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💬 Simon's Market Readout. Banks need stablecoins they can move through, without holding them for long. Simon explains how liquidity rules shape the case for a utility stablecoin.

📰 The Big Story. Alta wants to free up cash tied up in cross-border payments. Can a network co-founded by Airwallex’s CEO win its rivals’ trust?

🗞️ Things You Need to Know. OKXICE sets a launch date, Deutsche Bank goes live with custody, and DAX stocks trade 24/7 on 360X. Plus, Faro’s reported $270m commitment, Securitize’s move into loan financing, and Standard Chartered’s cash advance against tokenized fund redemptions.

At Blockworks DAS in London this week, I had a conversation with a very, very senior representative at one of the world’s largest banks.

They said to me, and I’m paraphrasing:

“Simon, I think I’ve finally come around to your way of thinking. We absolutely need a utility stablecoin. Because there’s no way banks are going to want to hold another bank’s tokenized deposit. The liquidity treatment makes it incredibly unattractive.”

To understand why, you need to understand the Liquidity Coverage Ratio (LCR). It’s a rule set by the Basel Committee on Banking Supervision, which sits at the Bank for International Settlements. It requires banks to hold enough high-quality liquid assets to cover their expected net cash outflows over a 30-day stress scenario.

How much a bank has to hold depends on how likely each type of deposit is to leave under stress. The stickiest deposits are typically consumer deposits, because people don’t move them very often. Stable retail deposits generally attract runoff assumptions of 3% to 5%, and less stable retail deposits start at 10%. Banks want lots of those, because they create modest liquidity requirements and provide a useful source of funding for lending and other activities.

Commercial and wholesale deposits attract higher assumptions. Qualifying operational deposits might attract 25%, while nonfinancial corporate deposits are generally 40%, or 20% if fully insured. Nonoperational deposits from other banks and financial institutions can attract 100%. In other words, the regulator assumes every dollar of that funding could leave during a 30-day stress event.

The Basel Framework also explicitly addresses what happens when one bank holds another bank’s tokenized deposit. Under SCO60.107, if a bank holds another bank’s qualifying tokenized deposit for operational purposes, it cannot recognize that holding as an inflow under the LCR. It also has to apply a minimum 50% Required Stable Funding factor under the Net Stable Funding Ratio (NSFR). For nonoperational holdings, the treatment can be more favorable, with a 15% Required Stable Funding factor and potential recognition of LCR inflows.

So it’s not accurate to say every tokenized deposit automatically carries a 100% LCR requirement. The treatment depends on which bank you’re looking at, the purpose of the holding and the characteristics of the instrument. But the incentive is clear. Banks have a regulatory and economic reason to avoid accumulating large balances of another bank’s tokenized liabilities.

Stablecoins aren’t exempt from this problem either. Under SCO60.108, qualifying stablecoins held on a bank’s balance sheet generally cannot count toward LCR inflows, and they attract a minimum 85% Required Stable Funding factor under the NSFR, subject to specified exceptions. You don’t want to be stuck holding a stablecoin on your balance sheet either. You want to get in and out as quickly as you can.

This is the important bit. A stablecoin can be extremely useful as a transient settlement asset, even if it’s unattractive as something a bank holds for any length of time.

So the ideal scenario is a stablecoin used for transit between two tokenized deposits. A tokenized deposit at Bank A (let’s call it HSBC) is converted into a utility stablecoin. The stablecoin travels across the network and is then converted into a tokenized deposit at Bank B (Citi, or whoever). The receiving bank ends up with a deposit on its own books rather than holding a liability issued by HSBC.

Assuming the infrastructure supports reliable, at-par conversion with sufficient liquidity, that’s an almost ideal scenario. You minimize the time either institution holds an asset with unfavorable regulatory treatment.

Put all of this together. Banks don’t necessarily want to hold each other’s tokenized liabilities. Stablecoins are also relatively unattractive to hold on a bank balance sheet. And there is now infrastructure that can let participants move between those instruments. Suddenly, the business case for a utility stablecoin becomes pretty compelling.

It’s with that lens that I want you to consider Project Faro. Twenty-one financial institutions have reportedly committed around $270 million to cover five years of operating costs for a new stablecoin venture. But each of those institutions has a very different business model, and potentially a very different understanding of what it wants from the project.

To me, Faro looks a little like a stablecoin the banks collectively own so they have a hedge. And it’s a very expensive hedge.

What I’ve outlined is, I think, the real business case for a utility stablecoin. But a utility stablecoin should probably be a true utility: broadly accessible, neutrally governed and designed for interoperability, rather than controlled by a relatively small group. That’s going to be the really interesting challenge.

Now, I obviously have some proximity to Open USD, so take everything I say with a grain of salt. But if I’m trying to be as objective as I can, I think its approach is philosophically much more interesting.

Open USD doesn’t charge mint and burn fees. It’s designed to let participants get in and out at par without artificial volume limits. The economics come from reserve income, most of which is shared with participating partners, less a management fee. Network transaction costs still exist. But the design encourages money to move through the system without charging participants simply for entering or exiting it.

Given the regulatory economics above, that matters. The utility stablecoin banks need is one they can get into, move across a network and get out of as quickly and cheaply as possible.

This works especially well in markets without an integrated, real-time gross settlement system operating around the clock, where there’s no equivalent of FedNow, or access to Fedwire, CHAPS in the UK or T2 in Europe. Even where those systems exist, they don’t necessarily provide seamless, 24/7 settlement across borders, banks and currencies. That’s the challenge everywhere we rely on correspondent banking.

Synchronizing tokenized deposits across banks risks rebuilding correspondent banking, just available 24/7. That’s okay for the correspondent banks. But what about everybody else? The fintechs, the payment service providers, the merchants, the businesses that don’t have direct access to these systems or relationships with every bank in every market. They need a way to move money between institutions without having to rebuild the whole correspondent banking model.

That’s the gap in the market. And I think we’re on the cusp of building it.

The more I think about this, the more convinced I am that the winning utility stablecoin will be the one that makes it easiest for money to move between the systems that already exist.

The regulatory treatment actually reinforces that argument.

The goal should be to minimize the time money spends in transit, the cost of moving it and the balance sheet exposure created along the way.

That’s what makes a utility useful.

And it’s why the next generation of payment infrastructure could end up looking very different from the correspondent banking networks we have today.

A cross-border payment can reach its recipient in seconds because the provider put cash in the destination market days earlier. Alta, which raised $47.5m this week, wants its first product to shrink that cash buffer. Its first design partner is Airwallex, whose CEO, Jack Zhang, co-founded Alta, according to Alta and its lead investor, Index Ventures.

Would a payment firm that competes with Airwallex trust Alta with the same flows?

Zhang argued stablecoins couldn’t beat Airwallex’s G10 costs. Alta goes after the cash buffer those costs leave out. When we covered Airwallex’s stablecoin hiring in July 2025, Zhang’s point was that Airwallex could already move G10 money in real time at a cost below one basis point. That figure tells a treasurer what it costs to move the money. It says nothing about the cash parked in the destination market so payouts can go out before the funds arrive. Alta’s first product targets that buffer, funding payouts just in time from tokenized assets.

Airwallex’s own position moved quickly. As late as September 2025, its blog argued stablecoins “can’t yet solve cross-border payments at scale.” By late December, Wang says, he and Zhang were discussing a new kind of financial infrastructure.

A smaller balance on the payment firm’s books doesn’t prove the corridor needs less cash. Even if dollars arrive onchain in seconds, the payout partner may still need a local cash buffer over a holiday weekend. If Airwallex handles the fiat payout, it or its local partner may hold that buffer. The test is how much cash all parties need before and after Alta, at the same payout reliability. Yield on idle cash makes the buffer cheaper to hold, which is a separate benefit from needing less of it. Alta has published no corridor figures yet, and an Airwallex corridor is the obvious place for the first one.

Neutrality is hard to sell when a co-founder runs a competitor. In the release, Zhang says institutions need infrastructure that is “private, neutral, regulated, and connected to global fiat rails.” If Airwallex is persuading its customers to use Alta, as Fortune reports, a rival would be adopting infrastructure its competitor promotes. The release describes how Alta plans to protect transaction data. It leaves open who governs the chain, who runs the validators and who sets access and pricing.

Ownership can change after a customer signs. Visa picked BVNK earlier in January to help power stablecoin prefunding for Visa Direct, and Mastercard completed its purchase of BVNK on August 3. The provider Visa picked, now belongs to Mastercard. With Alta the affiliation is visible on day one, so a rival can negotiate up front for its own payout partners, direct payout terms and the right to leave. Airwallex gains from any cash Alta frees up on its own corridors, even if rival firms sit out.

If a rival runs live treasury flows on Alta with a payout partner it chose itself, Alta will have become rails Zhang’s own competitors trust, a harder result to win than any corridor saving.

OKXICE, ICE’s joint venture with OKX, will open to eligible US customers on 23 November. Since our 22 October coverage, CoinDesk has tallied objections from 56 of the 62 companies on the original list. Direxion’s 59 ETFs make up most of the expected launch lineup. Separately, Ava Labs says Avalanche will supply the clearing ledger for NYSE’s planned venue. That venue still needs regulatory approval, so ICE’s first route to tokenized US stocks is set to open with a lineup dominated by ETFs. (Read more here)

Deutsche Bank’s digital asset custody service went live for paying clients on 11 November, supporting bitcoin, ether, USDC, EURC and EURAU. AllUnity, which issues EURAU, is part-owned by Deutsche Asset Management, formerly DWS. The same day, the bank and its asset manager agreed to explore tokenized money market funds, crypto ETCs and stablecoins on the custody platform. The asset manager says it plans to launch a tokenized money market fund, giving Deutsche’s new custody service a potential mandate from within the group. (Read more here)

Payward has launched xStocks for more than 200 UK and EU equities. All 40 DAX constituents now trade around the clock on 360X, a Deutsche Börse affiliate. Each token is backed one-for-one by the underlying share and gives holders economic exposure without voting rights. Deutsche Börse is distributing tokens of its home benchmark in a structure that would be ineligible under the SEC exemption OKXICE uses, which requires tokenized stocks to preserve the underlying shares’ voting and dividend rights. (Read more here)

Bloomberg reports that backers of Project Faro, the dollar stablecoin venture we covered on 3 September, have committed about $270 million to cover five years of operating costs. The report names Goldman Sachs, Citi, Santander and Deutsche Bank among the backers and says the venture is expected to incorporate in the US. The consortium has yet to confirm either detail. Its September announcement targeted issuance in the first half of 2027. The next sign of progress is a member bank naming a payment or settlement flow it plans to route through Faro. (Read more here)

Securitize agreed on 9 November to buy River One and expects the deal to close this quarter. River One’s platform arranges warehouse financing, the credit lines lenders use to fund loans while assembling a pool of assets. Securitize already issues and services tokenized assets, so the deal moves it into financing those pools before they are packaged. Securitize says River One is still developing relationships with stablecoin capital providers and lists the early stage of its business and technology among the deal’s risks. (Read more here)

In a pilot announced on 10 November, Standard Chartered Hong Kong gave Ant International access to cash before a redemption from a tokenized money market fund had settled. The facility lets a treasurer make a payout while the fund is still processing the redemption. For companies weighing whether to keep operating cash in tokenized funds, the economics depend on how much of the fund’s yield survives the cost of getting cash early. Standard Chartered did not disclose the pricing. (Read more here)

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