Stablecoins Can Be Banks' Cash Cows, Not Foes, Says Ubyx Founder

Written by James, Head of Ecosystem at the Ethereum Foundation

Compiled by Chopper, Foresight News

Last year, I spoke with Tony McLaughlin shortly after he left Citibank and founded Ubyx. What impressed me most was that someone who had spent 20 years working at a top global bank spoke about public blockchains with the conviction of a crypto-native, yet grounded every argument in real-world mechanisms like check clearing and correspondent banking.

As a seasoned professional in the payments industry, McLaughlin genuinely believes that the infrastructure he built over his career is about to be replaced.

McLaughlin isn’t the kind of startup founder we imagine. He’s a seasoned executive from the payments industry, coming from one of the world’s largest banks, and his approach to building a company reflects that: develop an idea, bring it to market, and let the market tell you whether it’s right or wrong.

How can stablecoins truly become ordinary currency—the kind that appears in your bank account and is equivalent to cash?

His answer concerns an extremely mundane piece of infrastructure that most people in the crypto space have never thought about, and which traditional banking professionals haven’t yet realized they need.

First, briefly summarize McLaughlin’s career trajectory—his background is crucial to this story.

He worked at Citigroup for nearly 20 years, rising to Managing Director of Treasury and Trade Solutions, with a focus on emerging payment technologies. During this time, he became a primary architect of the Regulated Liability Network (RLN), one of the most influential institutional-grade blockchain concepts of the past five years.

RLN proposes a shared private ledger where central banks, commercial banks, and electronic money institutions can issue tokenized liabilities on the same platform—a regulated industry response to public cryptocurrencies.

McLaughlin completed a proof of concept with the Federal Reserve and the UK Financial Association, and this concept also influenced the work of the Monetary Authority of Singapore. The Bank for International Settlements (BIS) has acknowledged RLN as an inspiration for its "unified ledger" concept. The Agorá project has adopted a similar architecture in collaboration with seven central banks and over 40 financial institutions. From every perspective, this is a heavyweight infrastructure.

Then, McLaughlin resigned and completely withdrew from the project.

For years, he has been advocating that private permissioned blockchains are the future of regulated currencies. The technology itself is not the issue—the problem is that no one has solved the cold start challenge.

You're asking all the world's major banks and central banks to join a network that doesn't yet exist, and no one wants to be the first to act. In a podcast, he called this the "bootstrap problem": you need to get the network started before others will use it, but no one wants to help start it because no one is using it yet.

Public blockchains have already solved this problem. They have users, liquidity, and developers. The cold start is now a thing of the past.

The moment he fully realized this was during the 2024 U.S. election. After observing political trends, he concluded that regulation of stablecoins was inevitable, meaning banks would eventually be permitted to operate on public blockchains—since stablecoins already exist on them. The GENIUS Act, signed into law in July 2025, proved him right.

He described the decision in his usual straightforward way: “From that day on, I decided I would never spend another second of my life promoting the adoption of private permissioned blockchains.”

He left Citibank and founded Ubyx in March 2025.

On March 3, 2026, President Trump publicly accused U.S. banks of "undermining" the GENIUS Act and "hijacking" his cryptocurrency agenda, with the point of contention being profits.

Banks have been actively lobbying against interest-bearing stablecoins, arguing that they draw deposits away from the traditional banking system. The Bank of England is also considering imposing holding limits on stablecoins for the same reason.

This fear is real: the total issuance of global stablecoins has surpassed $300 billion. If this represents deposits leaving commercial bank balance sheets, the impact on credit capacity would be enormous.

But McLaughlin believes the question is backwards. Over the past year, he has consistently argued just one point at every opportunity and on every podcast: stablecoins are not a threat to deposits—they are a windfall of income.

The starting point of cognitive errors lies in how people categorize this tool.

He said: “If regulators define stablecoins as ‘cryptographic assets pegged to fiat currency,’ I believe they are making a fundamental error. To me, that’s equivalent to saying, ‘A check is a piece of paper pegged to fiat currency.’”

He means that regulators made a mistake with stablecoins that they would never make with checks: they define the instrument by its technology (cryptographic tokens) rather than by its actual function (the promise to redeem at par value). Technology is incidental; the promise is the core.

Writing "I owe you $10" on a clay tablet, a piece of paper, or an ERC-20 token on Ethereum involves the same legal tools. What matters is who made the promise and whether the promise is enforceable.

In his framework, stablecoins are not novel crypto-native creations; they are the latest iteration of one of the oldest instruments in commercial law: negotiable instruments.

He compared it to American Express travel checks from 1891.

If you're under 35, you may have never used or even heard of them. Before debit cards and ATMs became widespread globally, traveler’s checks were the primary way people carried cash abroad. You would purchase them in advance from American Express or a bank, pre-paying the face value. They could then be spent anywhere in the world like cash, with merchants or local banks accepting them at face value because clearing networks guaranteed payment from the issuer.

I remember using it while backpacking through Asia—it still gives me a headache just thinking about it: lining up at the bank counter, signing and countersigning forms, waiting for staff to call the issuer, and getting terrible exchange rates. No wonder traveler’s checks vanished almost overnight once debit cards became widespread.

But its attributes are identical to those of a stablecoin: a dollar-denominated instrument, issued by a non-bank entity, pre-funded, fully collateralized, interest-free, transferable to holders, and redeemable at face value.

McLaughlin’s analogy is correct, but most listeners didn’t truly understand it. Most people fail to see the settlement issue with stablecoins precisely because they’ve never used the tools that originally solved this problem. Traveler’s checks have disappeared, and the underlying settlement infrastructure has become forgotten history. So when McLaughlin says, “Stablecoins need what traveler’s checks once had,” listeners merely nod politely without truly grasping the point.

Once you view the issue from this perspective, the question is no longer: “How do we protect deposits from the impact of stablecoins?” but rather: “How do we treat stablecoins the same way we’ve treated all other negotiable instruments over the past 200 years?”

Traveler's checks are accepted at face value worldwide not because of any special quality of the paper itself, but because American Express, Visa, and Thomas Cook have established clearing networks that ensure any merchant in any country can exchange the check for cash at face value.

When the network collapsed, the use of traveler’s checks plummeted. It wasn’t the tool that failed—it was the channel.

Stablecoins are currently in exactly the same situation: they can be transferred across borders in seconds on public blockchains, but there is no universal mechanism that allows you to redeem them at face value through regulated financial institutions.

If you are a stablecoin issuer, you must build your distribution network from scratch, negotiating bilateral partnerships one by one. If you are a bank seeking to accept stablecoins for your customers, you must negotiate separately with each issuer. Complexity increases geometrically.

McLaughlin’s favorite example is credit cards. Thousands of banks around the world issue credit cards, which might sound like a mess—but you rarely walk into a store and hear, “Sorry, we don’t accept your card.”

This fragmentation is invisible to users because Visa and Mastercard act as intermediaries, enabling each card to be used anywhere.

Stablecoins are fragmented but lack a clearing network—this is precisely the gap Ubyx aims to fill.

The mechanism design is very simple, and the difference from a crypto exchange lies at the core.

On the exchange, stablecoins are bought and sold at market prices and are not guaranteed to be redeemed at face value. The exchange is a trading venue where prices fall when demand decreases.

Ubyx does not operate this way. It uses a collection model, not a buy-sell model. The goal is redemption at face value, similar to depositing a check into your bank.

You don’t care who issued the check or which bank it’s from. You give the check to your bank, and the bank credits you for its full value, with the clearing system handling the collection from the issuing bank behind the scenes. If the check is returned, the bank simply gives it back to you.

The process for Ubyx is the same:

• The customer deposits a stablecoin (such as USDC) into the bank's custodial wallet.
• The bank submits the tokens to Ubyx.
• Ubyx transferred to the issuer (in this case, Circle)
• The issuer verifies the token's legitimacy and releases fiat currency from the reserve held at the settlement bank.
• Dollars are returned to the receiving bank via Ubyx, and the bank credits the customer’s account (typically after deducting exchange fees and converting to the local currency).

If the issuer fails to make payment, the bank returns the tokens to the customer, similar to a bounced check. The bank assumes no balance sheet risk during the clearing process.

McLaughlin described this system as a "black box" with three modes:

• Stablecoin in, cash out (redemption)
• Cash in, stablecoin out (issuance)
• Stablecoin A in, stablecoin B out (exchange)

It is designed to be independent of any issuer, blockchain, or fiat currency. At launch, issuers included over a dozen companies such as Paxos, Ripple, Agora, Transfero, Monerium, GMO Trust, and BiLira, covering the US dollar, British pound, euro, and emerging market currencies across multiple blockchains.

For banks, the cost of technical integration is deliberately kept as low as possible. Most banks do not build their own blockchain infrastructure, and even if they do, they still face the challenge of gaining trust from other banks.

This is where the narrative of deposit fear is reversed.

McLaughlin's rough estimate: Assuming the stablecoin market reaches $1 trillion (currently $300 billion and still growing). With a conservative assumption that 0.5% of circulating tokens are redeemed daily, the annual redemption volume would be approximately $1.8 trillion.

If banks charge a fee of 100 basis points plus a 100-basis-point foreign exchange spread for cross-border remittances, annual revenue would reach $36 billion.

These are his assumptions; the calculations are essentially correct. For any bank, the only question is: how much do you want to split?

For non-U.S. banks, this economic benefit is especially attractive. Every dollar-backed stablecoin that enters the European or Asian banking system and is exchanged for local currency represents pure foreign exchange revenue for the accepting bank. Foreign exchange business is essentially a "high-margin" operation for banks.

Over the past year, McLaughlin has referred to offshore stablecoins as a "gift" in every context.

Its alignment with central bank objectives makes it more compelling than mere revenue calculations.

When stablecoins are redeemed through regulated entities into custodial wallets, they become visible to tax authorities, undergo AML/know-your-customer screening, and are converted into local currency on the balance sheets of domestic banks. Central banks gain compliance and monetary transparency, commercial banks earn fee income and expand their balance sheets, and customers receive redemption at face value.

McLaughlin’s advice to bank CEOs was very specific: accept first, then issue. “When it comes to stablecoins, accepting is better than issuing. Why? Because you can make a lot of money by accepting.”

The most straightforward business logic lies in accepting and redeeming third-party stablecoins. Once a shared acceptance network is established, any bank could settle any stablecoin transaction just as it processes Visa payments, significantly lowering the barrier to issuance.

By then, issuing your own stablecoin will be as simple as issuing a credit card—you won’t need to build a payment network, just integrate.

The Ubyx shareholder list is worth reviewing, as the names listed reveal which entities recognize and support it.

Ubyx completed a $10 million seed round in June 2025, led by Galaxy Ventures. Other investors in this round form a “dream team” of firms that rarely appear together on the same shareholder table: Peter Thiel’s Founders Fund, Coinbase Ventures, VanEck, and LayerZero.

Silicon Valley libertarian capital, top cryptocurrency exchanges, and major traditional asset management firms are all investing in stablecoin settlement infrastructure. Several investors are also network participants: Paxos and Monerium are both investors and issuers within the network; Payoneer and Boku are strategic partners making investments.

This "investor-as-network-user" structure was intentionally designed. McLaughlin explicitly compared it to the early equity structures of Visa and Mastercard: banks that used the network were the ones that owned it.

In January 2026, Barclays made a strategic investment—the first time in its history that the UK’s second-largest bank by market capitalization invested in a stablecoin company. Ryan Hayward, Head of Digital Assets and Strategic Investments at Barclays, said: “Interoperability is key to unlocking the full potential of digital assets.”

Implied meaning: One of Europe’s most systemically important banks understood the logic of stablecoin settlement and decided to vote with its money.

A month later, AB Xelerate, the fintech accelerator under Arab Bank, also made a strategic investment. Now, U.S. venture capital, European banks, and Middle Eastern financial infrastructure have all bet on the same direction.

In mid-2025, Circle launched its own Circle Payments Network, providing proprietary infrastructure for USDC settlements. Circle has sufficient scale to build its distribution network independently.

The market question is: Will it ultimately be a single issuer network (Circle’s path) or a multi-issuer clearing system (Ubyx’s path)? McLaughlin argues that history favors a diversified clearing model. However, Circle’s first-mover advantage and dominant market share are realities.

The dispute over yield between banks and crypto companies remains unresolved. A rebuttable presumption opposing yield mechanisms for stablecoins is included in the rule proposal by the U.S. Office of the Comptroller of the Currency (OCC).

If yield is prohibited, banks can breathe easier, as stablecoins still lack the appeal of savings accounts for those holding cash. However, this also means that stablecoins will be limited to payment and settlement applications, resulting in a smaller market size and slower growth for Ubyx.

If yields are permitted, the stablecoin market will experience explosive growth, directly competing with deposits, money market funds, and government bonds for idle funds. Banks have strong incentives to rapidly build infrastructure—to defend against customer attrition and to capture foreign exchange and fee income.

Ubyx commits to adopting an open-source rulebook and ultimately implementing DAO governance through tokens. While this aligns with the philosophy of the decentralized network it connects to, it remains an untested model for regulated financial market infrastructures dependent on banks.

The first phase of McLaughlin's career was defending the fiat system against crypto challenges. The second phase involved building private blockchains for the banking industry. In the third phase, he concluded that private blockchains cannot solve the issue of adoption.

All of this change stems from his perspective on where funds are held. On public blockchains, within wallets, and through a set of infrastructure protocols, every regulated stablecoin becomes as reliable and harmless as a check.

He believes the key to the entire transition process lies in one sentence: Banks can handle stablecoins just like checks.

If an authority figure were to say this, every bank and fintech company worldwide would immediately know what to do. Ubyx bets that someone will say this soon.