The three contenders shaping digital money
Bankcoins under MiCA and central oversight
Europe is leading the push for bank-issued stablecoins. A consortium of nine major banks—including ING, UniCredit, SEB, and CaixaBank—has announced plans to launch a euro-denominated stablecoin by 2026 under the EU’s Markets in Crypto-Assets (MiCA) framework. Supervised by the Dutch Central Bank, the project will fully collateralize tokens with cash and government securities.
The pitch is clear: regulatory safety, balance sheet strength, and direct integration into existing banking apps. For policymakers in Brussels, bankcoins are the antidote to reliance on offshore tokens like USDT and an alternative to slow-moving central bank digital currency projects.
Big Crypto’s expansion playbook
On the opposite end is Tether, the dominant issuer of USDT. With a market capitalization above $170 billion and new reports of a funding round valuing the company at $500 billion, Tether is looking beyond stablecoins. Executives have signaled ambitions in artificial intelligence, telecommunications, and emerging market infrastructure.
Tether’s success hinges on two advantages: global liquidity dominance and profitability. In 2024 alone, it earned billions in interest from U.S. Treasuries backing its reserves. That profit engine now funds expansion into frontier technologies, positioning Tether not just as a crypto service provider but as a financial conglomerate.
Big Tech and fintech challengers
Tech firms and payment companies are not standing still. PayPal’s PYUSD token launched in 2023, embedding a stablecoin into a mainstream fintech ecosystem. Stripe and Visa have experimented with tokenized settlement rails. Apple and Amazon have not issued coins, but they dominate consumer payments infrastructure in ways that could tilt adoption overnight if they chose to move.
In Asia, platforms like Grab and WeChat Pay already operate quasi-stable ecosystems through wallet balances. By 2027, it is plausible that regional super-apps issue their own tokens, backed by fiat, and settle through both local clearinghouses and blockchain networks.
Regulation as the great equalizer
MiCA in Europe
MiCA, taking full effect in 2024–2025, sets the strictest global standards for stablecoin issuance. It requires issuers to hold fully segregated reserves, undergo audits, and comply with disclosure mandates. Critically, it introduces the category of “significant e-money tokens,” subjecting large issuers to additional oversight.
For bankcoins, MiCA provides a clear legal pathway. For private issuers like Tether and Circle, it imposes reporting obligations and capital requirements that will reshape balance sheet management.
U.S. frameworks
The U.S. has taken a more fragmented path. Congressional debate on a federal stablecoin law continues, while the SEC and CFTC argue jurisdiction. The recent SEC adoption of “generic listing standards” for commodity-based ETPs may indirectly benefit stablecoin issuers by normalizing digital asset exposures in mainstream finance. Still, absent federal clarity, U.S.-based issuance remains constrained.
Asia and emerging markets
Singapore, Hong Kong, and the UAE have embraced stablecoin regulation as a competitive lever. Each offers licensing regimes that allow private issuers to operate under controlled conditions. In emerging markets, from Turkey to Nigeria, adoption often occurs informally, with USDT serving as the de facto settlement currency where local currencies are unstable.
Market dynamics: who has the advantage?
Liquidity dominance
Tether’s share of global stablecoin liquidity is unmatched. Every major exchange, OTC desk, and cross-border corridor integrates USDT. Even with regulatory pressure, network effects make displacement difficult.
Brand trust
For banks, trust is the selling point. Consumers already rely on their apps for savings, payments, and credit. A MiCA-compliant euro stablecoin branded by ING or UniCredit could achieve mass adoption rapidly within the eurozone.
Speed and user experience
Tech platforms bring the advantage of seamless UX. PayPal’s PYUSD showed that a token can integrate into millions of wallets without users even realizing they’re holding a blockchain-based asset. Big Tech’s potential to hide blockchain complexity could prove decisive.
The risks that could derail each model
Bankcoins
Bank-led initiatives risk fragmentation and bureaucratic delay. Coordinating nine or more institutions across multiple jurisdictions is a governance challenge. Technical execution and wallet distribution also remain uncertain.
Big Crypto
For Tether and Circle, regulatory heat is the greatest risk. U.S. lawmakers continue to scrutinize reserve transparency, and European authorities under MiCA will demand more frequent audits and disclosures. A single banking partner disruption could destabilize flows.
Big Tech and fintech
For fintech issuers, regulatory suspicion of Big Tech’s financial power is a barrier. Policymakers worry about platform monopolies extending into money itself. If Apple or Amazon issued a coin, antitrust challenges could arrive as swiftly as adoption.
Practical checklists for stakeholders
For exchanges
- Diversify liquidity pools across USD and EUR stablecoins.
- Secure MiCA-compliant partnerships to serve EU users.
- Build contingency plans for potential U.S. restrictions.
For treasurers and corporates
- Evaluate counterparty risk: bankcoin vs private issuer vs fintech.
- Align liquidity management with regulatory jurisdiction.
- Pilot integrations with multiple rails (SEPA, FedNow, blockchain).
For fintechs and PSPs
- Prioritize user experience—hide blockchain complexity.
- Emphasize transparency in reserves and disclosures.
- Explore interoperability with CBDC pilots where possible.
Looking to 2027: three scenarios
Scenario 1: Bankcoins dominate Europe
By 2027, euro stablecoins issued by banks become the default for cross-border EU payments. Circle and Tether remain relevant but secondary. Europe leads in regulated adoption.
Scenario 2: Big Crypto scales beyond finance
Tether evolves into a diversified conglomerate, embedding AI, telecom, and infrastructure services into its balance sheet. Its stablecoin remains dominant in emerging markets, especially dollarized economies.
Scenario 3: Big Tech enters decisively
A major platform issues a token embedded in millions of devices overnight. The stablecoin becomes invisible to users, functioning like existing wallet balances. Policymakers scramble to respond to Big Tech’s capture of payments.
The enduring trilemma
The next phase of stablecoin evolution will not be about whether they exist, but who controls them. Banks bring legitimacy, crypto incumbents bring liquidity, and tech firms bring scale. Each has advantages, but each faces risks that could reshape the balance.
For regulators, the challenge is to set standards that protect consumers without stifling innovation. For investors and users, the question is which model offers resilience, transparency, and usability. By 2027, the stablecoin trilemma will not be theoretical—it will be the daily reality of global money.