SoFi recently went live with stablecoin settlement across its entire debit and credit card program through Mastercard. Its token, SoFiUSD, is the first stablecoin issued by a nationally chartered bank. Each SoFiUSD is redeemable for one dollar and is primarily backed by cash. This is an important development because this is the first time a bank stablecoin has been launched inside a real card program, with the best part being that the entire stack is owned by SoFi.
The payment program is currently processing at a pace that would equal more than $25 billion over one year. Visa has a similar stablecoin program with settlement volume surpassing a $20 billion annualized run rate, up more than 15x year over year. This shows that both major card networks are moving settlement on-chain. Merchants and cardholders don’t touch the token at all; the stablecoins live in the settlement layer, and that is perhaps the most sensible use for it.
Why stablecoins are best for settlement
Typical card settlement
Typical card settlement runs on banking hours where issuers prefund the bill and merchants have to wait over weekends and holidays. Add to that fees and delays, and you have an inefficient system that throws a wrench into any business’ financial activities.
Stablecoin settlement
With 24/7 on-chain settlement, the dead time is removed, and money is no longer trapped in processing. SoFi merchants can receive settlements instantly and can withdraw money around the clock. It is an invisible development to the payment infrastructure, but that is deliberate. It is not a UI development where a customer sees a “pay by stablecoin” button, but they notice faster merchant payouts and cheaper working capital, leading them to choose their banking partner accordingly.
For merchants and individual consumers
Mastercard and Visa have realised the potential of this technology, which is why they are trying to absorb stablecoins into their own network rather than be routed around by them. Bank-issued stablecoins will only grow from here for settlement purposes, where they can move the bank’s own liabilities between its balance sheet, merchants, and network partners 24/7. Individual consumer use cases will also exist–SoFiUSD caters to them as well–but its biggest use would be in settlement.
The main risk: a hundred types of dollars
While SoFi’s news means a great deal, it also begs the question: what if every bank followed suit? That would mean every large bank issuing its own dollar token, with a hundred “dollars” that would need to be bridged and reconciled. That is just correspondent banking all over again, but on the blockchain, and it’s not entirely hypothetical at this point.
Stablecoin issuance has proliferated, with close to 400 stablecoins in circulation. As banks increasingly explore issuing their own, the challenge will be ensuring different tokens can operate together. To circumvent this, a 21-bank consortium committed to establishing a company to support a stablecoin solution, including Capital One, BBVA, and Lloyds Banking Group. In Europe, Qivalis is pursuing a similar model, with BBVA, BNP Paribas, and other major financial institutions among its members.
But not every bank-issued stablecoin will have an impact. For a bank-issued stablecoin to become widely used, 3 things are required:
Distribution
A stablecoin needs real users and real payment volume behind it. For a bank that has a large card program or merchant pool, its stablecoin can immediately be used inside existing payment flows. Without that, the token exists, but nobody has a reason to use it.
Instant redemption to fiat
Businesses must be able to turn the stablecoin back into everyday money quickly. If a merchant receives a bank stablecoin, they need confidence that they can redeem it for dollars, euros, or another fiat currency instantly. If redemption is slow, businesses will not trust it for settlement.
Interoperability with other issuers
If every bank has its own stablecoin, those coins need to work with each other. Otherwise, Bank A’s dollar token, Bank B’s dollar token, and Bank C’s dollar token all become separate smaller systems. That recreates the old banking mess but on a blockchain level.
Mastercard and Visa may become the middle layer that connects these different bank stablecoins, similar to how they already connect banks, merchants, and cardholders today. Instead of every bank token operating separately, card networks could help clear and settle between them.
The market’s blind spot: owning every layer
Most banks are on their way to create their own stablecoin, but SoFi’s news is notable because they own every layer of the settlement journey. SoFi is the chartered bank, the stablecoin issuer, and the card issuer, and it holds the merchant account where the token is redeemed for cash. There’s no third-party issuer, no external redemption dependency.
When you own every layer, settlement becomes an internal ledger problem. When $25 billion a year settles in your own token, the reserve income and float stay on your balance sheet instead of flowing to an external issuer. Since the GENIUS Act requires payment stablecoin issuers to maintain reserves on at least a 1:1 basis and bars paying interest to holders, the reserve income stays with the issuer.
This is something that can’t be replicated by most card programs, fintechs, and regional banks on their own. Therefore, the next wave is infrastructure that lets a program launch its own branded, fully backed stablecoin and plug it into issuing, settlement, and redemption without holding a charter. MoneyGram followed a similar model with MGUSD by distributing the dollar stablecoin through its own network, while Bridge served as the regulated issuer and M0 handled minting and burning infrastructure.
The results that matter are not the tokens created
The tide is already in favour of bank-issued stablecoins, but they will scale as invisible settlement layers that ease the friction of banking for customers. Card networks will be crucial as a clearing layer, but the rest will remain closed-loop. The greatest denominator of success will be decided by the infrastructure that makes redemption work at 3 AM on a Sunday, reconciling against the card network’s records, and compliance that holds up to regulators.
