Who’s zooming who in stablecoins?

If you want to disrupt a big industry, it’s important to start by offering a lousy product.

That, at least, is the advice you’d get from Clay Christensen, who wrote the book on business disruption: 1) start with an obviously worse product so incumbents don’t feel threatened; 2) offer that inferior, but cheaper, faster or more accessible product to a segment of underserved customers the incumbents are ignoring; 3) use that as a base to get good enough for mainstream adoption while still being cheaper, faster and more accessible.

As examples, Christensen cites steel mini-mills (making low-quality rebar), Netflix (sending DVDs by snailmail), Toyota (no-frills compact cars), and PC makers (computers only fit for hobbyists).

In each of these industries, the incumbents laser-focused on their most profitable customers overlooked the newcomers that got their start by serving the least profitable ones — right up until the upstarts were serving both.

Is that what’s happening with stablecoins too?

They certainly matched step 1 of the Christensen playbook: USDT, the original stablecoin, was very much an inferior sort of dollar — not FDIC insured, not audited, not accepted by banks, not always worth $1. 

But it was popular with people who had little or no access to real dollars (e.g., emerging markets savers and crypto market traders).

Also per Christensen’s playbook, incumbent banks and fintechs dutifully ignored this inferior product, allowing it time to improve. Now, stablecoins are more transparently backed, more widely accepted, almost always worth $1 and, amazingly, sanctioned by the US government.

And yet, as recently as July, Bank of America CEO Brian Moynihan expressed skepticism about stablecoins as a business on the basis that clients weren’t “knocking at [BoA’s] door” asking for them.

That is the classic Christensen blunder: assuming an upstart product is no threat to your incumbent business because your mainstream customers are not yet demanding it.

By the time they are, it’s likely to be too late.

Other incumbents, however, are more alert to the threat from below — welcoming, even.

On Citi’s most recent earnings call, for example, an analyst asked CEO Jane Fraser if she had “an appetite to proactively disrupt yourself in a way to get ahead of these new entrants coming into the business.”

Fraser responded, “I can’t wait to answer this question.”

I’ve listened to a lot of earnings calls in my day, and I’ve never once heard a CEO say they can’t wait to answer a question.

So that got my attention — as did Fraser’s answer.

In short, she responded that Citi is keen to reduce the cost of cross-border transactions for customers by encouraging them to transact in stablecoins.

Most tellingly, though, was Fraser’s comment that “what's holding us back at the moment is our clients' readiness to operate in this world.” 

That does not sound like an incumbent waiting around to be disrupted.

In explaining her enthusiasm for this potentially disruptive technology, Fraser noted that only 6% of stablecoin transactions are related to payments.

(A recent Fed survey also found that “the share of US consumers who use cryptocurrency for payments has been very small and recently declined slightly.”)

This suggests that banks are not responding to stablecoins as a disruptive threat.

Just the opposite: They’re trying to create a market for them.

I’m guessing Christensen would tell you that incumbents are likely to win any market they themselves create.

In the case of stablecoins, Jimmie Lenz thinks it’s a certainty, even.

In a paper studying the business of digital dollars, Lenz concludes that incumbent banks will “dominate both the issuance and distribution of stablecoins.” 

He attributes this mostly to the economies of scale and operational efficiency that banks enjoy, adding on his podcast that they “almost can’t not” be the big winner.

The business battle lines, however, are not always clear.

Crypto-native Consensys, for example, is helping TradFi-native SWIFT build a “blockchain-based ledger” that will enable “real-time, 24/7 cross-border payments” (potentially usurping a core crypto use case).

Just today, we had news that Phantom is working with Stripe and Circle is working with Deutsche Bank on stablecoin payments and issuance.

And the crypto-native investors at Paradigm are co-developing a stablecoin-first blockchain, Tempo, for the payments incumbent Stripe.

Who’s zooming who in these mixed ventures is impossible to say.

More independently, Circle is building its own stablecoin-first blockchain without any help from the incumbents it seeks to disrupt. 

Notably, though, its chain might allow for reversible transactions — perhaps the most TradFi, least crypto thing imaginable.

If crypto payments aren’t immediately final, are they even crypto payments?

This might be a case of an initially inferior product becoming good enough for mainstream adoption.

But it might also be a sign of a failed coup — crypto recreating the system it was meant to replace.

If so, the banks will turn out to have been the disruptors.

— Byron Gilliam

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1  _{Grayscale and CoinDesk, as of 8/29/2025. Largest and most liquid assets reflect eligibility for U.S. exchange and custody accessibility and U.S. dollar or U.S. dollar-related trading pairs. Exclusions include stablecoins, memecoins, gas tokens, privacy tokens, wrapped tokens, staked assets, or pegged assets. Largest is defined by circulating supply market capitalization, and most liquid is defined by 90-day median daily valued traded.}

2  _{CoinDesk as of 08/31/2025, based on the crypto market ’s total investable universe.}