By 
Hey, it's Marc.
“Bunker mode”. That was Justin Drakes' urgent call for the industry this week to prepare for quantum resistance.
Meanwhile, TOKEN2049 wrapped in Singapore Day two belonged to BlackRock, Morgan Stanley and Nasdaq, and next June the show moves to New York.
The debate had moved on to who keeps the record and who keeps the customer. Circle's answer, which I wrote about Thursday: keep the customer.
Here's what matters this week:
Plus: Don’t miss Blackrock’s new report The Machine-Native Economy.
Your Take
Who will own the customer in corporate stablecoin payments by 2030? |
01 / STABLECOINS · PRO ANALYSIS
Circle lends without lending
What's going on here?
Circle added Aave on Tuesday to its bitcoin-backed borrowing in Circle Mint, which launched with Morpho on September 21. An institution deposits bitcoin. Circle's trust bank holds it, and a Bermuda affiliate issues cirBTC one for one. The cirBTC goes into an Aave or Morpho pool as collateral. The borrowed USDC lands in the client's Circle Mint account. It's for institutions only, and not for New York clients.
What does this mean?
I think Circle kept the best parts of a lending business and handed off the funding. It keeps the customer, the custody and the dollar. The loan money comes from whoever supplies USDC to the pool. Circle says it isn't the lender, and its trust bank doesn't make loans.
The borrower carries the liquidation risk. Morpho's pool liquidates at 86% loan-to-value, so a loan taken at 40% has a cushion of about a 53.5% fall in bitcoin. On Aave the line is 78%, a cushion of about 48.7%.
Why should I care?
If your treasury holds bitcoin, you can now borrow dollars against it without selling, so budget for pool rates that can climb fast.
The 51 Signal: who lends below the risk-free rate?
We pulled the lending pools behind Circle's product on Thursday morning. Lenders in Morpho's cirBTC pool on Arc, Circle's blockchain, earn 1.81%. In Aave's pool on Arc they earn 1.67%. SOFR, the overnight dollar benchmark, was 3.88%.
Our read: Three wallets supply 97% of the $195M in Morpho's pool, and 99.9% of it is lent out. That raises a question we can't answer from public data: who is lending this cheaply, and why? Circle discloses a commercial relationship with Morpho. Morpho's rate model keeps pushing the rate up while a pool stays this full. Borrowers should plan for that.
PS: Your next client could be reading this.
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02 / REGULATION
Washington rules without Congress
What's going on here?
Three big moves this week:
The SEC's custody proposal for advisers and funds, which I covered on Monday, appeared in the Federal Register on Tuesday, with comments due December 7.
The CFTC asked for early comments on federal rules for leveraged crypto trading and a new kind of registered exchange.
FinCEN withdrew its 2020 self-hosted wallet and 2023 mixer proposals.
What does this mean?
Agencies can open doors. They can't push everyone through. In his WSJ op-ed, Selig wrote that the CFTC can't require crypto to trade on its platforms "without congressional action."
In Selig's own words, plain spot exchanges stay under state money-transmitter laws. The new rules start with exchanges that offer leverage, which the CFTC already oversees. I think that's the limit: the CFTC can build a federal lane, but only Congress can close the state one.
And a rule can be undone by the next Commission. The SEC has two commissioners.
Why should I care?
If you run an exchange or custodian, build to these rules, but without a law, any door opened this week can still close.
03 / PAYMENTS
Samsung puts dollars in the wallet
What's going on here?
Samsung announced that Samsung Wallet will hold and send USDC for eligible US Galaxy users from the last week of October. Samsung charges no fee for transfers to other wallets. Payouts to bank accounts in more than 60 countries arrive in local currency, for a fee. Bastion is the custodian, with Coinbase Prime as sub-custodian. Solana and Sui run the networks. Samsung counts 82 million compatible Galaxy devices in the US.
What does this mean?
Consumer crypto has always lost people at step one: download an app, pass ID checks, manage keys. Samsung skips the download because the wallet is already on the phone.
I'd watch who gets paid. Samsung says it "is not a bank, money transmitter, or digital asset custodian." Bastion and Coinbase hold the money. And 82 million is phones that can, not people who will. Each user still needs a Samsung Account and an ID check.
Why should I care?
If you run remittances, your next competitor may come pre-installed on the phone, so watch what Samsung charges for payouts abroad.
Quick Hits
StanChart plans Singapore custody. Standard Chartered plans to hold crypto, stablecoins and tokenized assets for institutions there, after the UAE, Luxembourg and Hong Kong.
EU starts a stablecoin exit clock. ESMA told EU crypto firms to stop serving stablecoins that break MiCA, with three months to clear what's left.
Tokenized repo stays near $7.5T. Broadridge's repo ledger processed $7.5 trillion in September, about $359 billion a day.
Two more fintechs want charters. Rain applied for an OCC trust bank to issue stablecoins and hold reserves. Modern Treasury filed for one to run custody.
Anchorage buys a payouts firm. Anchorage Digital bought Routable, which pays out to 220+ countries, and will add stablecoin and tokenized deposit settlement.
Securitize sells real stock tokens. Securitize Stocks give a legal claim on 12 US shares like Apple and Nvidia, settling in USDC on Solana.
Solana releases settlement code. The Solana Foundation released open-source delivery-versus-payment code, with input from JPMorgan. The asset and the cash move together, or neither does.
Coinbase brings Deribit onshore. Coinbase finished its Deribit integration and opened institutional onboarding. Options through Coinbase Prime are due in the coming weeks.
Franklin calls out digital twins. At TOKEN2049, CEO Jenny Johnson questioned rival tokenized funds that keep the real record off the blockchain. Franklin's own BENJI platform holds about $2.5 billion.
A frozen wallet goes to court. Payments firm Conduit sued Tether in New York over $2.76 million of USDT frozen for more than a year.
Money Moves
OKX, $25B valuation. Circle, Ripple, QRT and SC Ventures by Standard Chartered invested at March's valuation. The amount wasn't disclosed.
Spiko, $90M Series B. NEA led, with Index Ventures and Bpifrance. Spiko runs $2.7 billion in tokenized cash funds.
GSR, up to $100M. The market maker is backing Hare, its new onchain lending-vault business on Aave, mostly through a multi-year credit line.
Boardroom Reads
Coinbase Bets Banks Will Be Bigger Customers as Well as Rivals. Bloomberg, October 8. Why the biggest US exchange wants to sell its plumbing to the banks it competes with.
Crypto and bitcoin have problems the CFTC and SEC can't fix. Paul Vigna, American Banker, October 6. The bear case: new rules won't fix falling bitcoin trading or weak demand.
"Bunker mode". Justin Drake, Ethereum researcher, on X, October 7. Why he thinks big holders should start moving coins to fresh addresses, in case AI breaks today's keys.
The Machine-Native Economy. Robert Mitchnick and colleagues, BlackRock, October 5. BlackRock's digital assets team argues AI agents will pay each other in stablecoins first.
Money in the digital age. Piero Cipollone, ECB, October 6. The ECB's plan for tokenized settlement in central bank money, with its deposit-flight stress test.
On the Calendar
October 13: JPMorgan Q3 results. Citi reports the same day. Listen for deposits and stablecoins.
October 13–16: DC Fintech Week, Washington. Regulators and builders on crypto, AI and open banking.
October 15: BNY Q3 results. BNY tokenizes and keeps the register for BlackRock's BSTBL fund shares.
October 20: Regulation Crypto Assets comments close. Last chance to comment on the SEC's crypto rulebook.
October 27–28: FOMC meeting. The rate decides what stablecoin reserves earn.
November 4: Circle Q3 results. The first numbers since OpenUSD launched against USDC.
That's all for now, folks.
– Marc & Team
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