According to Experts.news, the largest banks are beginning to move traditional bank money onto the blockchain, creating a potential competitor to the USDT and USDC stablecoins. In the UK, Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest, and Santander are already testing tokenized deposits, while in the U.S., Citi is simultaneously building infrastructure that allows corporate clients to work with stablecoins via Coinbase.
In effect, two models for the future of digital money are taking shape. The first involves the use of independent stablecoins issued by companies such as Tether and Circle. The second transfers existing funds from bank accounts onto the blockchain.
British banks took an important step in this direction on September 24, 2026. The industry association UK Finance announced the completion of the first real-world customer transactions involving tokenized deposits in pounds sterling as part of the Great British Tokenized Deposit (GBTD) project.
Participants in the project include Barclays, HSBC UK, Lloyds Banking Group, Monzo, Nationwide, NatWest, and Santander.
The banks conducted two live mortgage refinancing transactions. The tokenized funds were automatically blocked until the terms of the agreement were met, after which the payment was processed without any additional manual steps.
Another test involved a purchase on a consumer marketplace. It demonstrated the ability to transfer tokenized bank funds between customers of different banks via a shared infrastructure.
The main difference between this model and USDT or USDC lies in the legal nature of the money.
A tokenized deposit is not a separate cryptocurrency. It is a digital representation of regular money that the customer already holds in a bank account.
If there is 1,000 GBP in a bank account, the bank can theoretically represent this amount in the digital infrastructure as a corresponding amount of tokenized pounds. In this case, the bank continues to bear the obligation to the customer, and the funds themselves retain the legal status of a bank deposit.
A stablecoin works differently.
USDT is issued by Tether, and USDC by Circle. The user effectively exchanges regular money for a digital token, the value of which the issuer commits to maintaining at the level of the corresponding fiat currency through reserve assets.
Therefore, a tokenized bank deposit and a stablecoin may look the same on the blockchain, but economically they are different instruments.
Banks have a significant advantage—their existing system of trust, regulation, and customer relationships.
UK Finance explicitly states that tokenized deposits must retain the regulatory guarantees of traditional bank deposits while acquiring the properties of digital money—programmability, faster settlements, and the ability to automatically execute payments once specified conditions are met.
It is precisely this programmability that could become one of the technology’s main advantages.
For example, when purchasing real estate, funds can be automatically transferred to the seller only after the transaction has been registered. Payment to a supplier can be made after confirmation of delivery. In financial transactions, the transfer of a security and payment for it can occur almost simultaneously.
As a result, the number of intermediate transactions is reduced, as is the risk that one party will fulfill its obligations while the other does not.
The next phase of the British project will involve using tokenized deposits to settle payments for digital assets. GBTD participants plan to link customers’ tokenized funds to digital securities.
In this way, banks are attempting to create within the regulated financial system the opportunities that blockchain and stablecoins initially offered outside of it.
However, it is still too early to write off USDT and USDC.
The scale of the existing stablecoin market is incomparable to the banks’ experiments. According to CoinGecko data as of October 3, the market capitalization of USDT alone is approximately $184 billion, while that of USDC is approximately $74 billion.
The total stablecoin market already exceeds $300 billion.
Stablecoins are particularly strong in international money transfers. They operate around the clock, can move between different blockchains and platforms, and do not require the sender and recipient to be served by the same bank.
This is where a fundamental problem arises for the traditional banking system.
If a significant portion of international payments shifts to USDT, USDC, or other stablecoins, banks will have to compete for payment flows that previously passed almost entirely through the banking infrastructure.
Furthermore, a massive shift of funds from bank deposits to stablecoins could potentially reduce banks’ deposit base, which is used to lend to the economy.
The Bank of England is explicitly taking this risk into account as it develops new regulations for digital currencies.
In June 2026, the Bank of England published draft rules for systemic stablecoins. The regulator proposed a model under which at least 40% of a systemic stablecoin’s reserves must be held directly at the Bank of England, while up to 60% may be invested in short-term UK government bonds.
Restrictions on the amount of stablecoins that individual users and companies can hold are also being considered for a transitional period.
However, the Bank of England does not propose banning stablecoins. On the contrary, its strategy envisions the coexistence of several types of digital currencies.
In the future, traditional bank deposits, their tokenized versions, regulated stablecoins, and a potential central bank digital pound could all be used simultaneously.
Therefore, real competition is developing not so much between banks and cryptocurrencies as between different models of digital money.
Citi’s strategy is illustrative in this regard.
On September 28, Citi and Coinbase announced an expansion of their partnership, which effectively combines traditional banking infrastructure with stablecoins.
Coinbase has selected Citi’s Virtual Account Wallet to power Coinbase Virtual Accounts. Incoming traditional currency can be automatically converted into stablecoins.
Conversely, Citi’s corporate clients will be able to accept payments in stablecoins via the Spring by Citi payment platform and the Coinbase Payments infrastructure.
Coinbase accepts the digital payment and facilitates its conversion, after which Citi processes the settlement in traditional currency as a bank.
This is particularly important for corporate clients: the company gains the ability to accept stablecoins without having to build its own infrastructure for storing and managing crypto assets.
According to Citi, this solution potentially gives its corporate clients access to over 150 million stablecoin holders worldwide.
Thus, major banks are adopting different strategies.
British banks such as Barclays, HSBC, Lloyds, NatWest, and others are creating tokenized versions of their own deposit funds.
Citi, meanwhile, is developing a banking blockchain infrastructure and building a bridge between traditional money and existing stablecoins.
In the long run, these models may not displace one another but rather share the market.
Tokenized deposits have a natural advantage within the banking system—for payroll, corporate payments, mortgages, lending, and securities transactions.
Stablecoins are stronger in areas where round-the-clock cross-border transfers, interoperability between different platforms, and the ability to freely move digital money between blockchains are particularly important.
But for banks, this issue is becoming strategic. If they fail to migrate deposits and payments to a programmable digital infrastructure, a significant portion of the new market could go to Tether, Circle, Coinbase, and other companies in the crypto industry.
That is why competition between USDT, USDC, and tokenized bank deposits could become one of the key drivers of the global financial system’s development in the coming years.
Sources: UK Finance, Bank of England, Citi, Coinbase, CoinGecko.
According to Fixygen, the cryptocurrency market ended the week of September 28 through October 2 mostly in positive territory: Bitcoin (BTC) once again surpassed the $86,000 mark, Ethereum (ETH) approached the $2,750 mark, and investors shifted their focus to the outlook for U.S. interest rates and the continued inflow of institutional capital into digital assets.
As of Friday morning, Bitcoin was trading at around $86,500, having risen nearly 3% over the previous 24 hours. During trading, prices approached $87,000. For comparison, on September 25, BTC was trading at around $84,400.
Ethereum traded in the range of $2,740–$2,750 on Friday, compared to approximately $2,670 at the start of the week.
Cryptocurrencies were supported by a decline in expectations regarding further monetary tightening by the U.S. Federal Reserve. Following the release of U.S. labor market data, which came in weaker than expected, Treasury yields fell, and market estimates suggest the likelihood of a Fed rate hike in October has decreased significantly.
The liquidation of short positions served as an additional driver of growth. As Bitcoin rose to $87,000, the volume of liquidations in the cryptocurrency market exceeded $300 million over the course of a single day.
This week marked a continuation of a strong third quarter for cryptocurrencies. From July through September, Bitcoin rose by more than 40%, and Ethereum by more than 70%, although both of the largest cryptocurrencies remain below their all-time highs set in 2025.
Amid the market recovery, Citigroup raised its 12-month price forecasts for the largest cryptocurrencies. The forecast for Bitcoin has been raised to $113,000 from the previous $82,000, and for Ethereum to $3,028,000 from $2,024,000. The bank attributes the revision to increased activity in the cryptocurrency market, changes in the macroeconomic situation, and the resumption of capital inflows into cryptocurrency ETFs.
A key development this week was the continued convergence of the traditional banking system with stablecoins. On September 28, Citigroup and the U.S. crypto exchange Coinbase announced an expansion of their partnership in the field of digital payments.
The companies intend to integrate Citi’s banking infrastructure with Coinbase’s cryptocurrency payment infrastructure. Corporate clients will be able to use solutions for accepting payments in stablecoins and converting them into traditional currencies. The partnership is primarily focused on international settlements and payments operating 24/7.
Another trend of the week was the continued development of rules governing how institutional investors handle crypto assets.
On October 1, the U.S. Securities and Exchange Commission (SEC) proposed a new framework for the custody of digital assets by investment advisors and regulated funds. This proposal aims to establish a specific regulatory framework for the custody of cryptoassets and to define the conditions under which financial institutions may hold digital assets.
Thus, the U.S. regulator is gradually shifting from regulating the crypto market primarily through enforcement to establishing specific rules for digital assets.
At the same time, regulations in the United Kingdom are changing. On September 30, the Financial Conduct Authority (FCA) began accepting applications from cryptocurrency companies wishing to operate under the UK’s new regulatory regime for digital assets.
Companies must submit their applications by February 28, 2027. The UK’s new cryptocurrency market regulatory framework is set to take effect in October 2027.
The market’s attention remains firmly focused on the tokenization of traditional financial assets. One of the key developments in late September was an agreement between the New York Stock Exchange and Blockchain.com to expand access to tokenized U.S. stocks and ETFs.
The parties signed a memorandum of understanding that provides for the possibility of granting Blockchain.com clients access to tokenized securities traded on a dedicated digital platform operated by the NYSE. The project’s implementation will depend on obtaining the necessary approvals from regulatory authorities.
Another notable change is taking place in the stablecoin market. Tether is preparing to bring USDT back into the Bitcoin ecosystem more than a decade after the token effectively left it. This is expected to happen using the new RGB protocol, which allows for the issuance of digital assets based on the Bitcoin network.
At the same time, the stablecoin market continues to face regulatory and sanctions-related risks. A report published this week by the U.S. Senate Permanent Subcommittee on Investigations highlighted the widespread use of USDT by entities linked to Iran to circumvent sanctions. In response, Tether announced its cooperation with U.S. authorities and reported that it had frozen nearly $550 million in USDT linked to Iran in 2026.
Thus, the week highlighted several trends that are currently shaping the crypto industry: the recovery in the value of major digital assets, the return of institutional demand, the integration of stablecoins into traditional banking payments, and the gradual establishment of a comprehensive regulatory framework in the U.S. and the U.K.
In the coming weeks, key factors for the market will remain the Fed’s decisions, the dynamics of U.S. Treasury yields, capital flows into cryptocurrency ETFs, and further U.S. regulatory decisions.
Provided demand remains strong, the $87,000–$90,000 range remains the next key level for Bitcoin. However, cryptocurrencies’ high sensitivity to interest rates and macroeconomic data poses a risk of sharp corrections following strong growth in the third quarter.
Sources: Reuters, SEC, FCA, Coinbase, CoinDesk.
According to Fixygen, Citi, one of the largest U.S. banks, and the cryptocurrency platform Coinbase have expanded their partnership in the areas of corporate payments and stablecoins.
Coinbase announced this on September 28.
As part of the partnership, Coinbase has selected Citi’s Virtual Account Wallet technology for its Coinbase Virtual Accounts system. This will allow clients to receive traditional funds into virtual accounts, with the proceeds then automatically converted into stablecoins.
At the same time, Coinbase’s payment infrastructure is being integrated with Citi’s corporate service, Spring by Citi.
This will enable Citi’s institutional clients to accept payments in stablecoins, using Coinbase’s infrastructure for processing digital assets and Citi’s banking infrastructure for traditional settlements.
This partnership signals a further convergence of traditional banking payments and public blockchain infrastructure.
For businesses, this model allows them to use stablecoins as a payment instrument without having to build their own infrastructure for storage, conversion, and interaction between bank accounts and the blockchain.
At the same time, Citi is developing its own tokenized payments infrastructure. In September, the bank also announced that it had conducted real dollar transactions via the Swift blockchain ledger in collaboration with First Abu Dhabi Bank and OCBC.
The expansion of the partnership between Citi and Coinbase is taking place as the U.S. is developing a separate regulatory framework for payment stablecoins and the Federal Reserve is drafting detailed requirements for their issuers.
According to Fixygen, the volume of tracked cross-border transfers in stablecoins rose by 77.5% over the latest reporting period—from $124.2 billion to $220.3 billion, according to data from the Chainalysis Geography of Cryptocurrency Report 2026, published on September 23.
The average monthly volume of cross-border transactions more than doubled—from approximately $11 billion in January 2025 to $24 billion in June 2026.
Chainalysis emphasizes, however, that the actual volume of international stablecoin transfers is likely significantly higher. The statistics include only transactions for which the company can identify both the sender’s and recipient’s countries.
A distinctive feature of the market is the relatively small size of transactions. The average cross-border transfer is about $3,000, which, according to analysts, does not correspond to typical institutional transactions.
This pattern points to the growing practical use of stablecoins—for paying suppliers, sending money between countries, and transferring savings out of unstable national currencies.
At the same time, the geography of fund flows is changing. The largest quarter of cross-border routes accounts for 96.1% of the value of transfers, but Chainalysis has observed the rapid emergence of new payment corridors.
During the period under review, 4,708 new cross-border routes emerged, through which a total of $2.64 billion was transferred. The world’s largest stablecoin, USDT, plays a significant role in these transactions.
Growth continues even amid weak conditions in the cryptocurrency market. The total volume of funds flowing into cryptocurrency services decreased by 4.3%—from $9.3 trillion to $8.9 trillion—while the inflow of stablecoins to these services increased by 5.3%.
Peer-to-peer transactions are growing even faster. The volume of transfers between personal wallets within individual countries more than quadrupled—from $56.8 billion to $228.7 billion.
According to Chainalysis, stablecoins are becoming less dependent on speculative cycles in the crypto market and are gradually forming an independent international payment infrastructure.
U.S. Federal Reserve has presented two draft rules that establish a new regulatory framework for the issuance of payment stablecoins by U.S. banks and other organizations under the Fed’s supervision.
The drafts were published on September 24, 2026, as part of the implementation of the previously enacted GENIUS Act. The Fed has opened them for public comment.
The first draft requires that issued payment stablecoins be fully backed by eligible reserve assets.
Such reserves may include, in particular, short-term U.S. Treasury bonds and other high-quality liquid assets.
The Fed also proposes establishing standardized capital requirements for issuers, which must cover the credit and operational risks associated with the issuance of digital money.
Separate requirements are proposed for companies that provide custody services for stablecoin reserve assets. The regulator also intends to clarify which stablecoin transactions banks under its supervision are permitted to conduct.
The second draft regulates the procedure for banks to obtain authorization to issue payment stablecoins.
A bank intending to launch its own stablecoin will be required to submit a business plan, financial information, and other documents to the regulator. The draft also outlines the procedure for reviewing applications, handling appeals, and making final decisions.
Federal Reserve Board member Michael Barr stated that the regulatory framework must ensure that a stablecoin can be reliably redeemed at face value even under conditions of financial market stress or if the issuer itself faces difficulties.
According to him, restrictions on the structure of reserves and uniform capital requirements are important elements of the new system; however, the final rules will require further refinement following public comment.
The comment period for the drafts will end 60 days after their publication in the Federal Register.
The rules are being developed amid the rapid growth of stablecoins’ role in international payments. According to a recent Chainalysis study, the volume of cross-border transfers in stablecoins in the 12 months ending in June 2026 increased by 77.5%—from $124.2 billion to $220.3 billion.
At the same time, the average transaction size was approximately $3,000, which, according to Chainalysis, indicates that stablecoins are being actively used for money transfers, payments to suppliers, and the movement of personal savings—not just for institutional trading.
The introduction of full-fledged federal regulation could be one of the key steps in integrating stablecoins into the traditional U.S. financial infrastructure.
Tether, the issuer of the world’s largest stablecoin, USDT, has launched StableFund, a private credit investment fund, in partnership with the asset management firm Fasanara Capital, according to Fixygen.
The fund’s initial capital amounts to $400 million, provided by Tether and Fasanara. Going forward, the partners intend to raise up to $3 billion in institutional capital from third-party investors.
StableFund will provide loans primarily to small and medium-sized enterprises that face difficulties in securing bank financing. According to the project organizers’ estimates, the global funding gap for small and medium-sized businesses amounts to approximately $5.7 trillion.
Tether and Fasanara estimate the global private credit market itself at roughly $3 trillion, and it could grow to $5 trillion by 2029.
A key feature of the project is the use of stablecoin infrastructure to finance companies in the real economy. This means that USDT is gradually moving far beyond its traditional role as a settlement instrument for crypto exchanges.
For Tether, this marks a continuation of its business diversification. The company is already investing in government bonds, gold, Bitcoin, energy projects, artificial intelligence, and telecommunications.
The launch of StableFund demonstrates a new market trend: the largest stablecoin issuers are beginning to transform from infrastructure companies in the crypto sector into full-fledged financial intermediaries.
For USDT itself, this also potentially creates an additional source of real demand—the use of the stablecoin not only for crypto trading and international money transfers, but also for business lending.
