11-26-2025 
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Another U.S. bank is pursuing its own stablecoin, Europe’s central bank says stablecoins have little purpose beyond token trades, and South Korea’s stablecoin legislation will have to wait until next year.
- U.S. Bancorp prepping Stellar stablecoin
- Paxos buys Fordefi to boost stablecoin DeFi use
- Klarna issuing dollar-backed stablecoin
- European Central Bank says stablecoins only good for token trades
- South Korea’s stalled stablecoin rules unlikely to come this year
On November 25, Mike Villano, Senior VP and Head of Digital Assets Products at U.S. Bancorp (NASDAQ: USB), aka U.S. Bank, announced that his company is testing its own dollar-denominated stablecoin on the Stellar payments network. No timing was given for when the unnamed stablecoin might emerge from its testing environment.
Villano made the announcement on the U.S. Bank Money 20/20 podcast ‘The Tokenized Future of Banking,’ for which he was joined by José Fernandez Daponte, president/chief growth officer at the Stellar Development Foundation, and Kurt Fields, blockchain lead at consultants PwC.
Villano said U.S. Bank sees blockchain tech “as an alternative payment rail and we’re very interested to see what use cases are going to manifest from that and what customers are going to be most interested in.”
Fields said, “The primary objective was to demonstrate the promise of blockchain in a trusted bank-grade environment … It’s not about innovation anymore. It’s about practical application in a rigorous, highly regulated environment.” The aim is to “demonstrate that the promise of programmable money actually yields benefits for not only the institution but the customers that they serve.”
Villano said banks have far greater responsibilities to their customers than the average crypto platform, and U.S. Bank chose Stellar because “they have the ability at their base operating layer to freeze assets and unwind transactions.”
Daponte said Stellar “was designed from the get-go for financial services … our consensus mechanism, the speed, the privacy, all those things were very much thought with the payments-first mindset.” Daponte claimed Stellar has enjoyed “99.99% uptime for the last 10 years,” which offers reassurance for companies like U.S. Bank that “your blockchain is going to be there.”
America’s fifth-largest lender, U.S. Bank, recently announced the creation of a new Digital Assets and Money Movement organization. The organization’s aim is to accelerate development of (and generate revenue from) “emerging digital products and services such as stablecoin issuance, cryptocurrency custody, asset tokenization and digital money movement.”
On U.S. Bancorp’s Q3 earnings call, CEO Gunjan Kedia was queried on the bank’s stablecoin plans. Beyond serving as custodian for the fiat assets backing stablecoins, Kedia said the goal was to “be ready to onboard and offboard a stablecoin into the banking system, and we are working on that in conjunction with the industry consortiums.”
That’s likely a reference to the joint stablecoin project announced this spring, which involves Bank of America (NASDAQ: BAC), Citigroup (NASDAQ: C), Wells Fargo (NASDAQ: WFC), JPMorgan (NASDAQ: JPM), and other banks. Some of these firms have also expressed desires to launch a solo stablecoin project, most notably JPM and its JPMD ‘deposit token.’
Kedia said U.S. Bank’s second area of interest is being ready to “provide stablecoin services as a payment vehicle should that market take off within our client base. We expect to pilot some stablecoin transactions yet this year with some partnerships in the market.”
Paxos buys Fordefi
On November 25, U.S.-based stablecoin issuer Paxos announced that it had acquired Fordefi, a New York-based digital asset custodian and wallet tech provider focused on decentralized finance (DeFi). For the time being, Fordefi will continue to operate independently, but its tech will ultimately be absorbed into the Paxos infrastructure.
Terms of the deal weren’t disclosed, but Fortune quoted a Paxos rep saying the purchase price was “over $100 million.” That would represent a premium over the $83 million valuation of Fordefi’s last funding round in early 2024 (in which Paxos took part).
Paxos says adding Fordefi’s multi-party computation wallet architecture, policy engine, and DeFi integrations to its own infrastructure/custody offering will create “a single, trusted platform to issue stablecoins, tokenize assets and build complex payment flows.”
Paxos CEO/co-founder Charles Cascarilla praised Fordefi for building “an impressive stack and customer base founded on easy-to-use APIs and seamless Web3 connectivity.” Cascarilla told Fortune that Paxos customers “want to be able to access DeFi and have the right capacity to do that.”
Fordefi CEO Josh Schwartz said his company’s wallet platform is “trusted by nearly 300 institutions.” The enlarged Paxos can now offer enterprises “the unified custody and stablecoin infrastructure they need to deploy real-world digital asset use cases at scale.”
Paxos issues several prominent stablecoins, including PYUSD for payment processing giant PayPal (NASDAQ: PYPL), USDG0, which is governed by the Global Dollar Network consortium, Pax Dollar (USDP), and Pax Gold (PAXG).
The Fordefi acquisition followed Paxos’ acquisition earlier this year of Membrane Finance, a Finland-based Electronic Money Institution that issues the EUROe euro-denominated stablecoin. The acquisition provides Paxos with a pathway to ensure its products comply with the European Union’s Markets in Crypto-Assets Regulation (MiCA).
Klarna issuing dollar-backed stablecoin
In Sweden, EU regulators’ worst nightmares are coming true as ‘buy now, pay later’ firm Klarna announced plans to launch a U.S. dollar-denominated stablecoin next year. The token, dubbed KlarnaUSD, is currently being run through its testing paces on Tempo, the stablecoin-focused Layer-1 network recently launched by issuer Bridge (along with Bridge’s payment processing parent Stripe and the Paradigm venture capital group).
Klarna CEO Sebastian Siemiatkowski, who not so long ago dismissed digital assets as a “decentralized Ponzi scheme,” said the technology is now “finally at a stage where it is fast, low-cost, secure, and built for scale. This is the beginning of Klarna in crypto, and I’m excited to work with Stripe and Tempo to continue to shape the future of payments.”Klarna and Stripe established a strategic partnership in 2021, back when neither company had stablecoins on their roadmaps. But Klarna teased that it has more crypto tie-ups in the works, promising to “reveal our next partner in the coming weeks.”
While Klarna is available in 26 different jurisdictions, the largest slice of its 118 million users is located in the U.S., making a dollar-backed stablecoin a no-brainer in America’s newly accommodating regulatory climate. Siemiatkowski sees stablecoins as a way to “challenge old networks and make payments faster and cheaper for everyone.”
European regulatory
Speaking of challenging the old order, EU financial regulatory authorities wince following each announcement of yet another dollar-denominated stablecoin. EU central bankers have repeatedly expressed concerns that dollar-backed stablecoins could pose a significant threat to the euro currency and thus to the EU’s financial sovereignty.
On November 24, the European Central Bank (ECB) issued a preview of its latest financial stability review, which expresses “concerns arising from certain structural weaknesses inherent to stablecoins and their interconnectedness with traditional finance.”
The ECB notes that ~80% of all trades on digital asset exchanges involve stablecoins, making this (for the moment) “by far the most important use case” of the technology. The ECB casts doubt on the stablecoin sector’s claims of massive cross-border remittance adoption, saying there’s “a lack of concrete evidence” for this claim.
Similarly, the ECB says “the available data indicate that the retail use of stablecoins represents a tiny share of total stablecoin volumes,” with “organic retail-sized transfers” accounting for “only around 0.5%” of stablecoin volume.
The ECB thus concludes that “the use of stablecoins seems to be primarily driven by their role within the crypto-asset ecosystem, and it remains to be seen whether stablecoins will be adopted widely across other use cases.”
Absent verifiable use cases, the ECB focuses on the potential for stablecoins to slip their 1:1 peg with the fiat currency they represent if “investors lose confidence that they can be redeemed at par.” The most notable depeg occurred in March 2023 following the collapse of Silicon Valley Bank (SVB), at which USDC issuer Circle (NASDAQ: CRCL) had stored $3.3 billion of its cash reserves. USDC’s peg was only restored following assurances of a federal bailout of SVB.
The ECB remarks that the stablecoin market is currently an effective duopoly involving USDC and the market-leading USDT (Tether). Should these “current extreme levels of concentration persist … the failure of just one entity could have a widespread impact, even in the absence of a systemic stablecoin crisis.”
The ECB also echoes the fierce U.S. debate over whether non-issuers offering ‘rewards’ to customers for holding stablecoins on their platforms contravenes the spirit of the GENIUS Act’s prohibition on issuers offering ‘yield’ on their stablecoins.
MiCA bans both issuers and non-issuers from offering yield/rewards, but “deposits made by stablecoin issuers may be subject to sudden withdrawals in the event of a stablecoin run, leaving bank funding structures more vulnerable to shocks.”
The ECB stresses the need for global harmonization of stablecoin oversight, noting the threat from “third-country multi-issuance, where an EU entity and a third-country entity jointly issue a fungible stablecoin both in the EU and in a non-EU jurisdiction. This could leave EU issuers with insufficient reserve assets under the supervision of EU authorities to fulfil the combined redemption requests made by EU and non-EU token holders, amplifying run risks in the EU.”
Overall, the ECB views the current risks as “limited within the euro area, but the rapid growth justifies close monitoring.” The greater adoption of use cases beyond exchange-based trading could introduce additional risks, but overall, the ECB seems satisfied with MiCA’s ability to contain the risks associated with this growing market.
South Korea’s stablecoin stasis
November 27 is supposed to bring confirmation of the pending merger of South Korean tech giant Naver Corp (NASDAQ: NHNCF) and Dunamu Inc, the parent company of the country’s leading digital asset exchange Upbit. The deal will reportedly see Dunamu folded into Naver’s fintech offshoot Naver Financial.
Ahead of this blessed event, Seoul Economic Daily reported that Naver Financial is teaming up with blockchain investment firm Hashed and the Busan Digital Asset Exchange (BDAN) on a stablecoin wallet service called Sidanjumyeon.
This service will enable international tourists to exchange their fiat currencies for Busan’s local currency, the Dongbaekjeon, via a KRW-denominated stablecoin. It will also provide access to Naver’s existing Naver Pay wallet for the 1.5 million local residents who use Dongbaekjeon.
Additional details of the project will be presented at Busan’s Blockchain Week event next month. The problem is, the project won’t go live until South Korea’s government finalizes its stablecoin legislation, and that finish line seems a long way off.
On November 25, Korea JoonAng Daily reported that legislation authorizing won-backed stablecoins is unlikely to pass this year due to unresolved issues between the Bank of Korea (BoK) and the Financial Services Commission (FSC). The BoK wants a consortium of banks to own at least 51% of stablecoin issuers, whereas the FSC aims to open this market to nonbank entities.
Existing regulations prohibit private firms from owning financial institutions. The BoK believes allowing nonbanks to issue stablecoins “is essentially equivalent to permitting them to engage in narrow banking—simultaneously issuing currency and offering payment services.” The BoK also fears tech companies integrating their own stablecoins into their platforms, further entrenching their power and stifling the rise of competitors.
The BoK also believes banks are best positioned to counter the use of stablecoins in illegal foreign exchange activity. Over the past five years, it’s estimated that nearly 83% of the KRW 11.4 trillion (US$7.8 billion) in foreign currency smuggling is conducted via digital assets.
The Korea Customs Service launched a crackdown on the illegal forex trade this month. A recent bust found the perpetrators using Tether’s USDT to conduct KRW920 billion worth of transfers/conversions between customers in South Korea and Vietnam.
South Korea’s regulators believe limiting stablecoin issuance to banks will limit both the market’s growth and financial innovation. Not surprisingly, local tech firms are also lobbying hard against a bank-only stablecoin scenario.
However, one fintech executive, who requested anonymity, seemed to echo the views of Europe’s central bankers when it comes to what stablecoins are used for. “Even dollar-based stablecoins see little use outside of crypto trading. There’s doubt about whether a won-based stablecoin will catch on, and with no clarity on approval rules, most firms are taking a wait-and-see approach.”
Watch | MiCA and the Future of Stablecoins: What Comes Next for Tether?
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