A bank can hold digital dollars for its clients, help issue them with other institutions and use a payment network to settle obligations in them. Each job calls for a different investment. A series of announcements in recent days indicate where financial institutions are embracing aspects of the work themselves and where they are willing to share it.
As PYMNTS reported Wednesday (Nov. 11), Deutsche Bank has begun providing digital asset custody to paying clients after outlining a service for institutional and corporate customers in Europe. Custody gives those clients a bank to safeguard assets they already hold. Issuance is a separate undertaking, which Deutsche Bank is pursuing with other financial institutions.
PYMNTS reported Tuesday (Nov. 10) that Goldman Sachs, Citigroup, Santander and Deutsche Bank were among the institutions behind the reported funding for Project Faro. The money would cover about five years of operations for a planned U.S. issuer of a dollar stablecoin. The consortium gives participating institutions a way to share the cost of running an issuer. Each bank still has to decide how the token would fit into the services it offers clients.
Visa’s settlement program shows how that decision works in practice. In a seven-day pilot covered here, Lloyds settled $750,000 in obligations with Visa. Lloyds used its own node on Canton, while Visa supported settlement on a separate public blockchain. The funds reached Visa in under an hour, including over the weekend, the companies said. On Tuesday, the Monad Foundation announced that Visa had added Monad as an option for participating issuers and acquirers. Visa had already disclosed a stablecoin settlement run rate above $25 billion on its October earnings call, as PYMNTS reported.
Banks already manage similar choices across domestic payment systems. The October PYMNTS Intelligence and The Clearing House tracker, “Why Multi-Rail Strategy Is Banking’s Next Competitive Edge,” found that 76% of surveyed financial institutions enabled the RTP® Network for commercial customers, while 40% offered the FedNow® Service to those clients. Adding a network expands the options a bank can offer. Using it for a particular payment still depends on whether the recipient can receive it and whether the bank can fund and reconcile it.
Banks Choose What to Buy and Where to Partner
Morgan Stanley’s Monday (Nov. 9) agreement to acquire Vinyl Equity brings that ownership decision into securities. A transfer agent maintains the shareholder register and records changes in ownership. Bringing Vinyl into Morgan Stanley at Work would let the firm offer that service alongside the equity administration it already provides, including when a private company goes public. Morgan Stanley identified tokenization as a future application and expects the acquisition to close in the first quarter of 2027, subject to customary conditions.
KeyBank and HSBC illustrate the economics of using a partner for a particular task. PYMNTS reported that KeyBank is using Pinwheel to let customers enroll in direct deposit from its app or website. KeyBank also said customers can link outside deposit accounts through Plaid for payments and transfers. In the U.K., PYMNTS reported that HSBC is using Stripe to help eligible small-business customers accept contactless payments on a phone. In each case, a bank can add a service to an existing customer relationship by contracting for the technology that performs it.
For prospective U.S. issuers, there is a regulatory milestone ahead. The Office of the Comptroller of the Currency’s final rule on the GENIUS Act takes effect Jan. 18. The agency says it will begin accepting applications after the Office of Management and Budget approves the information collection for its forms. Applicants will need to explain what assets will back their tokens, how issuance and redemption will work, and how they will manage capital, liquidity and risks from third-party providers.
