Widespread adoption of blockchain, particularly stablecoins, has been hindered by a "semi-illegal" regulatory environment in the U.S. (e.g., Operation Chokepoint). Now that this barrier is removed, major financial players are racing to integrate the technology, likely making it common within a year.

A key provision in the crypto market structure bill, which could stall its passage, is the debate over allowing third parties to pay yield on stablecoins. Regulators fear this could trigger a mass exodus of deposits from the traditional banking system, while the crypto industry views it as essential for competition.

Instead of funding another stablecoin protocol, the more viable investment is in the tooling layer. This includes payment systems, SDKs, and accounting software (like triple-entry bookkeeping) that enable small businesses globally to integrate stablecoin payments into their existing fiat workflows.

While stablecoins face regulatory uncertainty, major banks like J.P. Morgan and Boney are developing a competing product: tokenized deposits. These offer the same blockchain efficiencies for fund transfers but operate within the existing, trusted banking regulatory framework, presenting a more attractive, lower-risk alternative for institutional clients.

Despite promising instant, cheap cross-border payments, stablecoins lack features critical for corporate treasurers. The absence of FDIC insurance, a single standard ("singleness of money"), and interoperability between blockchains makes them too risky and fragmented for wholesale use.

Before stablecoins, launching financial services in N countries required N² unique integrations. Now, companies can build on a single dollar-stablecoin standard and instantly operate globally. Adding other local stablecoins becomes a simple N-style addition, radically simplifying global expansion.

For stablecoin companies like Tether seeking legitimacy in the US market, the simplest path is to back their assets with US treasuries. This aligns their interests with the US government, turning a potential adversary into a welcome buyer of national debt, even if it means lower returns compared to riskier assets.

While stablecoins gain attention, tokenized deposits offer similar benefits—like on-chain transactions—but operate within the existing, trusted regulatory banking framework. As they are simply bank liabilities on a blockchain, they may become a more palatable alternative for corporates seeking efficiency without regulatory uncertainty.

To avoid being classified as a bank, Coinbase's stablecoin model offers "rewards" for user activity like payments or trading, rather than paying interest directly on balances. This is a crucial legal distinction under new regulations allowing them to pass on yield from treasury reserves.