The following is a guest post and opinion from John deVadoss, Co-Founder of the InterWork Alliancez.
The stablecoin market is converging on two power centers: brand-name stables issued by firms consumers already trust, and “fintech L1s” — base layers purpose‑built or tightly controlled by regulated fintechs. Everything else will orbit these because they maximize profits, defensibility, and distribution while fitting comfortably inside the policy perimeter.
Brand stables win first on distribution. Payments is a scale game. If a dollar token can be dropped into an existing wallet with millions of KYC’d users, plugged into merchant networks, and supported by compliance teams, it acquires liquidity faster than any crypto‑native alternative. The cost of acquiring a new transacting user approaches zero when the stable is just another balance type in an app people already open daily.
Second, brand stables monetize at scale. They sit on large, low‑cost, sticky balances and invest reserves in high‑quality short‑term assets. That float is a durable revenue stream, more dependable than volatile trading fees. On top, issuers can layer payment revenues: cross‑border FX spread, merchant acceptance fees, treasury services for platforms, and white‑label programs for partners. The combination of float income and payments economics makes brand stables a self‑financing growth engine.
Third, the moat is regulatory. Household‑name issuers already maintain licenses, bank relationships, audits, and sanctions controls. They know how to answer supervisory exams and file suspicious activity reports. That turns policy risk into a competitive advantage. As stablecoin statutes and rules mature — from reserve composition to redemption rights — compliance becomes more of a wall that keeps poorly capitalized entrants out.
Policy is shaping product design. Expect brand stables to likely be multi‑chain but centrally controlled, with blacklist and freeze functions, transparent attestations, bankruptcy‑remote reserve structures, and explicit redemption windows. Messaging standards that carry Travel‑Rule data and screening hooks will be standard.
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Author: John deVadoss
