a16z’s latest report on crypto: The global financial system is being rebuilt on new infrastructure, and the speed of this transition may be faster than the wider crypto industry thinks. The driving force at its core is stablecoins. a16z believes stablecoins are no longer just a medium of exchange used within crypto exchanges; they are gradually evolving into a new underlying pipeline for global financial products, and spawning a new kind of “Banking-as-a-Service” (Banking-as-a-Service, BaaS).
Stablecoin-based BaaS: From renting banking licenses to on-chain financial modularity
In the BaaS model of the past decade, fintech companies primarily provided payments, accounts, or financial services by renting banking licenses, and connecting to legacy core banking systems. But a16z points out that the new generation of BaaS structure enabled by stablecoins is completely different: companies no longer just rely on traditional banks’ back offices; instead, they assemble end-to-end financial products using on-chain infrastructure, self-custody wallets, payments, FX, account and credit modules.
In other words, in the past, if a startup wanted to build cross-border accounts, payments, money exchange, and lending, it often had to obtain licenses in different countries, connect to local banks, and build heavy compliance and clearing relationships. But after stablecoin “stacking” matures, these capabilities are gradually becoming financial primitives that can be combined. a16z believes that Stripe’s acquisition of Bridge and Privy, and Mastercard’s acquisition of BVNK, reflect how traditional payment giants have started laying out plans on the same map—moving early to secure key components in the new financial stack.
Blockchain is no longer just one market—three types of networks are starting to split up the work
a16z also notes that, in the past, outsiders often treated all blockchains as competing, similar pieces of infrastructure—but that assumption is breaking down. The on-chain networks needed for financial activity are already starting to split into three major categories.
The first category is general-purpose public chains, such as Solana, Ethereum, and their major L2s. These remain the main arenas for crypto capital market activity, including trading, lending, and DeFi. This is a huge and durable market, but it’s no longer enough to explain the entire on-chain financial landscape.
The second category is payment-specific blockchains, such as Stripe’s Tempo and Circle’s Arc. These networks are not trying to compete with general-purpose chains in every scenario; instead, they focus on the needs of financial services around transaction cost, privacy, stablecoin-native fees, and predictable settlement costs. For fintech companies that process large volumes of payments every day, whether they can accurately forecast costs is itself an infrastructure competitive advantage.
The third category is institutional networks, such as Canton. They focus on the programmability and privacy required by regulated financial institutions, while not forcing banks and asset management companies to give up existing compliance frameworks. a16z believes that as banks and large asset management institutions adopt at an accelerating pace, these networks may play an increasingly critical role as load-bearing infrastructure in the future financial system.
Stablecoin issuers enter the “charter competition”
At the stablecoin issuance layer, a16z believes competition has moved beyond simple competition for brand, liquidity, and distribution channels, toward deeper regulatory positioning. The article points out that after the GENIUS Act passed in the U.S., stablecoin issuers are racing to obtain an OCC National Trust Charter, because this isn’t just about legality and reputation—it may determine who can get closest to the core of the U.S. financial system in the future.
a16z’s view is that if, going forward, regulators allow institutions holding an OCC National Bank Charter to directly connect to the Fed payment rails, then stablecoin issuers that obtain the relevant charter status first could be integrated into the core of the financial system—becoming key infrastructure for the digital dollar transition.
That is to say, this competition is not only about who has a higher stablecoin market share, but about who can stand closer to the core position within the payments-level structural hierarchy. In the long run, if stablecoin issuers can secure an institutional position, they wouldn’t just provide payment tools; they could become the underlying layer for the development of credit and capital markets.
Cross-border payments have improved, but the last mile is still stuck in local liquidity
a16z admits that stablecoins have significantly improved the “middle-mile” issue in cross-border payments—the process of funds moving between countries. Stablecoins can enable faster settlement, reduce reliance on pre-funded capital held in correspondent bank accounts, and lower frictions in international transfers.
But what remains unresolved is the “last mile”: liquidity between stablecoins and local fiat currencies. Especially in emerging markets, many regions lack sufficient depth in local fiat trading, which leads to slippage, delays, and unstable quoting. If this problem can’t be improved, the potential of stablecoins for B2B payments, corporate collections, and cross-border operations will still be clearly limited.
a16z believes this gap is being filled gradually through three channels. First are FX services providers that support stablecoins, such as OpenFX and XFX. Second are regional exchanges with deep relationships in local fiat, such as Bitso in Latin America, Yellowcard in Africa, and Coins.ph in Southeast Asia. Third are banks that in the future directly support FX transactions for stablecoin settlement. These three are all indispensable: FX providers deliver technical integration, regional exchanges provide depth in local markets, and banks provide balance sheets and correspondent banking networks.
The bank connectivity layer will become an unglamorous but critical piece of infrastructure
The article also emphasizes that although the stablecoin financial stack is mostly built by fintech companies, non-bank payment firms, and crypto-native companies, this also creates a structural problem: stablecoin infrastructure and the legacy core systems still used by most banks are not compatible.
Therefore, the “bank connectivity” layer will become a very crucial component in the new financial stack. Companies in this category translate stablecoin capabilities into forms that banks can connect to, understand, and manage in a compliant way—so that banks don’t have to completely replace their core systems, and can still provide stablecoin functionality alongside existing account, payment, and clearing infrastructure.
a16z believes that although this layer may not be as eye-catching as payment apps or public chains themselves, it is a vital bridge for traditional finance to truly access on-chain finance. Some of the more forward-looking players have even expanded beyond crypto capital markets and payments into scenarios like on-chain lending—areas that banks in the future will inevitably pay attention to.
Financial applications are converging: exchanges, wallets, and the boundaries of new banks are becoming blurred
In the application layer, a16z sees two important trends. The first is the fusion between fintech “new banks” and crypto wallets. Crypto exchanges are adding virtual accounts, debit cards, and rewards mechanisms; meanwhile, new banks are starting to integrate crypto assets with traditional investment products. The boundaries between the two are rapidly blurring, and may ultimately converge into a unified financial application that serves both crypto-native users and the mainstream public.
The second trend is that corporate banking scenarios are beginning to adopt stablecoins. For parts of Latin America, sub-Saharan Africa, and Southeast Asia, local dollar bank infrastructure may be expensive, fragile, or difficult to access. Stablecoins therefore become a new tool for enterprises to conduct dollar-denominated operations, including paying suppliers, receiving globally, and managing funds.
a16z emphasizes that fundamentally, this story isn’t just about “crypto adoption”; it’s about “access to dollars.” Once users or enterprises obtain stablecoin-denominated dollar balances, the next step isn’t just payments—it’s complete financial services such as credit, investment, wealth management, and insurance.
Payments are just the first act; the credit market may be the second
a16z believes that if payments are the first act in stablecoin development, then credit may be a more important second act. The traditional view of stablecoins is a large-scale, narrow-bank model: dollars are tokenized, held in wallets for settlement, and can be redeemed on demand. But this understanding overlooks a key issue: when stablecoin issuance reaches a scale of trillions of dollars, those massive idle balances will ultimately seek yield and productive uses.
Companies holding stablecoin treasuries want capital to work. Agreements require liquidity, and end users will also generate borrowing demand. a16z therefore expects that a new on-chain credit market is almost unavoidable.
This credit market won’t just be a self-perpetuating loop like early DeFi—“lock crypto assets, borrow crypto assets, then speculate on crypto assets again.” Instead, it will be closer to the productive credit that banks were originally supposed to provide: capital formation; loans based on real assets or accounts receivable; and working capital for enterprises in markets where local bank infrastructure is insufficient.
a16z compares this trend to the private credit market of the past decade. When banks exited certain lending categories due to regulatory pressure, private credit funds filled the gap and grew into a trillion-dollar market. On-chain credit has a similar structure: capital forms outside the traditional banking system, and serves borrowers not sufficiently covered by the existing financial system. The difference is that its underlying infrastructure is more open, programmable, and global.
Stablecoins are also a new channel for dollar dominance
a16z further places stablecoins into a geopolitical context. For individuals and businesses, stablecoins represent a form of real economic empowerment: users can avoid local currency devaluation risk, connect to global payment rails, and use the currency with the highest global liquidity. Farmers in sub-Saharan Africa, manufacturers in Southeast Asia, and small importers in Latin America could all hold dollars, transact in dollars, and save dollars without needing U.S. bank accounts or correspondent banking relationships.
But for the U.S., this is also an amplification of existing power. In the past, dollar dominance was maintained mainly through institutions such as the IMF, World Bank, the correspondent banking system, and bilateral agreements. Now, stablecoins add a more direct channel: every wallet holding dollar stablecoins is effectively a new node in the dollar financial network.
a16z believes that by passing legislation like the GENIUS Act, the U.S. isn’t just regulating a new financial product—it’s betting that stablecoin infrastructure can sustain the U.S. dollar’s leadership position in the next-generation financial system amid challenges to its dominance.
Stablecoins are not a payment tool—they’re an upgrade to the global financial system
The story of stablecoins shouldn’t be understood only as cheaper, faster payments. Payments are just the entry point; what’s truly important is the new global financial stack being formed behind the scenes.
This stack includes payment-specific chains, institutional networks, stablecoin issuers, the bank connectivity layer, FX liquidity providers, enterprise financial applications, new banks, and the on-chain credit market. It may provide not only low-cost cross-border payments, but also dollar accounts in markets where bank infrastructure is weak, returns on idle capital, credit for borrowers ignored by traditional finance, and investment products that allow more people to access global capital markets.
To a16z, stablecoins are no longer just a product inside the crypto industry, but a core variable in the reorganization of global financial infrastructure. The companies building these layers of the stack will determine what global finance in the next era looks like—and what shape the global dollar economy will take.
This article by a16z proposes stablecoin-based BaaS (Banking-as-a-Service), the next on-chain credit market? First appeared in ABMedia.
