Onigiri Weekend Digest: Institutional Lens #36

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Hi everyone — welcome back to Stablescope Weekend Edition.

The stablecoin market is no longer just a crypto-market liquidity tool. It is becoming a live debate about who controls digital money distribution: banks, central banks, fintech platforms, payment networks, or crypto-native issuers.

This week’s stablecoin headlines capture two very different but connected realities: in Europe, regulators are still trying to contain stablecoins within the traditional banking perimeter; in the US, consumer fintech platforms are quietly turning stablecoins into everyday payment rails.

Recap on the two headliners this week:

SS #103 — ECB Rejects Easing Euro Stablecoin Rules SS #104 — Cash App Adds USDC Across Four Chains

Europe is asking: How do we prevent stablecoins from weakening bank deposits? While US fintech platforms are asking: How do we embed stablecoins into consumer finance without forcing users into crypto wallets?

Together, they show the widening gap between regulatory defensiveness in Europe and distribution-led experimentation in the US.

Enjoy the read!

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This week’s headlines point to a structural split in the stablecoin market.

The first model is the bank-controlled model, which Europe appears to favour. Under this framework, digital money should remain close to supervised banks, central bank money, tokenized deposits, and regulated payment institutions. Stablecoins may exist, but only within tight liquidity, redemption, and reserve constraints.

The second model is the platform-distribution model, now emerging more clearly in the US. In this model, stablecoins are embedded into consumer apps, fintech wallets, card networks, merchant platforms, and cross-border payment flows. Users do not need to understand blockchains. They simply send digital dollars through familiar interfaces.

The ECB’s position is not only about risk management. It is also about monetary control. If private stablecoin issuers are allowed to scale too quickly, they could compete with bank deposits, increase bank funding costs, and weaken the traditional credit transmission mechanism.

But the cost of this defensiveness is clear: Europe may protect its banking system while losing the global race for digital currency relevance. If euro stablecoins remain only a fraction of global stablecoin supply, the market will continue to dollarize through USDC, USDT, and other dollar-denominated assets.

Cash App’s USDC launch shows the other side of the equation. Stablecoin adoption does not need to start with institutions, DeFi users, or crypto exchanges. It can start through consumer fintech distribution. If a user can send USDC directly from an existing USD balance, with no separate wallet and no additional setup, the stablecoin becomes invisible infrastructure.

The key insight: stablecoins are moving from asset class to payment layer.

Major Stablecoin Issuers

Winners

Dollar issuers benefit from continued euro hesitation and new distribution channels such as Cash App. USDC gains credibility as a regulated, multi-chain settlement asset for consumer fintech and institutional payments.

Banks & Financial Institutions

Mixed Winners

European banks benefit from ECB protection against deposit leakage. However, banks that move slowly may lose payments relevance to fintech platforms and stablecoin-native infrastructure providers.

Regulators

Mixed

The ECB preserves financial stability and bank funding channels, but risks pushing innovation offshore. US regulators may gain more influence if dollar stablecoins become the default global settlement layer.

Corporates & Enterprises

Winners

Enterprises gain more practical options for faster settlement, cross-border payments, and treasury movement, especially as consumer and merchant-facing apps integrate stablecoins directly.

Retail Users & Crypto Natives

Winners

Cash App’s USDC integration reduces wallet complexity and makes stablecoin transfers easier for mainstream users. Crypto natives benefit from more liquidity across Solana, Ethereum, Polygon, and Arbitrum.

Developers & Protocol Founders

Winners

Multi-chain USDC distribution expands the addressable user base for apps building payments, remittances, on/off-ramp infrastructure, wallet abstraction, and programmable commerce.

Institutional Investors & VCs

Winners

The opportunity set expands beyond issuers into orchestration, compliance, custody, treasury APIs, FX routing, wallet infrastructure, and bank-fintech connectivity.

Infrastructure & Service Providers

Strong Winners

Demand should increase for KYC/KYT, reserve reporting, compliance automation, chain abstraction, custody, reconciliation, routing, and liquidity management.

DAOs & Governance Communities

Mixed

More mainstream stablecoin usage increases on-chain liquidity, but institutional adoption may concentrate around permissioned, regulated, or compliance-friendly networks.

Exchanges & Market Infrastructure

Mixed Winners

Exchanges benefit from deeper stablecoin liquidity, but consumer fintech apps and payment platforms could increasingly own the user relationship. Market infrastructure providers such as CCPs, FCMs, ATSs, and settlement venues may need to adapt to tokenized cash rails.

The ECB’s rejection of looser euro stablecoin rules reflects a fundamental concern: if stablecoin issuers can attract deposits at scale, they may pull liquidity away from commercial banks. That could raise funding costs, reduce lending capacity, and weaken the traditional banking system’s role in money creation.

This is why central bankers are uncomfortable with granting stablecoin issuers access to ECB funding. To them, that would give private issuers bank-like privileges without full bank-like supervision. It would also blur the line between payments innovation and monetary policy infrastructure.

Bruegel’s argument comes from the opposite perspective. If Europe imposes stricter stablecoin rules than the US, euro-denominated tokens may never scale. In that scenario, users, fintechs, exchanges, corporates, and institutions will continue using dollar stablecoins by default. The result is not less stablecoin adoption. It is more digital dollarization.

The ECB’s preferred path appears to be tokenized bank deposits, bank-led stablecoins, and eventually a digital euro. The Qivalis consortium, backed by 37 banks, is an important test case. If bank-led euro stablecoins can launch quickly and scale meaningfully, Europe may prove that stablecoin innovation can remain inside the regulated banking system.

But timing matters. A digital euro expected around 2029 may arrive too late if dollar stablecoins already become embedded into global payment flows, merchant settlement, remittances, and fintech wallets.

Cash App’s move shows how fast distribution can change the market. It does not require a new exchange account, a browser wallet, or deep crypto education. Users can move USDC from their existing USD balance across four major chains. That design choice matters because the winning stablecoin products may not look like crypto products at all.

The deeper trend is that stablecoins are becoming API-native money. They can move across apps, chains, wallets, merchants, payment processors, and financial institutions. Once embedded into consumer and enterprise platforms, stablecoins become less about speculation and more about settlement efficiency.

Stablecoins are increasingly separating from the broader crypto narrative.

For years, stablecoins were mainly used inside crypto markets: trading pairs, collateral, DeFi liquidity, and exchange settlement. That role still matters, but it is no longer the full story.

The next phase is about stablecoins as payment and treasury infrastructure.

Cash App’s USDC integration is a clear example. The user does not need to care whether the transfer happens on Solana, Ethereum, Polygon, or Arbitrum. The product abstracts away the blockchain and presents USDC as a simple digital dollar rail.

This is the direction the market is moving toward:

stablecoin in the background, user experience in the foreground.

For institutions, this distinction is critical. Stablecoins should not be evaluated only as crypto assets. They should be assessed as:

Settlement instrumentsfor faster value transfer.Treasury toolsfor programmable cash management.Cross-border payment railsfor reducing correspondent banking friction.Platform infrastructurefor fintechs, marketplaces, and enterprises.Digital dollar distribution channelsfor global users.

The more stablecoins are embedded into trusted applications, the less they feel like crypto — and the more they behave like financial infrastructure.

That is why the ECB’s concern is rational. Stablecoins are not just another token category. At scale, they can compete with parts of the banking system.

Despite the progress, several open questions remain:

Deposit displacement. If stablecoin issuers become large enough, they could draw balances away from banks, especially in markets where users prefer tokenized dollars over local bank deposits. This is the ECB’s core concern.Regulatory fragmentation. The US, Europe, Asia, and emerging markets are developing different models for stablecoin supervision. Issuers and platforms may route activity toward the most commercially attractive jurisdictions, creating uneven standards and regulatory arbitrage.Euro irrelevance in digital money. If euro stablecoins remain too small, Europe may preserve stability but lose influence over the next generation of digital settlement infrastructure.Platform concentration. If fintech apps, card networks, and large exchanges become the main stablecoin distribution channels, they may control user access, liquidity routing, and transaction data.Multi-chain operational complexity. Cash App’s four-chain USDC support is powerful, but it also requires strong infrastructure for compliance, monitoring, fraud prevention, liquidity management, and chain-level risk controls.Unclear economics. Stablecoin adoption is growing, but business models remain uneven. Revenue may come from reserves, transaction spreads, FX, merchant fees, API monetization, or treasury services. Not every participant in the stack will capture value equally.

Onigiri Capital (onigiri.vc), a US$50 million blockchain-focused investment fund, launched by Saison Capital, the venture arm of Japan’s Credit Saison. Onigiri Capital is on a mission to chart the next chapter of finance and invest in seed and Series A blockchain startups in stablecoins, payments, RWAs, DeFi and financial infrastructure. The fund’s strategy emphasizes connecting startups to Asia’s growing digital asset markets.

If you’d like to discuss or contribute to the next Institutional Lens, contact us at hi@onigiri.vc

Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.