The trillion-dollar battle for money's operating system

Stablecoins are digital tokens designed to hold a constant value — almost always one US dollar — backed by reserves and freely transferable on public blockchains. They are the bridge between crypto and traditional finance, and the most serious attempt yet to let software eat banking: a form of private digital money that settles globally, instantly, and around the clock.

But the interesting questions are not technical. They are strategic and economic: how a peg actually holds, why issuing stablecoins is a worse business than it looks, and who ends up controlling the rails when digital dollars go mainstream. I have worked on those questions since designing Libra at Meta — and in 2024, Jane Wu and I warned that a platform war over money’s operating system was coming. It is now here, and it is playing out almost exactly along those lines.

Money’s platform war

Platform wars — VHS versus Betamax, Blu-ray versus HD-DVD, iOS versus Android — share a script. Competing camps fight for a winner-take-all prize, the technology matters much less than everyone thinks, and victory goes to execution and applications rather than technical merit. JVC beat Sony with a worse picture and more content. The conclusion is always the same: a dominant design emerges, everyone switches, and the losers wait for a new paradigm to get another chance.

The stablecoin war is that kind of fight, with the highest stakes imaginable: the company or coalition that shapes the stablecoin market will wield substantial influence over the future of money. Stablecoins can displace legacy payment networks, accelerate the unbundling of financial institutions, and extend dollar access to billions of people who lack it. Incumbents understand this. The playbook that greeted Libra in 2019 — embrace, extend, extinguish, with regulation as the weapon of choice — bought them time. It did not settle the war.

What keeps a stablecoin stable

A peg is a promise, and promises are only as strong as the balance sheet behind them. Fiat-backed stablecoins hold reserves — typically cash and short-dated Treasuries — and let holders redeem one token for one dollar. The peg holds because arbitrageurs profit whenever the market price drifts from par. Confidence in redemption, not code, does the work.

That is also where the risk lives. When Silicon Valley Bank failed, USDC — with a slice of its reserve trapped inside — depegged within hours: a small preview of how reserve design failures propagate. Proper reserve composition makes this avoidable, which is why reserve standards, disclosure, and redemption rights are the heart of the GENIUS Act, and why algorithmic designs that manufacture stability without backing keep failing. The design question is never whether a peg holds in calm markets. It is whether the structure survives a run.

Stock vs. flow: why issuance is a bad business

Strip away the pitch decks and a stablecoin issuer has exactly two revenue levers: skim the stock — keep a slice of the yield on reserve assets — or tax the flow — charge fees when coins move. At equilibrium, competition erodes both.

The yield does not stay with the issuer for long. The scramble for market share forces issuers to recycle it into user incentives, because neither institutions nor consumers will voluntarily leave interest on the table once moving idle cash is a tap away. And fees on flow race toward zero: our modeling during Libra showed that even an issuer controlling both the asset and the network would be forced to push transaction fees to nothing and monetize higher-margin add-ons instead — add-ons that mostly still do not exist.

The history of electricity is the warning. Edison’s direct current made upscale Manhattan homes into status symbols; by the 1920s, alternating current’s standardized grids had won, and electrons lost their branding. Utilities competed on price, not panache. Once the meter starts ticking, nobody cares who spins the turbines — only who does it cheapest.

That is the trajectory of the digital dollar. Issuance does not grant any economics beyond the distribution — the balances and payment volume — you already bring to the table.

The sandwich and the vault: stablecoins’ two jobs

Stablecoins do two things: move money and hold money.

The moving-money use case with real momentum is the stablecoin sandwich. Domestic instant-payment rails — PIX in Brazil, UPI in India, SPEI in Mexico — have taught people that money moves 24/7, but that speed dies at the border. So orchestration firms flip local fiat into a stablecoin, shoot it across a blockchain, and cash out in local currency on the other end. Clunky on paper; instant and final in practice. By my estimate, tens of billions of dollars a month already move through these corridors for cross-border B2B payments and remittances — the opening act of a classic infrastructure inversion, where the new technology starts out awkwardly wrapped around the old one.

The holding-money job is where stablecoins already changed lives: onchain dollar vaults for people without easy access to greenbacks, which is why dollar stablecoins exploded across Latin America, Africa, and parts of Asia wherever inflation burns through local money. As regulation expands who is willing to hold balances, the store-of-value role grows — and collides with a rising stack of tokenized Treasuries and money-market funds competing for the same balances.

The players, and why nobody runs away with it

The pure-play issuers that dominated the crypto era face a hard truth: graduating from crypto trading to billions of consumers is a different game, and the distribution that decides it — wallets, merchants, checkout flows, platform relationships — is largely already spoken for. Exchanges and neobanks will not let a single issuer park a tank on their front lawn; they list rivals side by side and launch their own coins. Banks push for a many-stablecoins world that preserves the pecking order, with network effects anchored to the dollar rather than to any coin. Card networks embrace stablecoins as just another settlement currency rather than an existential threat. Big tech learned from Libra not to make a loud entrance, and partners instead — knowing its distribution lets it capture value whichever coin wins.

Meanwhile infrastructure providers bet on proliferation itself, helping any consumer brand issue a branded dollar the way co-branded credit cards work today. If regulation makes the coins similarly safe and open networks make them interoperable, differentiation collapses — and stablecoins fade into the background like loyalty points, or like the wire behind your drywall.

That is not failure. That is what winning looks like for consumers and businesses: the stablecoin wars end when no one notices the coins anymore — only the outlets through which dollars flow.

The endgame: an open standard

Follow that logic to its conclusion and the last move on the board becomes obvious. If issuance is a commodity and distribution is the prize, the rational act for the ecosystem is to stop fighting over coins and converge on one neutral standard — then compete fiercely on products built on top of it.

That is exactly what happened in mid-2026, when more than 140 fierce competitors — Visa, Mastercard, and American Express in the same consortium, alongside Stripe, BlackRock, Coinbase, Google, BNY, and a long roster of banks and fintechs — agreed to back Open Standard’s OUSD: a stablecoin that charges nothing to mint or redeem, returns nearly all reserve income to the companies that distribute it, and is governed collectively rather than by whoever started first. Issuance as neutral infrastructure; upside shared with distribution.

That was the core idea behind Libra, and it now lives on without the political baggage. The GENIUS Act solved many of the critical dimensions a shared standard needs — reserves, redemption, supervision. The remaining battle is the one standards bodies know well: coordinating governance among parties that must collaborate first and compete second. Announcements are easy. Chaordic alliances of frenemies — Dee Hock’s Visa being the only real precedent — are hard.

The world of payments will be much better if an open standard succeeds. And the competitive fire will simply move up the stack, to where it always ends: the battle for the “pay with” experience on the screen in your hand.

Selected papers & writing

• Why An Open Standard Will Win The Stablecoin Race — Forbes, 2026
• The Stablecoin Wars — Forbes, 2025
• The Race to Dominate Stablecoins — Harvard Business Review, 2024 — with Jane Wu
• Some Simple Economics of Stablecoins — Annual Review of Financial Economics, 2021 — with Alonso de Gortari and Nihar Shah
• On the Economic Design of Stablecoins — working paper, 2021 — with Alonso de Gortari
• Stablecoins and the Future of Money — Harvard Business Review, 2021 — with Jai Massari
• Setting Standards for Stablecoin Reserves — working paper, 2021 — with Nihar Shah
• Are Stablecoins Winner-Take-All? — Competition Policy International, 2024 — with Jai Massari
• The Unwitting Kingmaker: Why Washington’s GENIUS Act Could Accidentally Crown a Stablecoin Superpower — 2025

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