Editorial hello

The Bank of England has finally confirmed what it has been signaling for many months: that the highly conservative and cautious regulatory framework it originally proposed for sterling stablecoins in November, 2025, will be watered down.

It’s a win for the UK stablecoin industry. It also puts the BoE on a very different stablecoin trajectory to that of the ECB.

In other news, Noelle Acheson and I will be testing a new podcast, Monetary Forces, at 4 p.m. CET time on Tuesday, June 23 (aka tomorrow). We plan to kick things off by reviewing the latest BIS chapter on stablecoins, which comes out tomorrow.

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Editorial hello

Dear subscribers, I have finally recovered from my summer flu! Thank you for your patience. One of the problems with running an editorial operation as a one-man op is that when you get struck down by illness or need to take a holiday, output goes to zero. I’m hoping this won’t be forever and that soon enough this service will have enough cashflow to ensure there can be at least two of us or more holding the fort.

In the meantime, to lighten the load and to ensure the spice content continues to flow, I’m joining forces with the wonderful Noelle Acheson from the Crypto is Macro newsletter for an upcoming podcast.

Until now, I’ve hesitated to start one because to do it well, you really need to invest time and energy in the product, which I am notoriously short of. Moreover, I don’t like talking to myself. And if you’re going to partner up with someone, it has to be someone who really knows their stuff. They’re hard to find. But Noelle Acheson fits the bill perfectly, and it seems a no-brainer that we should cooperate. The other plus is that we think we’ve come up with a format that complements our workload rather than adds to it.

I am certainly cautious of overcommitting to new concepts and then under-delivering on them. That’s why we will be running this as a pilot. If it works, it works. If not, then not. We’re going to start next Tuesday. More will be revealed shortly.

Today’s newsletter is a catch-up on the week before.

Coming up

On July 1, I will be moderating a stellar panel at the Stablecoins Unblocked conference in London on geopolitics and the role of stable money in an unstable world. If you’re in London do come along. Peg subscribers get a discount on the ticket price. The code is at the bottom of this newsletter.

Industry news

AllUnity Launches The First Fully Reserved Swedish Krona-Backed Stablecoin SEK AU
SEKAU is a MiCAR-compliant stablecoin that is fully backed 1:1 by Swedish krona reserves held in segregated accounts at Banking Circle, enabling instant settlement and cross-border use across multiple blockchains.
https://allunity.com/news/allunity-launches-the-first-fully-reserved-swedish-krona-backed-stablecoin-sekau

State Street Launches GENIUS Act Compliant Stablecoin Reserve Fund
The Rule 2a-7 government money market vehicle is structured to satisfy U.S. regulatory reserve requirements for issuers.
https://www.tokenizationinsight.com/post/state-street-launches-a-genius-act-compliant-stablecoin-reserve-fund?

Tether Signs Partnership With Dubai Trade Hub
The collaboration aims to boost adoption for trade finance, cross-border payments, and commercial settlements in the region.
https://fundstech.com/tether-signs-partnership-with-dubai-trade-hub/

Tether Winds Down aUSDT And Alloy Platform To Sharpen Focus
Tether is discontinuing its gold-backed aUSDT stablecoin and the Alloy platform, redirecting resources to higher-demand products such as XAUT after reviewing user activity and liquidity.
https://www.theblock.co/post/405190/tether-winds-down-ausdt

Fidelity Explores Or Launches Stablecoin Money Market Fund
The offering targets institutional and issuer needs for high-quality, liquid reserves that comply with regulatory standards while earning yield in the evolving digital asset environment.
https://www.theblock.co/post/405357/fidelity-stablecoin-money-market-fund?

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Monday, June 22 at 3pm CET: Introductory statement by Christine Lagarde at ECON Hearing before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels, Belgium.

5.15 pm CET: Participation by Christine Lagarde in panel on the International Role of the Euro with Commissioner Dombrovskis and MEP Rasmus Andresen at House of the Euro in Brussels, Belgium

June 23-25, in Zurich — Point Zero Forum, 2026
Stablecoin panels include: Tokenization, Stablecoins and DeFi: How institutions are going on-chain, with SocGen FORGE’s Jean-Marc Stenger; State of Stablecoins: Keynote presentation with Simon Taylor.

Tuesday, June 23 at 1 pm CET: Publication of one chapter of the BIS Annual Economic Report, “Anchoring trust in money: innovation beyond stablecoins”.

Tuesday, June 23, at 4 pm CET: First LIVE edition of Noelle Acheson and my new podcast: Monetary Forces.

Wednesday, June 24, at 3.35 CET: Virtual participation by Mr Cipollone in fireside chat "A Stocktake on the Digital Euro" at 5th Point Zero Forum in Zurich, Switzerland

Also: BIS Deputy General Manager Andréa M Maechler speaks on “What makes money, money? Ensuring trust in the next-generation financial system” at the Point Zero Forum. Tommaso Mancini-Griffoli, head of the BIS Innovation hub, participates in a panel on “GL1 dialogue: institutional-grade ledger infrastructures” at the Point Zero Forum.

Sunday, June 28: The BIS Annual Economic Report 2026 and the Annual Report 2025/26, recounting the Bank’s activities and financial performance in the past year, will be published at 11:00 CEST.

June 29- July 1, in Sintra, Portugal — ECB Forum on Central Banking
Stablecoin-related sessions include: Tokenisation: challenges and opportunities when money, payments and financial transactions become digital with Piero Cipollone, member of the executive board of the ECB.

On July 1, I will be moderating a stellar panel at the Stablecoins Unblocked conference in London on geopolitics and the role of stable money in an unstable world. If you’re in London do come along.

I had the privilege of addressing a gathering of the Society for Professional Economists on Wednesday night, alongside two of my most favourite monetary system thinkers, Felix Martin and Russell Napier.

For context: Felix Martin is a macroeconomist, fund manager, and author of the acclaimed book Money: The Unauthorised Biography — a sweeping intellectual history of money that explores its nature as a social technology. Russell Napier is a highly regarded financial historian, independent strategist, and author known for his deep analysis of monetary regimes, credit cycles, and historical lessons from financial markets (including his influential book Anatomy of the Bear).

Napier had the tough job on the night. He had just 10 minutes to map out how he sees the international monetary system evolving through the lens of his long-standing thesis on the coming era of financial repression. But he did a really good job, and given the clarity and succinctness of his presentation, I thought it worth recounting the core arguments here for readers who aren’t yet familiar with his work.

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I’m afraid there’s not much insight from me today. I’ve been struck down with a terrible summer cold. And to make matters worse, I may have also contaminated my fellow panelists, Felix Martin and Russell Napier, at a very insightful little gathering last night organised by the Society of Professional Economists and focused on the Future of the International Monetary System. I was there mapping out what role gold tokenization may play in that future, albeit in clearly subpar form.

Both Felix’s and Russell’s contributions were stellar as expected. Russell had 10 minutes to run through his vision for how Volcker’s “non-system” is likely to evolve and somehow he managed to deliver it.

For those not familiar with Russell’s thesis, I’ve got a separate post coming on it.

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In today’s newsletter, stablecoin debit card usage is going up, which — given overall supply growth appears to be stagnating as per the below chart from Allium — should be welcome news for the sector.

The arrest in outright supply growth comes as record amounts of stablecoin assets are being frozen amid growing cooperation between stablecoin issuers, crypto platforms, and the authorities. Some $10 billion has been frozen or seized in 2026 alone, by some estimates. As you will see below, this is leading some to question whether there is really all that much differentiating stablecoins from fiat (or even CBDCs) when it comes to censorship resistance and surveillance.

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Editorial hello

I’m going to use today’s greeting as an excuse to remind everyone to sign up for Stablecoins Unblocked 2026, which is taking place on Wednesday, July 1. The conference is the UK’s premier full-day conference dedicated to the global impact of stablecoins. What’s more, I will be moderating a panel on the geopolitics of stablecoins on the day. Peg subscribers get a 20% discount. To get the code, continue to the end of today’s newsletter.

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My note earlier today embarrassingly stated that:

Mea culpa, mea culpa. I wrote the above before going to bed while falling asleep and I don’t know what I was thinking. It’s obviously all wrong.

Since it is too painful to live with, I have to formally correct the record.

However, in the process of penning my correction, it’s also the case that I ended up taking a much closer look at how these markets actually work. And, in fairness, the exercise turned out to be rather illuminating. Because Pre-IPO perps don’t function like ordinary perps.

So if you're curious about the peculiarities of these instruments and why they’re very far from retail-investor friendly, read on. If you're only here for the corrected numbers, feel free to skip to the bottom.

Pre-IPO perps are fairly exotic instruments

It may come as a shock to readers, but the SpaceX perp market on Hyperliquid isn’t really a market in the conventional price-discovery sense.

More buyers in these markets do not automatically translate into higher valuations, because in perpetual futures markets, everything depends on daily funding rate adjustments.

As of May 17, Hyperliquid offers two ways to gain exposure to SpaceX. Both contracts feature their own unique peculiarities.

My trade was in the earlier-listed Ventuals contract, which — as you can see above — offers exposure to SpaceX’s total company value.

But the price action is no simple thing. At any given time, it reflects the interaction of three factors: 1) the traded market price 2) the oracle/reference valuation 3) the funding rate.

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I know it looks like I’ve been doing nothing this week, but I promise this is just what happens when I go into research and deep thinking mode. The truth is, I started this greeting by revisiting Isabel Schnabel’s speech from earlier this week. Before I knew it, I had written 1,500 words and the whole thing needed to be shifted into a stand-alone piece. But it still needs more work. So you’ll have to wait.

To keep you amused in the interim, I decided to check in on how the Moscow Exchange’s track record as the earliest tradfi adopter of perpetual futures is going. Turns out, just swimmingly. The exchange now lists three ruble cross-rate perp contracts. It may also be planning even more listings.

This would be an opportune moment to mention SpaceX.

Elon Musk’s rocket company is set to debut on June 12 under the ticker SPCX.

But if you’re a stablecoin aficionado familiar with how defi markets and perps work, you may already have experimented with trading the stock in pre-IPO mode on platforms like Hyperliquid.

I did. For journalistic purposes.

This took the shape of a $45 flutter on a 2x leveraged long position, which I entered on April 2 and exited on May 24. I made an overall net gain of $37.77. Not bad, not bad. And given the flash crash that occurred on May 28, a pretty lucky exit.

The thing is, the associated funding costs were not insubstantial. About $5.25. So simply keeping the position open was far more expensive than I expected. Luckily, I only deal in small numbers.

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Aspiring GBP stablecoin issuers have welcomed a House of Lords report calling for a recalibration of the Bank of England’s proposed stablecoin regime, arguing that some of the central bank’s original requirements risked undermining the commercial viability of a nascent sterling stablecoin market.

In its report, Stablecoins: Waiting for Regulation, published on Wednesday, the House of Lords Financial Services Regulation Committee urged policymakers to reconsider several of the most contentious elements of the Bank’s framework, including the requirement for systemic stablecoin issuers to hold at least 40 percent of reserve assets in unremunerated Bank of England deposits, proposed temporary holding limits on stablecoins, and strict redemption requirements that industry participants say would impose significant operational burdens.

The committee warned that the UK risks falling behind international competitors if regulation is not sufficiently flexible to support innovation while maintaining financial stability.

“The regulators must be cognisant of the balance between the mitigation of risk and the viability of stablecoin issuer businesses, and hence on the development of a stablecoin market in the UK,” the report noted. “The Bank should consider the impact that requiring a proportion of unremunerated assets could have on the development of a GBP stablecoin market, and should set out details of the basis on which it has calculated the required proportions of unremunerated backing assets.”

The recommendations are unlikely to come as a surprise to market participants. Senior Bank of England officials had already signalled a willingness to engage with industry concerns and refine the framework following consultation, with growing recognition that overly restrictive rules could hamper the development of a domestic stablecoin ecosystem before it has had a chance to scale.

The report also argues that stablecoins could play an important role in the future of UK financial markets if the regulatory balance is struck correctly. “The UK has a mature and globally respected financial services industry, and its regulatory regime should be designed to allow a GBP stablecoin market to establish and grow, so that businesses can take advantage of the emerging opportunities this market could bring,” the committee said.

The findings came a day after Agant, one of a small group of firms seeking to establish sterling-backed stablecoins in the UK, announced a partnership with payments infrastructure provider Clear Junction. The House of Lords report identifies just two FCA-registered GBP stablecoin issuers currently active in the market — Agant and BCP Technologies, the issuer of tGBP — while four additional firms are exploring issuance through the FCA’s regulatory sandbox.

Under the arrangement, Clear Junction Digital will act as a distribution partner for Agant’s GBPA stablecoin, providing eligible institutional clients with access to issuance and redemption services and connecting fiat sterling payment flows to the token. Agant is preparing for its first live issuance, which Clear Junction chief executive Theresa Cameron told The Peg is scheduled to go live on June 8.

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Editorial hello

I’m afraid I wasn’t able to make it over to Money 20/20 this year. The downside is that I will miss the jam-packed stablecoin agenda. This is a shame because all the great and the good of the stablecoin world will be there. (You can check out the stablecoin-themed panels here.)

The upside, however, is that I will have more time on my hands to catch up on analysis and reading. And there’s plenty coming in over the week, not least the cross-party House of Lords Financial Services Regulation Committee report, ‘Stablecoins: waiting for regulation’, which lands overnight.

Meanwhile, a fascinating new paper from Omnia Financial, the law firm Hunton Andrews Kurth, and the regulatory advisory firm Klaros Group, Banking Stablecoins: A Regulatory and Operational Framework has also just landed. It is chiefly concerned with how the GENIUS framework will work in practice, especially with respect to capital treatment, liquidity management and operational integration. In that vein, it offers an enlightening analysis of how the regime has created a markedly different creditor hierarchy from that which has traditionally applied to unsecured claimants.

The ramifications of this are deeply under-appreciated by the mainstream media.

According to the report, under the proposed GENIUS regime, reserve assets backing stablecoins would be segregated from the issuer’s bankruptcy estate and held for the benefit of token holders. Stablecoin holders would have first claim on those reserves, with distributions made on a pro-rata basis. However, if those reserves proved insufficient, any remaining claims would receive a super-priority treatment ranking ahead of ordinary unsecured creditors and even ahead of administrative expenses incurred during bankruptcy proceedings.

But it’s also the case that the authors stop well short of treating these protections as settled. The report repeatedly acknowledges that the practical operation of the proposed waterfall remains untested. In particular, it highlights concerns raised by commentators regarding competing secured claims, the adequacy of reserve segregation arrangements prior to insolvency, and the treatment of debtor-in-possession financing. The latter is especially important because Chapter 11 restructurings typically require new financing from lenders who demand super-priority status. Whether such lenders could obtain claims over supposedly ring-fenced reserve assets remains unresolved.

It all, frankly, points to a potential mess regarding future bank resolution.

The authors also identify a more fundamental tension. If reserve assets are excluded from the bankruptcy estate and reserved exclusively for token holders, questions arise about how the insolvency process itself would be funded. Bankruptcy administrations require lawyers, liquidators, custodians and other professionals, all of whom expect payment. The report notes that regulators may ultimately need to address this issue through additional capital buffers, reserve requirements or segregation controls.

The result is a somewhat paradoxical conclusion. On paper, stablecoin holders appear to enjoy a stronger position than traditional unsecured creditors and potentially stronger protections than many investors in money market products. In practice, however, the report suggests that no one yet knows how these protections would perform in a major issuer failure. The legal architecture is increasingly clear; the real-world insolvency treatment remains largely untested. As stablecoins evolve into an increasingly important vehicle for global dollar circulation, this question of creditor priority may prove one of the most consequential unresolved issues in the entire sector.

We have more on the report below. And much more beyond that.

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Finally, we’re back. And to my surprise, we didn’t miss all that much. Just JP Morgan’s Jamie Dimon taking a potshot at Coinbase’s Brian Armstrong over the Clarity Act. And to a lesser extent, Tether collaborating with the Georgian government on the issuance of a local currency stablecoin, the key details of which — including its issuance structure, reserve custody arrangements, redemption mechanics, and rollout timeline — have yet to be revealed.

Inquiring minds will undoubtedly want to know whether LariCoin ends up looking more like a government-backed private stablecoin, or a CBDC by another name, than a conventional stablecoin.

The bigger news today, however, is the European Central Bank’s continuing campaign against stablecoins, this time in the form of a highbrow intervention from Isabel Schnabel. The erudite German official not only takes aim at stablecoins, but also seizes the opportunity to unceremoniously talk down the dollar, arguing that its enduring dominance owes less to America’s economic fundamentals than to the network effects, scale, and first-mover advantages generated by the eurodollar market and money market funds. Miaow.

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Not only is it too hot in London to work this week, it’s also half-term (aka school holidays). That means the Blind Spot will be off until June 1.

In practice, that means we retain the right but not the obligation to post stories and aggregations throughout the week.

Izzy

It’s not been a very daily Peg this week, apologies. Circumstances beyond my control. And I have bad news. Next week is half-term, so I’m taking the week off. But I have a couple of great stories in the pipeline, and will post a daily when I can.

In the meantime, please check out my gold tokenization feature in this year’s In Gold We Trust report.

And for those who can’t be bothered, here are the highlights:

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This is a guest post by Bruce Packard, a Financial Analyst and a former equity research analyst who worked in the city specialising in the financial sector.

The most powerful word in advertising is “free”. Many tech platforms have made billions offering a free service, then selling customer attention or bundling poor value products with the “free” service.

Before the financial crisis, UK high street banks were offering free current accounts, while at the same time reporting sky-high Return on Equity, in the range of 20-35 percent.

Some of that high profitability was financial engineering, balance sheet leverage, and mark-to-myth accounting.

But some bank excess profits would come from using the current account relationship to cross-sell poor-value insurance or foreign exchange transactions.

The regulator put a stop to the first in 2011, preventing banks from (mis)selling Payment Protection Insurance.

Despite this, in the UK at least, the free current account model endured, largely because most banks felt that U-turning on free would immediately cost them market share.

But things are changing. Competition from fintechs like Wise and Revolut has made it increasingly difficult for banks to gouge their customers on fee-based FX transactions.

Moreover, some of that same competition has not been afraid to challenge the assumption that the free banking model is commercially impossible to unwind.

Today, Revolut earns 80 percent of its revenue from non-interest income, mainly through charging customers fees. For a bank like Lloyds, the figure is closer to a third, with net interest income from mortgages and other loans representing two-thirds of revenue.

Moreover, it’s a strategy that is working exceptionally well for Revolut.

The neobank boasts some 70 million customers, growth is running at 30 percent year-on-year, and the bank generated £1.7bn in profit in 2025.

It’s all the more extraordinary when you appreciate that UK banks have historically tended to grow faster than the market only when they offer new customers better value than existing customers. Such so-called “front book/back book” pricing, sees existing customers on the back book penalised for their loyalty.

But that model doesn’t just annoy existing customers. Shareholders don’t like it either because new customers often fail to generate decent marginal returns. In fact, the model only begins to pay off when new customers attracted into the bank by promotional offers grow lazy and stop shopping around for better deals. If they stay on their toes, the whole thing risks turning into a sector-wide race-to-the-bottom.

Revolut’s growth, by contrast, hasn’t followed that old playbook. The bank has built a diversified revenue machine that customers value and recommend to their friends. Instead of spending on TV adverts or sponsoring the rugby, Revolut simply pays customers directly (often £50–£100) to refer their friends to the banking app. This is lower cost and more effective than traditional bank marketing, but of course hard to copy for traditional banks who have already alienated their own customers with poor service or by penalising their loyalty.

Jim Barksdale, the CEO of Netscape, used to say: “Gentlemen, there’s only two ways I know of to make money: bundling and unbundling.”

Fast forward a couple of decades, and Revolut is a perfect modern example of this reality. Revolut and Wise won customers by offering one product that banks were uncompetitive in: FX.

Now that they’ve got customers’ trust, they are focusing on “rebundling”. This means giving customers access to bundles of carefully curated services, such as insurance and savings deals.

The monthly fee model also allows them to throw in other perks such as airport lounge passes, hotel stays, and even newspaper subscriptions. Amazingly, rather than putting customers off, paid subscriptions now account for 16 percent of revenues. That’s greater than the income from Revolut’s FX and wealth services combined.

That said, it’s not like traditional banks did not attempt to do something similar.

For decades, many high-street lenders offered packaged accounts that bolted all sorts of supposed perks into the service. These didn’t work because, too often, such offers were just another way for banks to gouge their long-suffering customers. Travel insurance had age-related exclusions or didn’t cover winter sports (such as skiing), making it far less valuable. Banks even sold identity theft insurance, but much of the protection offered was redundant since it was already provided for free under standard consumer protection law. In contrast, Revolut set out to target a younger demographic that travelled frequently, traded crypto, and used multiple digital subscriptions.

Today it is among the banks pushing most enthusiastically into embracing stablecoins. Not only does the bank already support stabelcoin transfers and conversions for tokens like USDC and USDT, it is among the four institutions selected by the FCA to participate in a regulatory sandbox testing stablecoin services under the forthcoming UK regime, including the issuance of a GBP token.

Radical stuff.

There is a certain irony here. For years, traditional bankers argued that Britain’s “free if in credit” banking culture distorted incentives and encouraged banks to make money indirectly through opaque add-ons and cross-selling.

They should, perhaps, have been careful about what they wished for.

The institutions that finally persuaded customers to pay directly for banking services were not the incumbents, but fintech challengers.

Now, free banking is coming to an end, not because traditional banks can charge for their services. It’s because fintechs have used their day in the sun to hook customers on quality services not just cheap ones.

You can read the full testimony of Rory Tanner, head of UK Government Affairs and Public Policy at Revolut, to the Financial Services Regulation Committee here.

A very long analysis on our sister site about China’s not-at-all-diminishing energy stockpiles is to blame for today’s tardy sendout. Also: many, many briefings.

The Blind Spot

The curious case of China's not-at-all-diminishing energy stockpiles

Crises have a habit of sharpening collective awareness of previously obscure facts. In the case of the Iran war, one such revelation has been the sheer scale of China’s oil stockpiles…

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a month ago · 6 likes · Izabella Kaminska

A casual reminder that our interview with Tether’s Juan Sartori comes out on Wednesday in the In Gold We Trust report. This is paired with a long analysis about the birth of a tokenised eurogold standard. Annual subscribers can attend my exclusive briefing on the piece for free by signing up here.

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Editorial hello

We all know the stablecoin market is attracting an ever larger number of tradfi participants. But while big banks are increasingly entering the market, I hear many are still uncomfortable with the level of transparency applied to transactions processed on public blockchains.

In that vein, I understand some banks are flirting with the idea of developing “dual form” assets. These would be tokens that behave as tokenized deposits when they remain within a bank’s own closed ecosystem, but which automatically convert into stablecoins once they move outside that perimeter.

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I’m afraid I’m rushing to a stablecoin-themed lunch today, so the best I can do for a thought for the day is what I already shared on X this morning:

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Editorial hello

You know crypto and fintech have finally become the very thing they once claimed to disrupt when sitting through a Circle earnings call feels every bit as arduous and jargon-laden as a conventional bank earnings call.

I persevered regardless. Despite the effort, there were really only two notable takeaways. The first was a quiet early reference to the “strong growth” Circle is seeing in other digital assets, most notably EURC — the world’s largest euro stablecoin — which doubled year over year to end the period at €358 million.

The second concerned executives’ repeated insistence that USDC rewards will be driven by “utility” use cases — language that increasingly appears less like marketing and more like regulatory positioning.

This framing, I would say, is clearly designed to align with the final iteration — specifically the so-called “404 compromise” — of the upcoming Clarity Act, which permits stablecoin rewards provided they are not “economically or functionally equivalent to the payment of interest or yield on an interest-bearing bank deposit.”

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Editorial hello

Circle’s Q1 results came out today and point to improving operating leverage at its core stablecoin business, even as higher compensation and infrastructure costs continue to weigh on bottom-line profitability.

Total revenue and reserve income rose 20 percent year-over-year to $694 million, driven by wider circulation of the company’s USDC token and continued reserve income growth.

USDC in circulation rose 28 percent year-over-year to $77 billion, while USDC onchain transaction volume jumped 263 percent to $21.5 trillion.

Net income from continuing operations, however, fell 15 percent to $55 million from $64.8 million a year earlier, after the company absorbed significantly higher operating expenses tied to stock-based compensation, payroll taxes, and continued investment spending following its public listing.

All that said, expansion in Circle’s“revenue less distribution costs” margin to 41 percent from 40 percent a year earlier, with adjusted EBITDA rising 24 percent to $151 million, signaled improving operating leverage despite ongoing sizable revenue-sharing payments to partners such as Coinbase.

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