What is a stablecoin? A banker's guide
- The simplest definition
- The wildcat banking analogy
- How it moves
- Why banks should care
- The semi-bearer asset
I keep getting asked this question by bankers. Not crypto people — bankers. People who run community banks, treasury operations, and compliance departments. They've heard the term. They know it's important. But nobody has explained it in a way that maps onto what they already know.
So here it is: a stablecoin is a wildcat banking dollar. And if you work at a bank, that comparison should immediately tell you everything you need to know — the opportunity and the risk.
The simplest definition
A stablecoin is an on-chain bearer asset, redeemable at par for a dollar.
Bearer meaning: if you hold it, you own it. As opposed to a registered asset — like a bank deposit — where your name is on the account and the bank's ledger determines ownership. A stablecoin doesn't care who's on the ledger. If you have the private key, you have the money.
Redeemable at par meaning: you can go to the issuer and get a dollar back. Not a market price. Not 99.87 cents. A dollar. At least, that's what the regulation requires. Whether every issuer actually delivers on that promise consistently is a different question — and a big part of why this space needs better infrastructure.
The wildcat banking analogy
If you're a banker, you've studied the wildcat banking era. Before the Federal Reserve, hundreds of banks issued their own notes. Each note was "backed" by assets of varying quality. Some notes traded at par. Some traded at a discount. Merchants carried newspapers listing which banks' notes to accept and at what price.
Stablecoins are wildcat banking dollars. They're bearer assets backed exclusively by Treasuries, repos, or deposits, contingent to some small constraints. The Genius Act — the legislation that's set to regulate stablecoins in the US — specifies the allowable collateral: Treasuries, repos, bank deposits (with a 15% reserve requirement), tokenized Treasuries, and other Genius Act-compliant stablecoins.
The diligence is simpler than what you do on a bank's mortgage book. Does BNY Mellon, or State Street, or Customers Bank have an account with the issuer's name on it that equals the total number of stablecoins outstanding? That's the check. Compare that to reviewing every mortgage, assessing credit ratings, evaluating duration risk. The regulatory posture for stablecoins was purposefully simplified so that diligence doesn't require a huge slush fund like the FDIC.
How it moves
This is where stablecoins diverge from anything in banking history.
A stablecoin transaction is atomic, remote, and programmable. You can send money to anyone on earth who has a wallet, without correspondent banking chains, without SWIFT, without settlement delays. The transaction either happens or it doesn't — there's no "pending" state that lasts three business days.
Consider two examples. Uber wants to do instant payout to drivers. In the traditional banking system, that's a 25-person team costing tens of millions of dollars to build. With stablecoins, you can build it in an afternoon. Or take Cursor — they want to offer pay-as-you-go pricing for their AI coding tool. Building that on traditional payment rails requires invoicing, tracking, and reconciliation infrastructure. With stablecoins, it's a simple on-chain transaction every time you use the product.
These aren't hypothetical. They're products that companies want to build right now and can't — because traditional payment infrastructure makes them prohibitively expensive or technically impossible.
Why banks should care
A good part of stablecoin success is that banks' core ledgers — the systems that track where dollars and cents are — were built in the 1970s and 80s. They're so behind on upgrading these ledgers that they can't even do simple things like send money from one user internally to another in less than two or three hours.
That's not a technology problem that more investment can solve quickly. These are deeply embedded systems with decades of dependencies. And stablecoins simply route around them.
Here's an example that should shock you: idempotency doesn't exist at the financial network layer. The Federal Reserve itself doesn't implement it. If you send a payment and the server returns an error, you don't actually know whether the money moved or not. Any idempotency has to be built at the application layer, on top of inherently unreliable rails. Banks have cutoff times that are hours shorter than actual network windows — not because of technology limitations, but because humans need to be in queues clearing false positive sanctions hits during business hours. This is the infrastructure that moves trillions of dollars.
Matt from Emprise Bank — a 100-year-old, family-owned community bank — sees both sides clearly. He believes stablecoins represent "some really interesting capabilities and potentially an existential risk to the banking system." That's a big spectrum. On one end: product enhancements, things banks can deliver better and more efficiently to their customers. On the other: an ecosystem growing so fast that it pulls addressable market out of the banking system entirely.
What threw Matt over the edge was when Google announced the Googleplex project. How does a community bank in Wichita compete with Google when they have the brand, the money, the data, the technology, the user interface? That question drove him into banking-as-a-service — and now into stablecoins. Not because he wants to. Because he has to.
The semi-bearer asset
There's a concept here that doesn't have a name yet, so I'll propose one: the semi-bearer asset.
Traditional bearer instruments — cash, for instance — are fully anonymous. If you hold the bill, you own it, and nobody knows who had it before you. Traditional account-based assets — bank deposits — are fully registered. The bank knows who owns every dollar, but transferring ownership requires the bank's cooperation.
Stablecoins sit in between. They're transferable without an intermediary's permission — like bearer instruments. But every transaction is recorded on a public blockchain — unlike bearer instruments. You can send a stablecoin to anyone without asking a bank's permission, but the entire history of that stablecoin's movement is visible to anyone who looks.
This is genuinely new. There were no existing Google results for "semi-bearer asset" when I started using the term. Stablecoins occupy a unique position between bearer instruments and account-based systems, maintaining traceability while providing the transferability benefits of bearer instruments. For compliance, this is actually better than both pure bearer instruments (untraceable) and pure account-based systems (slow to transfer). You get the speed of cash with the auditability of a bank ledger.
For bankers: think of a stablecoin as a cashier's check that anyone can verify, anyone can transfer, and the entire chain of custody is publicly recorded. That's what your industry is competing with.
Quotes
Stablecoins as bearer assets
Source: Sam Broner / Common Prefix — Jan 20, 2026
A stablecoin is ultimately an on-chain bearer asset. Bearer meaning if you hold it, you own it. As opposed to a registered asset where if your name's on it, she owns it, even if someone else has the piece of paper in his hand. And you can redeem that stablecoin at par for a dollar in some other form.
Wildcat banking dollars
Source: Better Money Co. & Emprise Bank — Feb 2, 2026
Sam: You're in banking, so I can make some more far-flung analogies here. It reminds me quite a bit of wildcat banking dollars. It's literally a bearer asset, contingent to some very small constraints, backed exclusively by Treasuries, repos, or deposits.
Bank ledgers from the 1970s
Source: Sam Broner / Common Prefix — Jan 20, 2026
A good part of stablecoin success is actually that banks' ledgers — their core systems, that track where dollars and cents are — were built in the 1970s and 80s, and they're so behind on upgrading these ledgers they can't even do simple things like send money from one user internally to another in less than like two or three hours.
Emprise Bank: existential risk or product enhancement?
Source: Better Money Co. & Emprise Bank — Feb 2, 2026
Matt (Emprise): I believe that there are some really interesting capabilities and potentially an existential risk to the banking system from it. So that's a big spectrum. It's everything from — there are some product enhancements, some things I think we can deliver better, more efficiently to our customers. But I also see an ecosystem that is growing rapidly. I think the customer adoption will come where that basically pulls addressable market out of the banking system into a separate ecosystem. And where do we participate? Is there a place for us to grow in that ecosystem as well?
What drove Emprise into digital
Source: Better Money Co. & Emprise Bank — Feb 2, 2026
Matt (Emprise): What really threw me over the edge was when Google announced the Googleplex project. It's like, how in the heck is little Emprise Bank going to compete with Google when they have the brand, the money, the data, the technology, the user interface. So that's when I said, we've got to get on the other side of the digital disruption.
The Uber and Cursor stories
Source: Zoom: The Better Money Company / Affinity — Jan 9, 2026
Sam: I invested in Cursor. It's very hard for them to build a pay-as-you-go product that works as you would expect. They have to instead do like an invoice and tracking and it's complicated. Uber wants to do instant payout to drivers. That's like a 25-person team. It cost them tens of millions of dollars to build. With stablecoins, you can build both of these things in, like, an afternoon. Lyft should offer instant payout to drivers, but they've had to defer that product feature because it's too hard and expensive.
No idempotency at the Fed
Source: Sam / Jamshed Vesuna (Increase) — Jan 22, 2026
Jamshed (Increase): Idempotency does not exist at the financial network layer. Literally — the Federal Reserve does not implement idempotency. Any idempotency is created between some abstracted application layer on top of those networks.
Sam: Why do banks have cutoffs that are much shorter than the actual network windows?
Jamshed: Because they're doing manual processes. Banks have to do sanction screening, limit checks, risk assessments. Let's say you send a transfer and it hits a sanctions list — it could be a false positive, but you have to have proof that you cleared that. So oftentimes banks have humans in queues clearing false positive hits. And it's hard to tell your staff to work till 9pm because that's when the networks are open. So they make cutoffs during human work hours.
What stablecoin collateral looks like today
Source: Sam Broner / Common Prefix — Jan 20, 2026
We are currently doing — stablecoins regulation is Treasuries, repos — a type of repurchase agreement for Treasuries — bank deposits, but the bank deposits have a different reserve requirement. So it's not zero. I think it's like 15%, considered very high in banking circles to have 15% reserve requirements for a certain category of business. And tokenized Treasuries. And Genius Act-compliant stablecoins. So you can also hold stablecoins to issue stablecoins. But ultimately, this can't be circular — it needs to be backed at some point, basically by Treasuries. Or deposits, I guess, but 15% reserve requirement.