Significant shifts are occurring within the stablecoin landscape. Issuers are increasingly looking at securing bank charters within the U.S. regulatory framework. Tether, a major player, is also reportedly developing a stablecoin specifically for the U.S. market. Meanwhile, across the Atlantic, the Bank of England is considering placing limits on the amount of systemic stablecoins that can be held.
In a related development, Ripple has filed an application to establish Ripple National Trust Bank. This federally chartered institution aims to provide custody services for assets and, contingent upon separate approval from the Federal Reserve, could potentially gain access to central bank payment infrastructures.
Tether’s plans involve launching a U.S.-based stablecoin known as USAT. This announcement coincides with news that DBS, Franklin Templeton, and Ripple have partnered to facilitate the trading of tokenized shares of money market funds. This development is designed to bring bank-level cash equivalent options closer to on-chain payment and settlement processes.
The Bank of England’s proposals outline potential caps on individual holdings of systemic stablecoins, ranging from £10,000 to £20,000 per wallet, with a £10 million limit for businesses. The goal is to encourage usage for payments and reinforce financial stability, discouraging use for large-scale savings.
The future direction in the United States now hinges on two key interdependent factors: the scope of the federal trust bank structure and whether any stablecoin issuer secures account access with the Federal Reserve.
A trust charter, of the kind Ripple is seeking, mandates supervision by the OCC (Office of the Comptroller of the Currency), imposes fiduciary responsibilities, requires regular audits, and formalizes the protocols by which the issuer holds reserves in liquid assets, such as cash and short-term Treasury securities.
Access to the Federal Reserve, a separate consideration, is ultimately at the central bank’s discretion, governed by its Account Access Guidelines. Legal precedent confirms the Fed’s authority to reject access requests in uncharted territory, meaning that obtaining a charter is a necessary but not a sufficient condition.
Granting a payment-focused stablecoin issuer access would allow it to deposit reserves directly with the Fed, earning interest on these reserve balances. This scenario could lower the risk of relying on external banking partners, reduce the duration of the assets held, and simplify liquidity management during redemption events.
Should access not be granted, the existing reserve model would continue, relying on a combination of T-bill ladders, government money market funds, and systemically important custodian banks.
The Revenue Dynamics at Play: Quantifying the Policy Impacts
Despite a slight dip from their 2023 highs, policy rates remain notably positive, making the yield on fully reserved balances substantial, particularly at scale. Federal Reserve data indicates that interest on reserve balances currently stands at roughly 4.4%, while 3-month Treasury bills are yielding around 4%.
These figures can be used to create a simplified dual-pathway model for a dollar-pegged stablecoin in 2026. If an issuer like Ripple’s RLUSD maintained average reserves of $5 billion and had Fed access, its gross annual revenue would be approximately $220 million, based on a 4.4% interest rate.
Alternatively, if access were unavailable and reserves were held in 3-month Treasury bills, the gross revenue would be around $200 million at a 4.0% yield. The net figures depend on custody and administrative expenses, commonly estimated in the 10 to 20 basis-point range, before factoring in operating expenses and compliance costs.
| Scenario | Avg reserves | Yield proxy | Gross carry | Fee drag (10–20 bps) | Net before opex |
|---|---|---|---|---|---|
| Fed access, IORB | $5.0B | 4.4% | $220M | $5–10M | $210–215M |
| No access, T-bill ladder | $5.0B | 4.0% | $200M | $5–10M | $190–195M |
This calculation also underscores competitive dynamics. Having Fed access would allow a bank-chartered issuer to highlight a cash reserve profile at the central bank, reducing liquidity risk and potentially lowering external custody fees.
Without such access, the economics largely depend on short-term Treasury yields minus associated fees. While this remains viable at scale, it offers less in terms of differentiation.
Therefore, the core policy consideration isn’t simply whether stablecoins are fully reserved, but rather whether those reserves are held at the central bank or in market instruments managed by custodians. This distinction significantly impacts the speed of redemption processes during periods of market stress and the amount of capital required by intermediaries to support settlements.
Tether’s USAT Adds Another Dimension to U.S. Strategy
Tether’s plan to issue a U.S.-specific stablecoin product is intended to conform with relevant federal regulations and reporting standards. This would facilitate onshore distribution through partnerships with U.S.-based custodial providers.
If USAT is widely adopted across U.S. brokerages, payment platforms, and fintech networks after its launch, this could lead to shifts in U.S. market share over the coming quarters.
Assuming gradual regulatory approvals and integration cycles, a conservative estimate might see USAT capturing 5% to 10% of the U.S. market share by late 2026. However, more rapid merchant adoption and broader wallet distribution could potentially propel this to between 10% and 20%.
Tether’s strategy of maintaining USDT for offshore markets and launching USAT domestically allows the company to diversify regulatory exposure and may diminish the early-mover advantage held by incumbents that previously secured U.S. licenses.
In the United Kingdom, the proposed limits on stablecoin holdings would redefine how GBP-pegged stablecoins are utilized. The Bank of England’s framework prioritizes payment functionality and streamlined redemption processes, rather than facilitating large discretionary balances.
These caps would restrict consumer stores of value and corporate treasury holdings. The Financial Conduct Authority’s consultation proposes that redemption requests be fulfilled either on the same day or the following day. This requirement necessitates backing portfolios comprising very short-duration instruments.
That mix of factors limits potential yield and moves the business model closer to a “narrow bank” or e-money program. UK-based DeFi liquidity could face inherent limitations because domestic users, trading venues, and liquidity providers would be unable to hold substantial GBP balances on-chain.
Cross-border users and EU or U.S. exchanges would likely continue to manage larger pools of capital without UK restrictions, which could potentially shift liquidity away from GBP trading pairs based in the UK.
A Simplified Model Illustrates How the Cap Influences Addressable Supply
Assuming an average wallet holding of £15,000 and applying a 25% to 40% reduction to account for compliance requirements and off-ramping patterns, retail circulating supply scales with adoption but ultimately reaches a plateau.
This plateau isn’t necessarily permanent, as new wallets and merchant balances will increase overall capacity, but the cap undoubtedly influences the rate of growth.
| Retail users | Cap per wallet | Utilization | Potential consumer float |
|---|---|---|---|
| 4 million | £15,000 | 25–40% | £15B–£24B |
| 6 million | £15,000 | 25–40% | £22.5B–£36B |
These restrictions shift the focus towards merchant acquiring, card networks, and tokenized bank deposits. This is because payment throughput can scale independently of the size of cached balances.
Within the crypto ecosystem, UK wallets would utilize GBP payment rails for settlement purposes and then re-allocate capital into USD or EUR stablecoins, or potentially into tokenized money market funds where permissible. The collaborative arrangement between DBS, Franklin Templeton, and Ripple is especially relevant in this context.
Tokenized money market funds provide exchanges and payment companies with a way to hold cash equivalents in a format that is compatible with blockchain settlement and brokerage operations.
A combined approach, where a regulated issuer handles the payment token and a regulated asset manager manages the cash equivalent, reduces the distance between money market instruments and transactional money, although governance and redemption mechanisms would still operate separately.
Identifying Potential Winners: A Jurisdictional Perspective
In the United States, success is expected to favor issuers that can combine a national trust charter with compliance to federal stablecoin regulations. This would mean meeting bank-grade compliance standards, providing reserve disclosures on a monthly basis, and integrating seamlessly with traditional payment networks.
The competitive landscape could be dramatically altered if a pioneer issuer gains access to a Federal Reserve account, as this would centralize balance sheet operations around central bank money, rather than relying on custodied market instruments.
Within the United Kingdom, the caps and redemption standards will likely favor payment providers, banks, and models based on tokenized deposits. This would occur while simultaneously restricting the use of on-chain GBP balances for speculative endeavors or liquidity provision.
In both the U.S. and UK markets, downward pressure on interest rates will likely compress reserve income, increasing the importance of achieving scale, operational efficiencies, and effective distribution channels.