The biggest news this week is the bidding war for Hyperliquid's native stablecoin, a fight for $5.5 billion in float. This isn't just a crypto battle—it's attracted big names from both DeFi, like Frax and Ethena, and fintech giants, including Stripe and PayPal. This marks the first major decentralized attempt to challenge traditional fintech profit models by ceding float revenue to the community to gain a distribution foothold. With the barrier to entry for stablecoin issuance falling, we're seeing a shift from issuance to distribution as the key differentiator, turning the idea of "monetary sovereignty" into a reality.

Market Overview & Growth Highlights

Total stablecoin market cap reached $287.876b, with a week-over-week decrease of $353.58m. In terms of market structure, USDT continues to maintain its dominant position at 58.88%; USDC ranks second with a market cap of $72.012b, accounting for 25.02%.

Blockchain Network Distribution

Top 3 Networks by Stablecoin Market Cap:

1. Ethereum: $154.314b

2. Tron: $79.239b

3. Solana: $12.465b

Top 3 Networks by Weekly Growth:

1. M By M^0 (M) : +20.77%

2. PayPal USD (PYUSD): +14.78%

3. Ethena USDtb (USDTB) : +12.94%

Data from DefiLlama

🎯$5.5 Billion at Stake: Hyperliquid’s Stablecoin Battle

The Hyperliquid community is hosting a bidding war for the right to issue its native stablecoin, USDH, a battle over who gets to manage $5.5 billion in user reserves and their interest. This challenges the traditional model where centralized issuers like Circle and Coinbase captured billions in interest revenue. Bidders like Frax and Ethena are offering to return up to 100% of the interest to the community, viewing issuance not as a profit center but as an entry ticket to Hyperliquid’s user base.

The proposals reveal two key strategies for stablecoin distribution: a decentralized, developer-driven approach versus a top-down, corporate one. DeFi-native projects like Frax and Ethena aim to use Hyperliquid’s reserves to boost their own ecosystems. In contrast, fintech giants like Stripe and PayPal, through partnerships, are leveraging existing merchant networks for rapid, mainstream adoption.

Currently, the community-focused bid from Native Markets is the frontrunner. This event marks a shift in the stablecoin landscape, where the moat is no longer just reserve size but distribution and community ownership. This could be a harbinger of more communities and brands issuing their own stablecoins, pushing "monetary sovereignty" from an idea into a tangible industry standard.

🎯Stripe’s Next Big Profit Engine: Monetizing the Right to Distribute

Stripe recently launched its in-house payment chain, Tempo, completing a full-stack stablecoin payment system. This ecosystem, which includes Privy for wallets, Bridge for issuance and compliance, and Tempo for settlement, is not about creating a new kind of payment but about making stablecoins an invisible yet core part of its payment infrastructure.

Stripe’s true advantage isn’t the tech itself, but its ability to commoditize the backend—issuance, compliance, and settlement—and focus on what it does best: product and distribution. By leveraging its massive merchant network, Stripe can embed stablecoins directly into real-world business use cases, like loyalty points or supply chain payments. This "distribution channel" is far more valuable than the interest from reserve funds, as it creates non-speculative demand. Stripe's API could even enable merchants to become stablecoin issuers, making distribution the new profit engine.

This model flips the script: instead of focusing on issuance, the real strategic advantage lies in controlling the distribution gateway. Stripe’s control over its merchant network could allow it to charge "tolls" to stablecoin issuers like Circle, transforming distribution itself into a new, monetizable layer.

New Launches

👀In a first for U.S. credit unions, St. Cloud Financial Credit Union is launching its own stablecoin, Cloud Dollar (CLDUSD), by late 2025. Developed with blockchain firm Metallicus, the stablecoin will integrate directly into the credit union's banking system for instant, low-cost transactions. This move allows a smaller financial institution to use blockchain tech to compete for a piece of the $270 billion stablecoin market, bringing a new type of player to the crypto space.

👀Coinbase engineers just dropped x402 Bazaar, a discovery layer for AI agents. Built on their open-source x402 payment protocol, it's basically "Google for AI agents," letting them find and pay for data and services with stablecoins. This sets a new standard for "agent commerce," using micropayments to make it economically viable for AI to access the data they need. Coinbase believes this could create an AI economy even bigger than the one for humans.

👀MegaETH, an Ethereum scaling solution, has partnered with Ethena to launch a new stablecoin, USDm. They're using the stablecoin's reserve yield to subsidize sequencer fees, instead of adding their own markup. This model aims to create a more stable, lower-cost environment for users by aligning network incentives directly with the stablecoin's success. With Ethena's scale and a design that's compliant with the U.S. GENIUS Act, this new approach could redefine how Layer 2 networks are funded.

Market Adoption

🌱Spanish banking giant BBVA is expanding its crypto services in Spain for retail customers, offering Bitcoin and Ethereum trading and custody. They’re doing it with crypto infrastructure firm Ripple, which provides the digital asset custody tech. This move, enabled by the EU's clear MiCA regulations, shows mainstream banks are getting serious about crypto. It also expands a long-standing partnership between the two companies, with Ripple already providing services for BBVA in Switzerland and Turkey.

🌱BlackRock, the world's largest asset manager, is reportedly looking to tokenize its ETFs, including funds tied to real-world assets like stocks. This move follows the huge success of its Bitcoin and Ethereum ETFs, which have attracted over $67 billion combined. With its existing on-chain fund, BUIDL, having already surpassed $2 billion in assets, BlackRock is signaling that Wall Street's move to asset tokenization is accelerating.

🌱Fintech unicorn Ramp is hiring senior engineers to build stablecoin payment infrastructure, including wallet systems and fiat on/off-ramps. The move aims to integrate stablecoins into the company's AI-driven platform for business clients, a strategic shift that could create new opportunities in corporate payments and financial automation. This expansion follows Ramp’s recent success in raising new funding, potentially boosting its valuation to $21 billion.

🌱 Michigan-based mortgage lender LitFinancial has launched a new stablecoin, litUSD, on the Ethereum blockchain, backed 1:1 by cash. The company plans to use the stablecoin to cut funding costs and improve financial management. This move allows LitFinancial to explore on-chain mortgage settlements, making loan performance publicly verifiable. It's an early example of how institutional stablecoins are reshaping traditional finance and bringing new liquidity to the mortgage market.

Capital Deployment

💰Blockchain-based financial firm Figure just had a smashing IPO, raising $787.5 million and seeing its stock price jump over 24% on day one. Founded by former SoFi CEO Mike Cagney, the company uses blockchain to cut out middlemen in financial transactions, slashing the time it takes to process home equity loans from 42 days to just 10. Figure's successful public debut, along with its recent turn to profitability, signals that the mainstream financial world is finally buying into the business value of blockchain.

💰A new startup, Inversion Labs, is raising a $500 million fund to acquire traditional, low-margin businesses and make them profitable by integrating blockchain technology. The company just closed a $26.5 million seed round led by crypto VC firm Dragonfly Capital. This unique approach gives institutional investors low-risk exposure to crypto and provides a real-world model for how blockchain can improve efficiency and drive growth in traditional industries.

💰Kraken has acquired Breakout, a proprietary trading platform founded by crypto influencers like TraderMayne and CryptoCred. The platform provides skilled traders with up to $200,000 in nominal capital, allowing them to keep up to 90% of their profits. This acquisition gives Kraken a new way to identify talent and allocate capital based on skill rather than personal wealth, which could become a significant new model for trading platforms.

💰Canada’s Tetra Digital Group just raised $10 million to develop a new, regulated stablecoin pegged to the Canadian dollar. With backing from Canadian financial heavyweights like Shopify, Wealthsimple, and National Bank, the project aims to launch in early 2026. This move isn't just about a new stablecoin—it's a strategic effort to build a homegrown digital payment infrastructure, diversify beyond U.S. dollar-pegged stablecoins, and secure a place for Canada in the global digital economy.

💰Coinbase just acquired the founding team behind crypto yield platform Sensible, marking its seventh such deal this year. This move is a major step in Coinbase's "exchange for everything" strategy, which aims to make crypto more user-friendly by simplifying DeFi access and adding new assets like tokenized stocks and prediction markets. Despite recent financial headwinds, the company is doubling down on its vision to build a one-stop-shop for trading, lending, and earning—making crypto something people actually use, not just hold.

💰Ant Digital Technologies is reportedly moving to tokenize over $8.4 billion in clean energy assets. The company is already tracking power output from 15 million new energy devices in China, including wind turbines and solar panels. This move, which has already seen three pilot projects raise around $42 million, is a significant real-world asset (RWA) play by a major fintech. It could boost liquidity and create new financing channels for green energy projects.

💰Lead Bank, a 97-year-old community bank in Missouri, just raised $70 million, valuing the crypto-friendly institution at $1.47 billion. Backed by major players like a16z, the bank was acquired in 2022 by a team of tech execs for just $56 million. Since then, it’s expanded its banking-as-a-service platform, partnering with fintech giants like Stripe and Visa for their stablecoin-linked payment cards. This massive valuation leap shows just how much the market values banks that can seamlessly bridge the gap between traditional finance and the crypto world.

💰Tether, the world's largest stablecoin issuer, is reportedly eyeing a big move into the gold industry, looking to invest across the entire supply chain from mining to trading. This strategy comes as gold prices hit record highs, with Tether already owning nearly a third of a Canadian gold royalty company. While Tether denied selling off its Bitcoin, its push into physical assets shows a growing trend among crypto giants to diversify their holdings and bridge the gap between digital and traditional finance.

💰Crypto prediction markets are booming, with over $216 million raised in 2025 alone. This surge is driven by two major players: Kalshi, which recently raised $185 million at a $2 billion valuation, and Polymarket, which is reportedly seeking over $200 million at a $1 billion valuation. A key catalyst for this growth is the shifting regulatory landscape in the U.S., with the CFTC now showing a willingness to engage constructively. This has attracted institutional investors and prompted the industry to expand beyond politics into sports and culture.

Regulatory Compliance

🏛NASDAQ is seeking SEC approval to tokenize stocks, a move that would allow clients to trade shares on-chain or through traditional methods with equal priority. The exchange plans to use the Depository Trust Company (DTC) for clearing and settlement, ensuring tokenized shares grant the same rights as their traditional counterparts. This follows similar moves by brokerages like Robinhood and signals a major shift as traditional finance embraces blockchain to potentially reshape how securities are issued, traded, and owned.

🏛In a major policy shift, SEC Chairman Paul Atkins stated that entrepreneurs should be able to raise capital on-chain "without endless legal uncertainty," echoing his belief that "most crypto tokens are not securities." He revealed the SEC's new "Project Crypto," a plan to modernize regulations so trading platforms can offer trading, lending, and staking under a single framework. Atkins criticized previous "weaponized" enforcement actions for driving innovation overseas, signaling a new era of cooperation that could bring a "golden age" of financial innovation back to the U.S.

🏛A new draft bill in the Senate proposes a joint SEC-CFTC committee to end the crypto regulatory turf war. It also offers key legal protections, clarifying that DeFi developers and protocol operators are not automatically subject to broker-dealer or anti-money laundering rules. The bill also specifies that rewards from staking and airdrops are not considered securities, and provides exemptions for decentralized projects where no single entity controls more than 20% of the tokens. This is a major move to resolve legal uncertainty for developers.

🏛A dozen Democratic senators just released their crypto regulatory framework, which would give the CFTC authority over non-security tokens while classifying DeFi as a "key vehicle" for illicit finance. Unlike the Republican-backed FIT21 Act, the Democratic proposal also includes a controversial ethics rule that would ban elected officials and their families from profiting off crypto. The clear differences between the two parties will make it a challenge to pass a comprehensive bill to end the U.S.'s regulatory uncertainty.

Big Picture

🔮Stablecoins are posing a fundamental threat to U.S. community banks by luring away their deposit base. Unlike fintechs, which compete on user experience, stablecoins are a direct challenge to the banks' core business. While the OCC has signaled that banks can legally engage with crypto, banking associations are warning that the GENIUS Act may allow some crypto platforms to pay interest on stablecoins, potentially causing a mass shift of funds away from traditional banks and into the digital world.

🔮After securing a "green light" from the CFTC, Polymarket is preparing to re-enter the U.S. market by acquiring derivatives exchange QCEX. The move comes as the prediction market platform hit an all-time high for new market creations in August, though its overall trading volume has dipped since the U.S. election peak. With high-profile backers like Donald Trump Jr. and a new partnership with Elon Musk's X, the company is aiming for new growth as it diversifies its offerings and tries to regain momentum.

Source link:PayPal, Stripe Reshape Stablecoin Competition With a Focus on Distribution