Where is the true battleground for stablecoin issuance: compliance, liquidity, or distribution?

Writing by: Chuk (Former Paxos Employee)

Translation by: Dingdang (@XiaMiPP)

Introduction: Everyone is issuing stablecoins

Stablecoins are evolving into application-level financial infrastructure. After the enactment of the GENIUS Act and clearer regulatory frameworks, brands like Western Union, Klarna, Sony Bank, Fiserv, and others are shifting from “integrating USDC” to “launching their own dollars through white-label issuance partners.”

Supporting this shift is the explosive growth of “issuance-as-a-service” platforms. A few years ago, Paxos was almost the sole preferred option; now, depending on the project type, there are over 10 feasible pathways, including new platforms like Bridge and MoonPay, compliance-first Anchorage, and industry giants like Coinbase.

The increasing options make stablecoin issuance seem like a commodified capability—at least at the token core architecture level, this is true. But “commodification” depends on who the buyers are and what specific tasks need to be completed. When we distinguish between the token’s underlying operations, liquidity management, regulatory compliance stance, and peripheral supporting capabilities (deposit/withdrawal channels, fund orchestration, account systems, card services), this market is less about price competition and more about layered competition: the truly hard-to-copy “results” are where pricing power is most easily concentrated.

In other words: core issuance capabilities are becoming more uniform, but in aspects with high operational result requirements—such as compliance, redemption efficiency, launch time, and bundled services—suppliers are not easily replaceable.

White-label stablecoin supply is rapidly growing, creating a vast issuer market beyond USDC/USDT. Source: Artemis

If you see issuers as fully interchangeable entities, you overlook where the real constraints are and misjudge where profits might be retained.

Why do enterprises launch their own branded stablecoins?

This is a reasonable question. Enterprises are motivated mainly by three factors:

Economic benefits: Retaining more customer funds and balances, and expanding ancillary revenue streams (fund management, payments, lending, card services).

Behavior control: Embedding customized rules and incentive mechanisms (e.g., loyalty programs), and independently deciding settlement paths and interoperability to match their product forms.

Accelerating deployment speed: Stablecoins enable teams to launch new financial experiences globally without rebuilding a complete banking system.

It’s worth noting that most branded stablecoins do not need to grow to the level of USDC to be considered successful. In closed or semi-open ecosystems, the key metric may not be market cap but ARPU (average revenue per user) or improvements in unit economics—i.e., how much additional revenue, retention, or efficiency the stablecoin functionality brings to the business.

How does white-label issuance work? Dissecting the technology and operational stack

To determine whether issuance is “commodified,” first clarify the specific division of responsibilities: reserve management, smart contracts and on-chain operations, and distribution channels.

Issuers typically control reserves and on-chain operations; brand owners control demand and distribution. The real differences lie in the details.

The white-label issuance model allows brands to launch and distribute their own stablecoins while outsourcing the first two layers to a “recorded issuer” (issuer-of-record).

In practice, responsibilities are roughly divided into two categories:

Mainly controlled by the brand: distribution and usage scenarios (distribution channels)—including where the stablecoin is used, default user experience, wallet entry points, and which partners or platforms support it.

Mainly controlled by the issuer: issuance operations. Smart contract layer (token rules, admin permissions, minting/burning execution) and reserve layer (asset composition, custody, redemption process).

From an operational perspective, most of these capabilities are now productized via APIs and dashboards, with deployment times ranging from a few days to several weeks depending on complexity. Not all projects today require a compliant US issuer, but for institutions targeting US enterprise clients, compliance capabilities have already become part of the product even before the full implementation of the GENIUS Act.

Distribution is the most challenging part. In closed ecosystems, making stablecoins usable is primarily a product decision; in open markets, integration and liquidity are bottlenecks. At this stage, issuers often intervene in secondary liquidity support (exchange/market maker relationships, incentive design, initial liquidity injection). While demand remains controlled by the brand, this “market entry support” is where issuers can significantly influence outcomes.

Different buyers assign different weights to these responsibilities, naturally splitting the issuer market into several clusters.

Market stratification: whether it is commodified depends on who the buyers are

“Commodification” refers to a service being sufficiently standardized so that switching suppliers does not change the outcome, shifting competition focus to price rather than differentiation.

If changing the issuer would alter the results you care about, then issuance is not yet commodified for you.

At the token core level, switching issuers often does not significantly affect outcomes, making them increasingly interchangeable: most institutions can hold similar treasury-style reserves, deploy audited mint/burn contracts, provide basic controls like freeze/pause, support mainstream chains, and expose similar APIs.

However, brand owners rarely just buy a “simple token deployment.” They buy results, and the required results largely depend on the buyer type. Overall, the market roughly splits into several clusters, each with a “key point where substitutability begins to fail.” Within each cluster, teams typically only have a few truly feasible options in practice.

Enterprises and financial institutions are driven by procurement processes and trust as the core optimization goal. Substitutability fails in areas like compliance credibility, custody standards, governance structures, and the reliability of 24/7 redemption under large-scale conditions (potentially hundreds of millions of dollars). In practice, this is a “risk committee-style” procurement: issuers must stand firm in written materials, and their operational stability and predictability in production environments must be sufficient—even “boring.”

Representative institutions: Paxos, Anchorage, BitGo, SoFi.

Fintech companies and consumer wallets are product-oriented, focusing on delivery and distribution capabilities. Alternatives fail in launch time, integration depth, and value-added features that enable stablecoins to be used in real business processes (e.g., deposit/withdrawal channels). In practice, this is a “delivery within this iteration cycle” procurement strategy: the winning issuer is the one that can minimize KYC, deposit/withdrawal, and fund flow coordination work and get the entire system operational as quickly as possible (not just the stablecoin itself).

Representative institutions: Bridge, Brale (MoonPay / Coinbase may also fall into this category, but public information is limited).

DeFi and investment platforms are native on-chain applications, emphasizing composability and programmability, including structures designed for different risk trade-offs and aimed at maximizing yields. Substitutability has some influence on reserve model design, liquidity dynamics, and on-chain integration. In practice, this is a “design-constrained” compromise: as long as it enhances composability or yields, teams are willing to accept different reserve mechanisms.

Representative institutions: Ethena Labs, M0 Protocol.

Issuers tend to form clusters based on enterprise compliance posture and client onboarding methods: enterprises and financial institutions in the lower right corner, fintech/wallets in the center, DeFi in the upper left corner.

Differentiation is moving up the technology stack, especially evident in fintech/wallet domains. As issuance itself gradually becomes a function, issuers start competing through bundled comprehensive services to complete overall tasks and aid distribution. These services include compliant deposit/withdrawal channels and virtual accounts, payment orchestration, custody, and card issuance. This approach can maintain pricing power by changing listing times and operational outcomes.

Within this framework, the question of “whether it is commodified” becomes clearer.

Stablecoin issuance at the token layer has already been commodified, but at the result layer, it is not yet commodified because buyer constraints make suppliers difficult to replace.

As the market develops, issuers serving various clusters may gradually converge in capabilities needed to meet market demands, but we are not there yet.

Where might lasting advantages come from?

If the token core has become an entry barrier and peripheral differentiation is slowly fading, a clear question arises: can any issuer establish a lasting moat? Currently, it appears more as a customer acquisition race, achieved through switching costs to retain users. Changing issuers involves operations related to reserves, custody, compliance processes, redemption mechanisms, and downstream system integrations, so issuers are not “just a click away from being replaced.”

Besides bundled services, the most likely source of long-term moat is network effects. If branded stablecoins increasingly require seamless 1:1 convertibility and shared liquidity, value may accumulate in becoming the default interoperability network at the issuer or protocol layer. It remains uncertain whether this network will be controlled by issuers (capturing strong value) or evolve into a neutral standard (wider adoption but weaker value capture).

An important trend to watch: will interoperability become a commodified feature or a primary source of pricing power?

Conclusion

Currently, token issuance is commodified at the core, with differentiation at the edge. Deployment and basic controls are becoming more uniform, but operational, liquidity support, and system integration outcomes still vary.

For any buyer, the market is not as crowded as it appears. Actual constraints quickly narrow the candidate list, and “trustworthy options” are often only a few, not dozens.

Pricing power derives from bundled sales, regulatory environment, and liquidity constraints. The value lies not in “creating tokens” itself but in the entire infrastructure supporting stablecoin operation.

Which moats can last long-term remains uncertain. Sharing liquidity and exchange standards to form network effects is a reasonable path, but as interoperability matures, who captures the value remains unclear.

Next, attention should be on whether branded stablecoins will converge into a few exchange networks or if interoperability will ultimately evolve into a neutral standard. Regardless of the outcome, the conclusion remains the same: tokens are just the foundation; business models are the core.