Major U.S. banks are bypassing established stablecoins and creating their own digital currencies, a shift that reveals institutional priorities around control and infrastructure. U.S. Bank, the fifth-largest bank by assets in the United States, completed a live cross-border payment using its proprietary USBDC stablecoin on the Stellar network, moving funds between its North America and European entities. The pilot tested the full lifecycle of USBDC, from issuance and transfer to redemption, while validating whether U.S. Bank could use Stellar's freeze and clawback functions through its internally developed Digital Asset Platform.

What Makes Bank-Issued Stablecoins Different from Circle and Tether?

USBDC represents a fundamentally different approach to stablecoins than the market leaders. While Tether's USDT and Circle's USDC account for 94 percent of major stablecoin supply, leaving all other stablecoins at just 6 percent of total supply, U.S. Bank's token is designed to retain conventional banking controls. The bank emphasized its ability to freeze assets and reverse transfers, features that distinguish bank-issued tokens from decentralized alternatives. This matters because it means U.S. Bank maintains the same compliance and risk management tools it uses in traditional banking, simply moving them onto a blockchain network.

"This live pilot demonstrates our ability to accelerate global cash management and money movement capabilities," said Gunjan Kedia, chairman and chief executive officer at U.S. Bank.

Gunjan Kedia, Chairman and Chief Executive Officer at U.S. Bank

Jamie Walker, Head of Digital Assets and Money Movement at U.S. Bank, added that the pilot represents "another step forward in our broader digital asset strategy". The language suggests this is not a one-off experiment but part of a longer-term institutional pivot toward tokenized infrastructure.

Jamie Walker, Head of Digital Assets and Money Movement at U

How Are Banks Positioning Themselves in the Stablecoin Market?

• Proprietary Infrastructure: U.S. Bank is exploring additional uses for USBDC beyond cross-border payments, including cross-border treasury operations, liquidity management, and moving collateral onchain, giving the bank control over its own payment rails.
• Consortium Approaches: A broader stablecoin push includes a plan by 21 major financial institutions to form a company to issue stablecoins, with the group planning to launch a U.S. dollar-denominated stablecoin in the first half of 2027 before expanding to other Group of Seven currencies.
• Strategic Acquisitions: Circle, which issues USDC, agreed to buy Singapore-based Tazapay for $400 million in an all-stock deal to expand stablecoin cross-border payments, with the deal expected to close in 2027 subject to regulatory approvals including from the Monetary Authority of Singapore.

The Tazapay acquisition reveals how stablecoin operators are building out infrastructure rather than relying on existing payment networks. Tazapay handles more than $25 billion in annualized payment volume, works with over 60 banking and fintech partners, and offers local payout coverage in more than 100 markets. Notably, around $15 billion of Tazapay's annualized flow already uses stablecoins, meaning Circle is acquiring an operational payment business of significant scale rather than simply expanding its geographic footprint.

The timing of these moves suggests a deliberate strategic pivot within institutional finance. U.S. Bank's pilot on Stellar, combined with Circle's acquisition of Tazapay and the 21-bank consortium's plans, indicates that major financial players are no longer waiting for a single dominant stablecoin standard. Instead, they are building parallel infrastructure designed to serve their specific institutional needs, whether that means maintaining banking controls, accessing local payment networks, or creating consortium-backed alternatives to existing market leaders.

The challenge ahead is whether these bank-led initiatives can translate pilots and acquisitions into wider adoption. As the stablecoin market remains dominated by USDT and USDC at 94 percent of major stablecoin supply, the next phase for institutional rails hinges on whether banks and payments networks can move beyond testing phases into production systems that rival the scale and liquidity of existing alternatives.