The Trump admin is weighing a policy of promoting stablecoin adoption. All you have to do is look at bond yields to see why. The bank lobby is going to fight this because they fight every kind of progress that erodes their unjustified and underserved monopoly. When they do, it will reveal their true colors. A stablecoin is always (always!) easier to acquire than a bank account. It's also more functional. Once more assets go on chain, it will be more interoperable too. All else equal, there will always be more demand for stables abroad than dollar accounts. Banks arguing against such a policy are arguing for lower dollar demand, higher borrowing costs for the US government, higher mortgage rates, etc.

Many of us have mentioned how the stablecoin yield debate playing out in Clarity, and the arguments made against yield by the bank trades, mirror the battle over money market funds in the 1970s. Well here's some proof. Here's a letter submitted by the Independent Bankers Association of America (a predecessor to the ICBA) in a 1980 hearing of the Senate Banking committee on money market funds. As you can see, many of their arguments against stablecoins are almost verbatim a copy from what they argued back then: threat to deposits, harms lending, uniquely dangerous for smaller banks. And we know today that argument was dead wrong. Money market balances grew parabolically into the trillions, and yet banks remain flush with deposits.

The good folks at the Bank Policy Institute and The Clearing House—fresh off their battle against stablecoin yield—have a new paper out explaining why they oppose progress and how the economy exists to serve banks, not the other way around. I'm only kidding (sort of). What they actually put out is a 50 page response to the Fed's proposed rules around the so-called "skinny master accounts" that would give non-banks like FinTechs and stablecoin issuers access to certain Fed-run payment systems for the first time. Needless to say, they are not fans! By way of background, most other central banks give access to non-banks and have been doing so for years. FinTech integration is a key part of the success of Pix in Brazil and UPI in India. Restricting access to the bank monopoly is one reason why payments in America suck. The BPI/TCH arguments against this sort of account (and for making it very limited if introduced) all rest around safety and soundness. The way they tell it, fractional-reserve banking is a bastion of economic stability. It's those pesky FinTechs and stablecoin issuers that are dangerous. Also, banks never faciliate any kind of illicit activity. Think I'm kidding? Here are some quotes on the consequences of giving FinTechs and stablecoin issuers equal access: ..it would allow uninsured institutions subject to less rigorous supervision and regulation to access directly the payments system, which could undermine the integrity of the payments system and pose risks to financial stability. ...the shift would enable these more lightly regulated institutions to attract additional customers, thereby increasing the number of consumers exposed to the risks inherent to maintaining accounts at such institutions. These risks include the heightened potential for runs arising from uninsured deposit taking and other deposit-like activities, such as stablecoin issuance.. ...the shift could have significant spillover effects on the broader economy. For example, if the proposed approach contributes to increased stablecoin issuance and adoption, stablecoins could displace deposits at IDIs. ..the shift could also increase illicit finance risk as less regulated (or unregulated) institutions. The disingenuous nature of these arguments is almost impressive. Narrow banks like FinTechs and stablecoin issuers don't have deposit insurance because they don't need to, they literally have the money. Banks don't. That's why they need deposit insurance. It's also why they blow up periodically and have needed trillions in taxpayer funded bailouts in my lifetime alone. We are only 3 years removed from a GSIB collapsing, for gods sake. Banks are also the primary conduits of trillions of dollars in illicit funds annually. Not a year goes by without a billion-dollar fine for AML violations. But they still want exclusive access to public government infrastructure, because they care about us! (but not enough to pay any interest on our bank accounts, even though the Fed pays them 3.6% for doing nothing). I fully support the new limited master account regime because it's good for progress, good for consumers and businesses, and will lead to a better and safer financial system.

Good lord. It turns out that a16z, the same people who told us "Why Decentralized Matters" 8 years ago, now don't think it matters. Sure, they hedge by making a meek "parallel path" argument between actual DeFi and whatever the suits are doing, but the fact that they now take all this "enterprise blockchain" nonsense seriously tells me they've lost faith. Or rather they believe decentralization matters for DePIN that enables DeSci for agentic inference, but not for finance. "Peer to Peer Electronic Cash" breaking up Wall Street is now a bridge too far! Allow me to reframe what is actually happening with TradFi adoption of blockchain: the rent seeking intermediaries for whom friction and delays is a primary source of profits are not into actual crypto (shocking, I know). They prefer fake crypto, because it allows them to hijack the narrative, delay progress, and use lawfare in Washington to kill true innovation. This isn't some conspiracy theory. The very same banks who are lobbying to kill stablecoins as I type are claiming to use fake internal blockchains to offer services they could have rolled out 20 years ago using SQL. Also, the same HFT trading firms who have been lobbying to kill DeFi for years are the biggest holders of dubious coins tied to "permissioned networks" supposedly used by COBOL jockeys to do post trade settlement. Before that, they used fax machines. None of this should come as a surprise. Incumbents fight change. Highly regulated incumbebts who haven't had to innovate for decades fight the hardest. What does come as a surprise is that the smartest VCs out there (and I mean this genuinely) are falling for their slight of hand. No wonder this industry is in such a low place. Our once fearless leaders are full of doubt and bending the knee to archaic orgs like...SWIFT? Like, it took the Society over a decade to try to move cross-border payments that take 3 days to a new messaging standard, but a16z thinks they'll build a viable "blockchain" for real-time payments soon. Sigh. Since they end their article with advice for founders, I am going to do the same: Proof of Authority is not a viable consensus mechanism, inside a bank or on CNBC. Neither is Proof of Press Release. A founder who doesn't think the institutions of tomorrow will be fundamentally different from the dominant ones today proably shouldn't be one.

For all the talk about the Ethereum Foundation's shortcomings, the refusal to get more involved or "build product" or fund/promote specific projects or be too focused on neutrality too early...this I know to be true: There have been dozens of other L1s who did the opposite. Raised a gazillion dollars, had a Foundation and Labs, hired many engineering, product, & BizDev people, ran points programs, invested in startups or gave grants, did TradFi PoCs and theater, promoted specific projects, spent lavishly on bougie conference parties, and did even crazier things like launch a memecoin fund (!). All but one of those L1s are so dead we don't even talk about them. For many, you can trace the failure to the "un-Ethereum" like GTM strategy. You can't build succesful decentralized infra by going out of your way to give a small opaque group of people excess power. You certainly can't build a global settlement layer that way; the billions of people, and trillions in assets, that aren't on your chain yet will always fear that control lever being used against them. All of which is to say: while there are many critiques one could have of the EF, they did one thing right, which was to err on the side of doing too little, as opposed to too much. Whatever other work needs to be done will be picked up by outside parties who have their own vested interest. That's what is happening now. In crypto, the greatest trick the devil ever played was to convince an army of smart people that the best way to be decentralized tomorrow was to be centralized today.