The giants draw their swords, a decisive battle for stablecoins!

If we consider the years 2020–2022 as a “trial period” and 2023–2024 as a “searching phase,” then the landscape of stablecoins in 2025 has already entered a phase of “full speed ahead.”

Its development speed far exceeds expectations: the annual transfer volume of stablecoins has skyrocketed from a negligible $3.3 billion in 2018 to $18.4 trillion in 2024. This figure not only marks its transformation from a niche experiment to a backbone of global payments but also means it has surpassed the annual processing scale of traditional payment giants Visa ($15.7 trillion) and Mastercard ($9.8 trillion).

Image source: Visual Capitalist

In the past month, several landmark events have brought this narrative to the forefront:

• Citigroup formally partners with Coinbase to expand digital asset payment capabilities for institutional clients;
• Nine major European banks form a consortium for the euro stablecoin, expected to launch in 2026;

Western Union announced the launch of the USD stablecoin USDPT on Solana in 2026, issued and custodied by Anchorage Digital Bank;

• Visa discloses the expansion of settlement support for four stablecoins on four new chains;

On the capital front, according to Fortune magazine, Mastercard intends to acquire the stablecoin/crypto infrastructure company Zero Hash for $1.5 to $2 billion, and earlier, it also engaged in a “bidding” war with Coinbase over the acquisition of BVNK.

Putting these pieces together reveals a clear trend: in the competition for future financial dominance, traditional financial giants are unwilling to fall behind and are driving a comprehensive transformation of their core businesses—from payment networks to cross-border settlements—towards an on-chain programmable system.

Bank: stablecoin vs. tokenized deposits

When traditional banks began to embrace digital assets, they found themselves facing two different paths: stablecoin and tokenized deposits.

At first, Citibank CEO Jane Fraser stated that she values tokenized deposits more than the popular stablecoins on the market. This is not to say that stablecoins are bad, but rather that tokenized deposits are more “comfortable” for banks:

• Tokenized deposits (the “internal” track of banks): Banks like it because it essentially turns the money customers deposit in banks (deposits) into digital tokens. It's like issuing a digital pass for existing bank accounts. It operates completely under the watchful eye of existing regulatory bodies (such as central banks), is very secure and compliant, and can seamlessly integrate into traditional banking settlement systems, allowing banks to settle funds 24/7 without interruption. For banks, this is the choice with the least friction and the most reassuring regulation.

But simply having the bank's own “internal track” is not enough.

• Stablecoin (the “external” track of banks): Banks also realize that if they want to connect with the entire crypto world and those popular “public chains” (like Ethereum), they must use stablecoins. These stablecoins act like the universal currency of the crypto world.

Therefore, Citibank's actions appear very smart: while expressing a preference for tokenized deposits, it quickly announced a partnership with Coinbase.

The ultimate purpose of walking on two legs is singular: regardless of whether the future financial network is based on public chains or banking systems, traditional banks must continue to be the most central “trust and settlement center” in the new financial system by simultaneously mastering these two types of “digital money.”

In Europe, nine banks (UniCredit, ING, Banca Sella, KBC, Danske, DekaBank, SEB, CaixaBank, Raiffeisen) are jointly promoting a Euro stablecoin, establishing a company in the Netherlands and applying for an electronic money institution license under MiCA, with plans to launch in the second half of 2026 at the earliest. This design emphasizes “compliance, 1:1 reserves, and usability on public chains,” with the straightforward goal of creating a local digital payment rail in Europe to hedge against the spillover effects of USD stablecoins in the European payment environment. From the statements to the organizational structure, this is a “bank-led infrastructure battle benchmarked against public chain ecosystems.”

Western Union: Using stablecoins to connect the 'cash endpoint'

Unlike traditional banking giants that focus on internal “clearing-settlement” efficiency upgrades, the established cross-border remittance giant Western Union views stablecoins as a core business—an upgrade to the channel of cross-border retail remittances.

Western Union is one of the largest cross-border remittance companies in the world, and its strong advantage lies not in advanced financial technology, but in its vast network of physical locations spread across the globe. Especially in developing countries, it controls the “last mile” of converting funds from digital form to physical cash, serving as a lifeline for many unbanked users to access funds.

The strategic goal of Western Union is very clear: to turn stablecoins into the “highway” of its remittance channel and combine them with a powerful cash network to form a smooth closed loop.

1. Choose a channel: Western Union has partnered with Anchorage Digital Bank to issue the stablecoin USDPT, and has selected the Solana public chain as its operating network. The key to choosing Solana lies in its high throughput and extremely low fees, which are crucial for high-frequency, low-value retail remittances.
2. Building the Network: The company has simultaneously launched the Digital Asset Network, aiming to create a seamless closed loop for the entire process: external wallet → stablecoin remittance → local cash withdrawal/deposit.
3. Meeting User Needs: For users in developing countries who rely on cash, what they care about is not whether the funds “are on the blockchain,” but three core pain points: “Can it be credited instantly?”, “Can it be withdrawn immediately at nearby outlets?” and “Are the fees affordable?”

This is precisely the brilliance of Western Union: it hides the complexity of financial infrastructure behind the scenes, utilizing the efficiency advantages of stablecoins and public chains to serve its strongest cash-intensive scenarios, thereby consolidating its position in the global retail remittance market.

The Battle of the Card Giants: Connectors vs. Acquirers

Compared to the traditional clearing systems of banks and the cash networks of Western Union, Visa and Mastercard are accelerating the integration of stablecoins from the perspective of global payment networks, but the two have taken different approaches:

1. Visa: Transformed into a “Multi-Chain Settlement Router”

Visa's statements and strategies are increasingly resembling those of a “multi-chain settlement network operator.” In this fiscal year, Visa has added settlement support for four public chains and four stablecoins, allowing these on-chain funds to be exchanged for over 25 fiat currencies.

Visa emphasized in its financial report that card transactions linked to stablecoins surged year-on-year. This indicates that its core capability lies in “bridging the gap”: it is leveraging its extensive card network to act as a router between traditional bank accounts and on-chain digital funds, allowing banks, merchants, and regular wallet users to seamlessly conduct cross-chain settlements.

2. Mastercard: Acquires Time through “Lightning Acquisition”

Unlike Visa's “connect” strategy, Mastercard's capital moves appear to be more aggressive and direct:

It plans to invest $1.5 to $2 billion to acquire Zerohash, rapidly filling its backend technology gap in stablecoin/crypto settlement. Subsequently, Mastercard was also reported to be in deep negotiations with Coinbase to acquire BVNK, with rumors of a price as high as $2 to $2.5 billion.

Mastercard's strategy is to acquire infrastructure in exchange for time in the “on-chain payment main track.” Compared to lengthy internal development, acquisitions can quickly internalize core capabilities such as compliance custody, wallet routing, fund anchoring and redemption, as well as on-chain risk control, and then rapidly push these capabilities to its global issuing banks, acquiring banks, and merchant network.

Both card organizations have recognized the core role of stablecoins in future payments, but Visa excels at connectivity, while Mastercard tends to quickly control the infrastructure.

The risk has not left.

Although global giants are racing ahead in the stablecoin space, this road is filled with significant challenges that have yet to be resolved. For banks and card organizations, the biggest challenge is not the technology itself, but how to deal with these non-technical “roadblocks.”

1. The “Invasion” of US Dollar Stablecoins

The global expansion of stablecoins directly touches the most sensitive nerve of governments: monetary sovereignty.

Imagine if the US dollar stablecoin began to dominate the daily payments of a small country; it would essentially weaken the central bank's ability to manage the economy. This phenomenon of “digital dollarization” would inevitably provoke a strong backlash from local regulators.

This is why Europe has chosen to take a controlled path - they prefer to promote stablecoins of their national currencies (such as the euro) and collaborate with local banking alliances to ensure that monetary control does not easily slip away.

2. “Trust” Stress Test: On-Chain Robustness

To bring the “bank-grade stability” of finance onto the blockchain, issuers and clearing parties must always be prepared to deal with crises of trust and technical attacks:

• Redemption and Reserves: Can the stablecoin withstand pressure in the event of a large-scale redemption (i.e., a bank run)?
• On-chain crisis: Platforms must withstand a series of technical and operational risks such as insufficient liquidity, fluctuations in reserve assets, network congestion, and hacker attacks.

3. Realistic Barriers: The Compliance Quagmire of “Cash”

For a model like Western Union that focuses on converting digital funds into physical cash (the “last mile”), it is essential to incorporate the high efficiency of the blockchain into everyday use cases, which requires overcoming numerous legal obstacles: Western Union must simultaneously meet strict anti-money laundering (AML) requirements, complex foreign exchange management regulations, and apply for operational licenses in multiple jurisdictions in every country where it operates.

Therefore, to build a global digital financial network, the complexity of compliance engineering and operational management far exceeds the technical integration of “accessing a few chains.” This is precisely the fundamental reason why giants like Visa, Mastercard, and Citibank choose to “band together for warmth” or “spend money on acquisitions”—relying solely on themselves cannot overcome these harsh non-technical barriers.

Conclusion

Looking at the news of the past month, the essence of the stablecoin wave is not the victory of the crypto camp, but a silent revolution in financial infrastructure. When “account + stablecoin” becomes a parallel structure, users almost no longer perceive the boundary between “on-chain/off-chain”; they only see faster deposits, lower fees, and a more stable experience. At this point, the victory or defeat returns to familiar variables: network scale, fee rate curves, merchant expansion, risk control, and compliance execution. This is also why in Q4 of 2025, traditional finance chose not to remain a bystander.

Author: Bootly