerating beyond regulatory clarity into operational reality. The past 24 hours brought meaningful signals: DOJ-Binance compliance monitoring discussions suggest enforcement normalization, while UK-US crypto cooperation talks indicate regulatory convergence rather than fragmentation.

It made me think that the US has sort of forced the world and forced its largest banks to take very seriously the idea of stablecoins, but at the same time, it's left the world unsure what to do, but knowing they need to do something.

Every major bank leadership conversation I've had recently centers on the same admission - "We know we need to do something with digital assets. We just don't know what."

The answer is hiding in plain sight. Look at what JPMorgan's Kinexys and Citi's token services actually accomplished. They built internal blockchain settlement for closed-loop operations across their books and records. Critics immediately ask: "Why use blockchain for internal ledgers when databases work fine?"

They're missing the strategic intent entirely.

These banks started closed-loop with open-loop ambitions. Blockchain isn't about replacing databases for internal operations - it's about learning the technology while capturing immediate value, then expanding to public networks when privacy barriers fall.

This represents a fundamental shift in institutional thinking. Banks will go on-chain. Not eventually - actively. The infrastructure decisions being made today reflect stated intent from leadership across major institutions.

The privacy breakthrough changes everything. Previous blockchain cycles failed institutional adoption because high-performance chains and mature privacy solutions didn't exist simultaneously. Today we have both, plus regulatory frameworks that clarify compliance pathways.

Yet the vendor ecosystem keeps pushing the wrong solutions. Every bank gets pitched: "Launch your own stablecoin" or "Join our network" without clear articulation of institutional value proposition.

Here's the insight most miss: Banks don't need to issue stablecoins - they need to tokenize deposits. When a bank turns any deposit into an ERC-20 compatible token that lives in wallets and operates on networks, that IS a tokenized deposit. If it's 100% backed by deposits, calling it a "stablecoin" is just marketing semantics.

The crypto industry needs to mature beyond land-grab mentality and understand what's actually in it for financial institutions. The answer might not be your Layer 1 or your freshly launched network.

The answer might be:

• Here's how you can get a meaningful share of this new emerging market.

• Here's how it can take a meaningful middle and back office cost out.

• Here's how you can deliver on an open loop with privacy.

We've got harder problems to solve. Let's solve those.

Stories You Can't Miss 📰

🏛️ Tether Unveils USA₮ (USAT): World's Largest Stablecoin Issuer Enters US Market

Tether, the world's dominant stablecoin issuer (who control 56% of the global market with $170 billion in circulation) announced its long-awaited entry into the US market with USAT. It will be a regulated dollar-backed stablecoin designed to comply with the GENIUS Act.

Key Points:

• Currency as product roadmap: Bo Hines (former White House crypto official) becomes CEO of what is essentially "Dollar v2.0 (Tether Edition)" - featuring Tether’s Hadron technology, institutional APIs, and regulatory compliance as product differentiators

• Infrastructure as competitive moat: Tether is partnering with Anchorage Digital (issuer) + Cantor Fitzgerald (custody/primary dealer), who will provide the institutional backend for Dollar-as-a-Service, competing directly with Circle's Dollar-as-a-Platform infrastructure

• Market segmentation strategy: USAT targets regulated US institutions while USDT maintains global reach - effectively creating premium vs. standard tiers of the same currency

• Distribution network effects: Tether sits around with ~56% global stablecoin market share ($170 billion out of $302 billion) - a distribution advantage Tether can channel into U.S. issuance if conversions and integrations are seamless

• Political capital as feature: White House connections aren't just regulatory advantage - they're also a product development input from currency policy makers

The Tokenized Take:

The dollar now has a product roadmap and competing engineering teams. USAT is the emergence of national currency as platform competition. Until now, Circle’s pitch has been a "Compliance-First Dollar”. But Tether is now competing with "Scale-First Dollar”, paired with US issuance stack (Anchorage/Cantor).

This feels like cyberpunk: Corporate entities competing to be the best version of government money. When former White House officials become CEOs of private dollar implementations, and banks choose between different flavours of the same currency based on APIs and network effects, we've crossed into science fiction territory.

If USAT clears launch and distribution milestones on schedule, the strategic question will shift from “which stablecoin?” to "Which dollar implementation serves our use case?"

Treasury managers will have multiple options:

• Circle's USDC: Regulatory-first, transparent reserves, institutional comfort

• Tether's USAT: Scale advantages, global network effects, political connections

• Other Stablecoins like USD1, PYUSD, RLUSD, etc.

• Traditional banking rails: Legacy infrastructure, correspondent banking delays

Each dollar implementation competes for institutional wallet share, developer mindshare, and regulatory favour.  So, a fascinating question now emerges - when money has product managers, who wins - the best engineered dollar or the most politically connected one?

🚀 BlackRock Eyes Tokenized ETFs: Wall Street Gets APIs

The world's largest asset manager is exploring tokenizing its ETF portfolio on public blockchains. This follows their successful 2024 launch of their tokenized money-market fund BUIDL, and the early 2025 introduction of their spot Bitcoin ETF.

There is not a proper timeline yet, but this is a strong signal - traditional finance infrastructure being rebuilt as programmable, always-on digital rails. BlackRock's $10+ trillion in AUM could make this the largest institutional tokenization initiative in history.

Key Points:

• Massive scale potential: BlackRock manages over $10 trillion in assets and $5 trillion in iShares ETFs - even tokenizing 5% of ETF holdings would bring $250+ billion in traditional assets on-chain, way larger than current tokenization markets

• 24/7 settlement: Tokenized ETFs would enable instant settlement and continuous trading outside traditional market hours, fundamentally changing how institutional portfolios operate

• Real-world asset integration: Focus on tokenizing ETFs linked to traditional assets (stocks, bonds, commodities) rather than crypto-native products, bridging legacy finance with blockchain infrastructure

• Backend trials underway: BlackRock is conducting blockchain trading mechanism tests with partners including JPMorgan's Kinexys platform, indicating serious technical development beyond exploration

• Regulatory approval pending: Timeline depends on regulatory clarity for tokenized traditional securities, with compliance frameworks for custody and on-chain transfers still being developed

The Tokenized Take:

This is the “ETFs as APIs” moment. If ETFs become programmable objects, they can plug directly into bank treasuries, collateral workflows, and automated portfolio rebalancers. This shifts ETFs from passive investment vehicles to active building blocks in programmable finance ecosystems.

But mind you, the technical challenges are massive. Reconciling instant blockchain settlement with T+1/T+2 clearinghouses isn't a software update - it requires rebuilding core market plumbing while maintaining regulatory compliance. Larry Fink identifying "identity verification" as the critical unsolved problem shows even BlackRock recognizes significant hurdles remain. When the world's largest asset manager says it's hard, it's actually hard.

This signals serious institutional commitment. BlackRock is willing to invest years in blockchain infrastructure development, with active testing partnerships including JPMorgan's Kinexys. This demonstrates they view programmable finance as inevitable rather than optional.

BlackRock won't just have a headstart - they have proof of concept. Their Bitcoin ETF success and tokenized money market fund (BUIDL) demonstrate blockchain integration works at institutional scale. Moving to tokenize traditional asset ETFs suggests the infrastructure is mature enough for mission-critical use cases, not just crypto-adjacent experiments.

The network effects could be transformational. If BlackRock's tokenized ETFs become collateral in DeFi protocols or settlement assets in institutional transactions, they bridge traditional finance liquidity with blockchain programmability. This creates feedback loops where traditional assets become more valuable because they're programmable, accelerating institutional adoption.

This brings a fascinating point in front of us – when your competitor’s ETFs are programmable and yours aren’t, how long before automated institutional systems prefer the programmable version? Surely, not what asset managers would want. That puts tokenization roadmaps squarely in the “must have” bucket for large managers, not a side-lab experiment.

🏛️ Bank of England Proposes Strict Stablecoin Caps: Strategy or Self-Inflicted Handicap?

The Bank of England plans to impose strict ownership caps on stablecoins - £10k to £20k for individuals, £10 million for businesses - creating more restrictive rules than the US or EU just as the GENIUS Act becomes law and global stablecoin adoption accelerates. Could this be a competitive disaster?

Key Points:

• Stricter than global peers: The proposed caps are more restrictive than US (GENIUS) or EU (MiCA) frameworks. This potentially makes the UK the least competitive major jurisdiction for stablecoin adoption

• Systemic stablecoin targeting: Limits apply to "systemic stablecoins" - those widely used for UK payments or likely to be used for that purpose, effectively covering all major stablecoin players

• Industry backlash intensifies: Crypto and payments companies warn the caps would be "costly and hard to enforce" while putting the UK at a severe competitive disadvantage

• Deposit protection rationale: BoE officials justify the measures as preventing a drain of deposits from traditional financial institutions as users opt for 24/7 stablecoin convenience and yield opportunities

• Enforcement complexity: Industry groups question how the caps would actually work in practice, given the borderless nature of digital assets and cross-border payment flows

The Tokenized Take:

The UK is about to regulatory-arbitrage itself out of the digital payments revolution. While the US passes the GENIUS Act and Tether launches regulated USAT, the Bank of England responds by... capping how much digital money people can hold. This feels like limiting how much email someone can receive because it might compete with the postal service.

As Tony McLaughlin argued in our podcast a few weeks ago, every dollar that arrives as a stablecoin is a gift: we can convert it, transfer it, and monetize the flow through FX and payments. But here we are - hanging a "Closed for Business" sign on one of the fastest-growing segments of global finance.

The caps that the UK wants to expose, don’t change demand; they change routing. Value will detour around the UK to jurisdictions with scalable regimes. Meanwhile, the U.S. has a law on the books; the EU is harmonizing supervision under MiCA.  

The genie is already out of the bottle. Stablecoins processed more transaction volume than Visa and Mastercard combined in 2024. When BoE apply these caps, it won’t change demand; they change routing. Financial institutions and fintechs will detour around the UK to jurisdictions with scalable regimes.

The future isn't stablecoins versus tokenized deposits - it's both working together. Tokenized deposits will excel in closed-loop institutional systems, while stablecoins bridge borders and third-party networks. Smart jurisdictions are building regulatory frameworks that enable this convergence, not artificial barriers that prevent it.

So, the question becomes: Do we want to shape this market or watch it route around us?

If the UK wants to be a hub, it should set proper guardrails that scale, not ceilings that disintermediate domestic banks and fintechs from cross‑border payment demand.

The UK needs a competitive stablecoin regime that attracts global digital payments flow, not caps that guarantee it flows elsewhere. Safety matters, but so does remaining relevant in the global financial system.

📰 Some More News:

🏦 Tokenization, Stablecoins & Finance

• Circle responds to Hyperliquid’s stablecoin with investment, native USDC rollout (Read more here)

• LSEG completes first transaction on Microsoft-backed digital markets infrastructure targeting £1.2 trillion private fund market (Read more here)

• American Express Introduces Blockchain-Based Travel Stamps (Read more here)

• Ethereum Foundation Launches AI Team to Support Agentic Payments (Read more here)

• Crypto Lender Maple Expands to Tether-Backed Plasma (Read more here)

• P2P fast-tracks ETH staking as exit queue hits record highs (Read more here)

• Base Explores Issuing Native Token (Read more here)

🤑 Funding and M&A

• MoonPay to Buy Startup Meso to Expand Crypto Payments (Read more here)

• Pantera-Backed Solana Treasury Firm Helius Raises $500M (Read more here)

• BitMine's Ether Treasury Crosses 2.15M ETH (Read more here)

• Stablecore Raises $20M to Bring Stablecoins, Tokenized Deposits and Digital Assets into Banks and Credit Unions (Read more here)

💼 Government & Policy

• UK set to announce closer co-operation with US on cryptocurrencies (Read more here)

• Binance in talks with DOJ over dropping independent compliance monitor (Read more here) 

• France, Austria and Italy Urge Stronger EU Oversight of Crypto Markets Under MiCA (Read more here)

• Ripple National Trust Bank Charter Application (Read more here)

Tweet of the Week 🐤 

From Diogo Mónica

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