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💬Simon's Market Readout – Block files for a second bank charter, this one built for stablecoins. Two banks, no bank holding company, and 59 million Cash App customers behind it.

📰 Stories You Can't Miss: Singapore's Big Three go live on Swift's tokenized deposit ledger; Circle pays $400M to own one of its own CPN endpoints; Turnkey turns swaps and yield into fee lines for fintechs; and Nasdaq puts $100M and its surveillance stack into Kraken's parent.

Simon's Market Readout 💬

Block just applied for a second bank charter.

This one is for stablecoins.

Square Financial Services, the first one, takes deposits and lends. Builders Bank & Trust, the new one, would hold bitcoin, execute trades, and settle stablecoins. It would be OCC-supervised, uninsured, and based in Sioux Falls. It would not take bank deposits or make loans.

Day-one activities, from the filing:

Cash App shipped USDC in May. Now stablecoin settlement is sitting inside a bank-charter application.

That tells you where Block sees this going.

Three things this would give Block:

1. A custody bank with room to grow.

The filing says “institutional-grade fiduciary custody” and “expand into a broader customer base.”

Cash App already holds bitcoin for customers. A national trust bank would put that custody business inside a federally supervised institution, with room to serve customers beyond its existing retail base.

The CEO would be Lee Woolley, formerly of Northern Trust and BNY Mellon. A custody banker, hired to run a custody bank.

2. A federal home for stablecoin settlement.

Today, Block operates through a collection of state money transmitter and virtual currency licences. Builders would bring certain custody and related digital-asset activities into one federally supervised entity.

Cash App's fiat payments would still rely on state licences. So this does not make the whole state patchwork disappear.

But do not underestimate the attraction of federal preemption for the activities moving into the bank. Answering to 50 states with different crypto rules is PAINFUL.

If you want to build a bigger stablecoin business, having a single federal entity to run those activities through makes a lot of sense.

3. Digital-asset custody separate from the insured lending bank.

Square Financial Services would keep taking deposits and lending. Builders would house the proposed digital-asset custody and settlement business.

Separate charters. Separate regulators. Different risks.

Block gets a dedicated bank for digital assets while keeping that business outside its FDIC-insured industrial bank.

In March, Dorsey said, “I don't like that we're going to support stablecoins, but our customers want to use them.”

September's charter application lists stablecoin settlement as a core activity.

Customers asked for stablecoins. Block shipped them. Now it wants a dedicated federal home for that business.

And this is a consumer app with 59 million monthly transacting customers. That is a serious distribution base to put behind the infrastructure.

Honestly, this one took me by surprise, but it makes so much sense as you look at it.

If you want to be in stablecoins, better to have a single federal entity to do that with.

Singapore’s three major domestic banks are all now transacting on Swift’s tokenized deposit ledger.

The next test is whether the same infrastructure starts carrying domestic interbank money.

Singapore is where Swift’s tokenized deposit POC starts to look like a network.
All three major domestic banks are in the Swift 17-bank cohort. OCBC and DBS have transacted in USD with Citi, while UOB has transacted in HKD with HSBC. SGD and more counterparties are scheduled next.

In February, we wrote that interbank interoperability was the blocking issue for tokenized deposits. The deposits are still separate bank liabilities, but Swift is now showing that obligations between them can be matched and netted through one shared layer. Singapore is the clearest sign so far of that model being used repeatedly within one banking market. Corporate treasuries are on it too. Siemens has moved its own cash from a euro account at BNP Paribas to a sterling account at HSBC.

24/7 availability is a funding decision as much as a ledger feature.
New York's dollar settlement day opens after Singapore's has closed, and over a weekend neither is open at all. Swift can coordinate the tokenized deposit payment on Saturday, but final settlement still uses existing models, including RTGS.

DBS and Citi have not disclosed how the weekend USD leg was funded, how much liquidity was pre-positioned, or when the underlying obligation finally settled. For a treasury team, those details decide whether always-on payments free working capital or move the funding requirement elsewhere.

The next test is domestic SGD.
UOB plans SGD and USD transactions with other partner banks in September. It has also said domestic transactions will test whether the ledger can support round-the-clock interbank payments. Swift's POC ends in December.

If UOB moves SGD against another bank in Singapore before then, Singapore would become the first disclosed market in the POC where Swift's ledger has carried domestic interbank money rather than another cross-border corridor. If that counterparty is DBS or OCBC, the Big Three will have transacted with each other for the first time.

Circle has agreed to pay $400 million for a company that already sits inside its own payments network.

Tazapay was a CPN design partner and joined mainnet as a licensed Beneficiary Financial Institution, converting USDC into fiat for local payout. Circle is now bringing that endpoint in-house.

In the sixteen months since CPN launched, Circle has moved from network operator to managed payments provider. Tazapay is where it starts owning one of the regulated endpoints.

CPN launched in 2025 connecting financial institutions. Circle’s Managed Payments let PSPs stay in fiat while Circle handled USDC settlement and compliance. Digital Asset Accounts added custody and onboarding. Now, Tazapay brings the local banking relationships and payout rails that terminate the payment.

Circle promises it never competes for its partners' customers. It is buying one.
Circle's Digital Asset Accounts page still reads: "As a neutral infrastructure provider, we never compete for your customers." Once this deal closes, that promise has to coexist with Circle owning a customer-facing PSP inside CPN.

The concern for an independent member is not that Tazapay poaches clients. Circle governs CPN, sets its technical and operational standards, controls how beneficiary institutions are ranked in quotes, and holds the corridor and pricing data every quote request generates. A PSP now has to be comfortable routing executable pricing through infrastructure run by a competitor's parent.

Diligence shifts to three contractual questions.
Who can access network data, what restrictions apply to affiliate use, and whether an affiliated BFI operates under the same commercial rules as independent members.

This is the tension Open USD was designed around.
Open USD gives partners the earnings from its reserves, less a management fee, and Open Standard says its board will be made up of Open USD partners. Its board is drawn from partners and reserve earnings flow to distributors, because a for-profit issuer earning on float has every incentive to climb the stack until it competes with the firms distributing it (we covered this in July). Circle's own product page is where that tension is now written down.

Timing gives members some leverage.
Circle says CPN monetisation starts in H2 2026. The acquisition is not expected to close until 2027. Circle will be pricing the network before it owns a participant in it. Whatever it agrees with the 175 enrolled institutions (while Tazapay is still independent) becomes the benchmark after close.

If those terms aren’t nailed down before close, members have a lot less leverage afterwards.

Turnkey's Earn launch puts three parties inside one customer product. Turnkey takes a share of the yield, a curator runs the lending strategy, and the fintech that switched it on carries the licensing and disclosure obligations.

The economics are shared, but the customer obligation still sits with the fintech.

Non-custody answers the custody question. It does not answer who owns the product.
Coinbase and Robinhood already distribute this kind of product directly to customers, and both made governance decisions that Turnkey's clients will now have to make themselves.

Coinbase names Steakhouse Financial as curator of its Morpho-based USDC vaults, live since September 2025, and when it added a higher-yield tier using Ethena-linked collateral in June this year, it disclosed that Coinbase Ventures holds an investment in ENA. Robinhood also names Steakhouse as curator and bought Lloyd's of London and RELM cover for specified cyber and smart-contract losses. The policy covers Robinhood, not individual users, although Robinhood may use proceeds to compensate affected customers. Each of those is a product-governance call made by a company that owns the customer relationship.

Turnkey sits one layer lower, and that moves the governance work downstream. A fintech can add onchain lending without building protocol integrations, transaction routing and fee infrastructure itself. Turnkey supplies the vault catalog, transaction flow and fee wrapper, and can earn a share of yield. The fintech decides which products its customers see and carries the licensing and disclosure obligations.

The competitive comparison is Fireblocks. Galaxy's vaults were already reaching institutional allocators through Fireblocks. Turnkey is another distribution pipe into the same Galaxy strategies. The difference is positioning. Fireblocks leads with approval workflows, policy controls and treasury governance. Turnkey's new pitch leads with embedded distribution and configurable fee economics.

If curated onchain lending becomes a standard fintech feature, every integrator has to answer who chose the vault list and what they earn from it. Turnkey's docs already put much of that answer on the integrating company. Anyone evaluating Earn should read the fee schedule and the responsibility clause as one document.

Nasdaq is turning its March tokenized-equity partnership with Payward into an equity relationship, with market surveillance now part of the deal.

Payward is putting Nasdaq's surveillance technology across its trading venues, crypto included.
When Nasdaq Equity Tokens (NETs) launch next year, Payward will monitor those markets with a surveillance stack already used across regulated exchanges. For a company that wants to be infrastructure for stock exchanges, that credibility may be worth more to Payward than the $100 million.

Payward will soon put three forms of the same Nasdaq-listed share in front of customers. Kraken Securities sells the shares themselves. xStocks, issued by Backed/Payward, provide economic exposure without ownership of the underlying shares. NETs are Nasdaq's issuer-led version, designed to preserve shareholder rights. We asked in April whether Payward could stay neutral while serving competing exchange groups. Now it owns one tokenization model while distributing Nasdaq's alternative.

If NETs launch on schedule in Q2 2027, watch where the flow concentrates. Kraken’s own book, onchain xStocks liquidity, or partner venues such as 360X and LSE 24.

Payward is on every one of those routes. Nasdaq wants NETs to win liquidity; Deutsche Börse and LSEG want that liquidity on their own venues. That is where Payward’s neutrality gets tested.

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