Newsletter · · Ashutosh Agarwal
Clarity Act Slips to September as Citi and NatWest Ship Tokenized Deposits - Stablecoins Eat Banking - Week of August 10, 2026
For the week of August 3 to 10, 2026, the Senate left for recess without a vote on the Clarity Act and punted it to September, while Citi took tokenized deposits from millions to billions, NatWest lit up the UK pilots, and Circle's print showed 62% of reserve income now going out the door in distribution costs.
Stablecoins Eat Banking
Week of August 10, 2026: Clarity Act Slips to September as Citi and NatWest Ship Tokenized Deposits
The Clarity Act ran out of road. After a week of "final 48 hours" and "weekend vote incoming," the Senate left for its August recess without so much as a procedural vote, and Majority Leader John Thune punted the whole thing to September. Here is the tell for our thesis: while Washington stalled on the bill that decides whether a stablecoin can ever legally pay you, the incumbents spent the week quietly shipping the workaround. Citi went from "millions to billions" in tokenized deposits, NatWest lit up the UK's tokenized-deposit pilots, and Mastercard's own CEO went on the record embracing stablecoins, for cross-border, where it doesn't threaten his interchange. The banks lost the calendar and won the quarter.
TL;DR
Clarity is dead until September, no vote, no cloture, no motion to proceed before recess. The hard August 7 wall we flagged last week came and went. Thune told Politico the bill gets "queued up first thing when we come back," with senators back September 14 and only about three weeks of floor time before October. The blocker is unchanged and getting worse: it's the ethics fight over Trump's crypto money, not the stablecoin plumbing, and new Republican opponents (Jerry Moran, alongside long-time no votes Josh Hawley and Rand Paul) surfaced this week. Polymarket odds collapsed to ~14% (The Paul Barron Crypto Show, Aug 7; Thinking Crypto, Aug 7).
Circle's earnings put a hard number on the one thing that actually matters, how much of its yield it has to give away. Total revenue grew ~7% year over year, net profit around $50 million, adjusted EBITDA around $140 million (down quarter over quarter). The killer stat: Circle is now paying roughly 62% of its reserve interest income away in distribution costs, and that share keeps climbing. Offsetting that, the Coinbase deal everyone feared would lapse was quietly renewed on existing terms, Coinbase still takes 50% of USDC net interest (100% on its own platform) (Empire, Aug 7).
This was the week bank co-option stopped being a press release and became a shipping product. Citi Token Services went from processing "millions" a year ago to "billions" now, live 24/7 in five branches (Tokenized, Aug 6); NatWest confirmed the UK's six-bank "Great British Tokenised Deposit" starts piloting real transactions this month (Invested / OMFIF, Aug 6); and Mastercard's CEO said the network now runs stablecoins with full card protections, for cross-border B2B, where correspondent banking is broken, and pointedly not for buying coffee (Motley Fool Hidden Gems, Aug 9).
What's new
1. Clarity didn't get punted, it got parked. And the reason has nothing to do with stablecoins. Last week we told you the whole 600-page fight had boiled down to one word, "yield," against an August 7 wall. Here's what actually happened: nothing. No motion to proceed, no amendments, no cloture vote. The Senate left. This is worth being precise about, because a bill that never reaches the floor is a different animal from a bill that loses a vote.
The clearest timeline came from Rebecca Walser of Walser Wealth Management (investor) on The Paul Barron Crypto Show (Aug 7). She walked through a Politico piece in which Thune told reporters the bill is being "queued up... first thing when we come back in September", the first time he has attached even a rough date to it. But she was blunt that this is not a bill that's ready to pass and just needs a calendar slot: "It doesn't look like, to me, there's actual still consensus... They don't have the 60 votes. And so there's work to be done." Thune himself said they'd need three weeks of work after returning, which, as Walser noted, is a tell that the differences are not resolved. It's now been 385 days since the House passed Clarity into the Senate, and Polymarket odds sat at ~14%.
What is blocking it is not the stablecoin plumbing. It's ethics. On The Rollup (Aug 6), Cody Carbone of the Digital Chamber (operator/insider, the industry's lead lobbyist on this bill) was refreshingly direct: "Ethics is the ballgame now... it's less about the substance of what is a true market structure framework, and about how do we, from a Democratic side, take the president to task." The math he laid out: 53 Republicans, 47 Democrats; you need 50-plus Republicans plus 10 Democrats to reach 60 for cloture. Josh Hawley and Rand Paul are reliable no votes on any digital-asset bill; Mitch McConnell's health is a question mark. So the industry is trying to peel 10 votes off the 18 Democrats who backed the GENIUS Act, and those Democrats want three things Trump won't easily give: state attorneys general with power to enforce (not just his own appointed U.S. AG), divestment of crypto money he's already made, and a provision that outlives his term.
"If we're sitting here in a week... and they did not put this bill on the floor, there was no procedural votes, then we failed. That means this bill is likely not going anywhere this Congress.", Cody Carbone, Digital Chamber (operator/insider), The Rollup, Aug 6
That was Carbone's own falsifiable test, spoken the day before the deadline. A week later, it failed. And this week added fresh headwinds: Republican Senator Jerry Moran surfaced as a new opponent, a name, Paul Barron noted, that "has never even been mentioned by any of the lobbyists", and Senator Elizabeth Warren dug in publicly. Her words, played on Discover Crypto (Aug 6): "As far as I heard, they've still not solved the problem of corruption, of consumer protection, of national security or protecting our economy. And until you solve those problems, I just don't see how anyone, Democrat or Republican, moves forward on this bill."
Why it matters for the book: another two months of no bill is, by default, another two months in which a stablecoin cannot legally pay a competitive yield. The delay is a quiet win for the deposit franchise even though nothing was actually voted on. Nobody had to kill the yield door; recess did it for them.
2. The regulators are done waiting for Congress. The most consequential forward-looking item hiding inside the Clarity wreckage: even if the bill never passes, crypto is getting regulated anyway, just by agencies instead of statute. Per Discover Crypto (Aug 6), CFTC Chair Mike Selig (operator/insider, regulator) said the agency "will move forward" with its own crypto rules if Clarity dies, in lockstep with SEC Chair Paul Atkins. The two have reportedly already drafted a joint memorandum and a token taxonomy classifying 16 assets as commodities (Bitcoin, Ethereum, Solana, XRP, Cardano, Avalanche, Chainlink, Polkadot, HBAR, Litecoin, Dogecoin, Shiba Inu, and more). The important distinction for anyone modeling this: agency-written rules can be undone by the next administration; a statute can't. So "regulation happens either way" is true but flimsier than a bill, which is exactly why the industry keeps grinding on Clarity.
3. Circle's print settled the argument the market has been having for three months. On Empire (Aug 7), the hosts and guest investor "Rob" (a private-markets stablecoin investor) walked the numbers. Headline: revenue grew ~7% year over year, net profit ~$50 million, adjusted EBITDA ~$140 million but down quarter over quarter, earnings the hosts called "mixed" but which "outperformed what a lot of crypto-native folks expected." The stock was roughly flat on the day.
But the number that matters for the thesis is the distribution drag. As Rob put it: "The amount that they are paying for distribution... keeps going up every quarter. Their net revenue is about 60% less than the [gross] revenue... they're paying about 62% of [reserve income] away today. That probably continues to grow. And that is probably one of the biggest headwinds to the stock." In plain terms: Circle collects the interest on its reserves, then hands most of it, 62 cents on the dollar, to the partners who distribute USDC, chiefly Coinbase. It is, in Rob's framing, "an on-chain money-market account" whose margins are being competed away at the distribution layer.
The offsetting good news: the Coinbase revenue-share agreement that the market feared was about to lapse got renewed on existing terms, Coinbase keeps 50% of USDC net interest, 100% when USDC sits on Coinbase's own platform. Rob's read: ending that deal "would have been way better for [Circle]," so the renewal is a mild negative surprise dressed up as certainty. Also flagged: Circle's Arc blockchain mainnet is scheduled for about September 16. On valuation, the hosts pegged the stock down ~70% from its post-IPO spike (to roughly the $60s), with a ~$16 billion market cap versus Coinbase near $38–39 billion, and noted that at ~20–22x forward EBITDA, Circle and Visa now trade at strikingly similar multiples. The message: "the market just brought Circle down to gravity."
4. Citi quietly became one of the biggest live tokenized-deposit operators on earth. The best operator interview of the week was Ryan Rugg, Global Head of Digital Assets for Citi Token Services (operator/insider), on Tokenized (Aug 6). The scale line: "This time last year, we were processing millions. Now we're processing billions." Citi Token Services is live 24/7 in five branches across two currencies, letting corporate clients move dollars on a Saturday or during Chinese New Year when the banks are shut, against Citi's roughly $4 trillion a day of traditional payment flow. The design philosophy is the whole point: clients don't open a new account, don't touch a wallet, don't manage keys. They pick "Citi Token Service" from a drop-down in Citi Direct; Citi mints a token in one branch, sends it, burns it, and it lands as cash. "I believe this technology will be successful when we're not sitting here talking about the technology", the same way nobody asks if you're "on the cloud."
Two things here matter for our debate. First, Rugg, a decade-deep blockchain veteran (R3 employee #20, then IBM), echoed last week's demolition of the megabank consortium, but from the inside: "Citi could never own the network. Our peers would not join that... it has to be built for the industry, by the industry." He has watched a graveyard of failed bank consortia (Contour, we.trade, Corda networks that couldn't stay backward-compatible) and knows why single-bank land-grabs fail. Second, Citi's own GPS "Stablecoin 2030" report, which Rugg co-authored, projects stablecoin circulation reaching $1.9 trillion by 2030 in a base case, $4 trillion in a bull case, but argues that tokenized bank deposits could ultimately carry greater transaction volume than stablecoins. That is the incumbent thesis in one sentence: let the stablecoins have the headline supply; the banks keep the flow.
5. The UK just started piloting the bank-owned version of a stablecoin, and was refreshingly honest about its limits. On Invested / The OMFIF Podcast (Aug 6), Lewis McClellan, Head of Digital Assets at NatWest (operator/insider), detailed the Great British Tokenised Deposit (GBTD), formerly the Regulated Liability Network, a roughly four-year project, now involving NatWest and five or six of the UK's largest banks and building societies. The news: they are piloting live transactions this month (August 2026), with more later this year or early next, split across retail and wholesale use cases. The retail pilots are concrete and clever: a peer-to-peer marketplace sale where programmable money replaces an escrow agent (funds lock, then release only when both sides confirm), and a remortgage where the money and the land-registry title could eventually settle together on-chain. Internationally, NatWest sits in the BIS Project Agora, now ~eight central banks and ~40-plus private participants (Bank of England included) moving tokenized central-bank reserves cross-border.
McClellan was candid in a way bank spokespeople rarely are, and it cuts to the heart of the debate. A tokenized deposit "isn't really a better instrument like a stablecoin is." It "can't move as freely wallet to wallet", it's "a huge walled garden that exists for only the customers of certain banks." And even in the pilots, settlement "isn't fully atomic yet, because you're still going back out maybe to CHAPS RTGS", the central bank's operating hours aren't 24/7 yet. His honest conclusion is coexistence, not conquest: "It's certainly going to be a multi-money market." Tokenized deposits win because they settle in central-bank money and keep the deposit-and-credit-creation link the economy runs on; stablecoins win on portability and brand. Read that as the co-option case admitting its own ceiling.
6. Mastercard's CEO drew the line exactly where you'd expect an incumbent to draw it. On Motley Fool Hidden Gems (Aug 9), Mastercard's chief executive (operator/insider) said the network can now handle stablecoins alongside fiat, wrapped in "the same protections that you expect from your card payment." He described himself as "pretty agnostic" on the underlying rail, but not completely, and he told you why: "We invested 60 years into building the largest acceptance footprint out there... you want scale. You want predictability. You want protection. So those things are not actually delivered through stablecoins." Where he'll actually use stablecoins: B2B and peer-to-business cross-border, "where correspondent banking creates high fees and opacity." Where he won't: everyday consumer purchases, "it is really not needed for anybody to go and buy their coffee at the local coffee shop with a stablecoin... there is no problem to solve." The one line to keep: "This answer is true for today and for tomorrow and the near-term future. But in five years this might look very different." An incumbent conceding the cross-border pain point while defending the consumer-checkout toll booth, and quietly flagging its own expiration date.
The debate
Do regulated stablecoins genuinely disintermediate deposits, interchange and correspondent rails, or do banks and networks co-opt the tech so the incumbents keep the money? Last week the referee was JPMorgan arguing co-option on itself and a bank consultant arguing disintermediation on the banks. This week the co-option camp had, frankly, its best week of the year, and yet the shape of the trade didn't change.
Co-option, and this week it went operational. For months the incumbent answer was vaporware; a bank consultant memorably called the megabank consortium "a press release about a press release." Not this week. Citi is doing billions in live tokenized deposits, up from millions a year ago, integrated so deeply that clients don't know they're using a blockchain (Tokenized, Aug 6). NatWest and five-plus UK banks start piloting the Great British Tokenised Deposit this month (Invested / OMFIF, Aug 6). Wells Fargo is reportedly rolling out a tokenized-deposit program for corporate clients (The Paul Barron Crypto Show, Aug 7). And Mastercard's CEO put the network's stablecoin strategy on the record, framed precisely to protect consumer interchange (Motley Fool, Aug 9). Citi's own base case even argues tokenized deposits will out-volume stablecoins over time. The incumbents are no longer talking about co-option. They're shipping it.
Disintermediation, quieter this week, but the economics still bite. The strongest disintermediation evidence came from the money itself, not from a founder. Circle's print confirmed the structural squeeze: 62% of reserve yield paid away in distribution and rising, proof that a pure stablecoin issuer's economics get competed away the moment it needs banks and exchanges to distribute the coin (Empire, Aug 7). And on the technology's ability to gut legacy cost, Fundstrat's Sean Farrell (analyst) pointed to a concrete example on The Edge Podcast (Aug 7): Figure has tokenized home-equity lines on-chain and "reduced costs by 80%" while speeding underwriting roughly "5x." Farrell also estimated that the GENIUS Act plus Circle's IPO converted something like "30%" of Fundstrat's TradFi-only clients into genuine crypto-rails interest.
But watch where the co-opters keep landing. Here is the thing that keeps the disintermediation thesis alive even in a week the banks dominated: every co-option product this week is a tokenized deposit that does not pay you a competitive yield and cannot leave the walled garden. NatWest said it plainly, a tokenized deposit "isn't really a better instrument like a stablecoin is," it's a walled garden, and it isn't even fully atomic yet. Mastercard is embracing stablecoins only where they don't threaten its consumer toll. Citi keeps its clients inside Citi. Co-option modernizes the pipes; it does not, by itself, save the deposit franchise.
My read: the two storylines fit together, and the recess made it obvious. The banks are winning the co-option war at the settlement layer, Citi, NatWest, Wells, Mastercard all proved it this week. But co-option at the settlement layer only matters for the deposit franchise if the coin can't pay interest. And the reason a competitive-yield coin still can't exist is that Clarity didn't move. So the incumbents got the best of both worlds this week: they shipped the rails that keep the flow inside the banking system, and Congress's inaction kept the yield door bolted shut for another two months by default. That is a very comfortable position, right up until September 14, when a bill that legalizes third-party yield lands back on the floor. The co-option is real. It's just not sufficient. Watch the calendar, not the consortium.
Stocks in play
CRCL (Circle), The margin math is now public. Revenue +7% YoY, ~$50M net profit, ~$140M adjusted EBITDA (down QoQ), stock roughly flat on the print; the Coinbase revenue-share deal renewed on existing terms (50% of net interest, 100% on Coinbase's platform); Arc mainnet ~September 16 (Empire, Aug 7). Bull: still the only pure-play way to own the stablecoin theme, the compliant default for institutions, Coinbase locked in, Arc coming. Bear: 62% of reserve income now goes out the door in distribution and that share keeps growing; a delayed Clarity keeps the legal yield model in limbo. Watch: the distribution-cost ratio next quarter, and whether Arc adds a revenue line that isn't just reserve interest.
COIN (Coinbase), The quiet winner of Circle's print. The renewed Circle deal means Coinbase keeps 50–100% of USDC net interest; one Empire investor floated a long-Circle/short-Coinbase pair on the ~$16B vs ~$38–39B valuation gap, but conceded there was "no economic reason" for Coinbase to ever walk from that deal (Empire, Aug 7). Bull: takes the lion's share of USDC economics without carrying reserve risk. Bear: trading revenue is cyclical, and a future yield ban still threatens the shared reserve income. Watch: whether Coinbase discloses how much of its net-interest income depends on the USDC split.
V (Visa), Sponsoring the plumbing. Visa's Tokenized Asset Platform (VTAP), which lets banks issue fiat-backed tokens, was the headline sponsor of the Citi tokenized-deposit episode, a sign Visa is positioning as the issuance layer beneath bank coins (Tokenized, Aug 6). No standalone Visa news this week. Bull: earns on settlement regardless of which coin wins. Bear: it's wiring the rails that could one day route around card interchange. Watch: named bank issuers on VTAP.
MA (Mastercard), Off the sidelines, on the record. The CEO confirmed stablecoins now run on Mastercard's rails with card-grade protections, targeted at B2B/P2B cross-border and explicitly not at consumer checkout (Motley Fool, Aug 9); a separate episode teased "huge Mastercard stablecoin news" this week (Thinking Crypto, Aug 6). Bull: monetizes the cross-border pain point while defending the consumer toll. Bear: the CEO himself said "in five years this might look very different." Watch: whether Mastercard names a stablecoin cross-border volume figure.
C (Citi), NEW to the front of the pack. Citi Token Services went from "millions to billions" in tokenized deposits year over year, live 24/7 in five branches; partners with Coinbase for stablecoin pay-ins/pay-outs; invested in Fnality; correspondent bank for 1,500 banks with 300-plus on 24/7 USD clearing (Tokenized, Aug 6). Bull: arguably the most credible live incumbent tokenized-deposit franchise, embedded in a $4T/day flow. Bear: it's a walled garden that still leans on traditional rails to fully settle. Watch: a disclosed CTS volume or client count, and progress toward true multi-bank interoperability.
JPM (JPMorgan), Quiet this week on its own products, surfacing mainly through the BIS Project Agora cross-border pilot referenced around tokenized-deposit coverage. No fresh Kinexys/consortium metric. Watch: any adoption number from the four-bank tokenized-deposit network, which has yet to show real demand.
HOOD (Robinhood), Tokenization, not banking, this week. Coverage centered on Robinhood's push into tokenized stocks and prediction markets rather than its stablecoin/Chain economics (Tokenized, Aug 3); Fundstrat's Farrell named Robinhood among the "conduits" that will monetize on-chain real-world-asset flow "if they can get their act together" (The Edge, Aug 7). Bull: owns the front end for retail tokenized-asset flow. Bear: execution risk, and this week it slipped out of the stablecoin-yield conversation entirely. Watch: Robinhood Chain TVL and Earn balances now that the launch buzz has faded.
PYUSD / PayPal, The takeover story went cold. After last week's $53B Stripe/Advent bid dominated, there was no fresh PayPal or PYUSD development this week. Watch: any signed price or board response on the Stripe bid, and whether PYUSD is treated as a strategic asset.
Tether (USDT), Referenced, not moved. Surfaced only as the market-share benchmark and as a bottom-up lender to commodity-trade firms (Tokenized, Aug 6); no US-compliance or product news. Still outside the GENIUS/Clarity perimeter.
Other names that came up: NatWest (leading the UK's six-bank Great British Tokenised Deposit, piloting this month, OMFIF, Aug 6); Wells Fargo (reportedly launching a corporate tokenized-deposit program, Paul Barron, Aug 7); Western Union / Rain (WU, ~$4B revenue and ~375,000 active agents, building a stablecoin card/wallet stack with Rain, live in 37 markets day one and targeting 60 by year-end, Empire, Aug 7); Figure (tokenized HELOCs, ~80% cost reduction, ~5x faster underwriting, The Edge, Aug 7); Fnality (Citi investment).
QUIET this week (no meaningful stablecoin coverage): GPN (Global Payments), FI (Fiserv), FIS, the payment-processor middle tier is silent for a fifth straight week. SOFI (SoFi), XYZ / Block, GS (Goldman Sachs), Ripple / RLUSD, Frax, Erebor, all went quiet after appearing last week; the Clarity-endgame noise crowded them out. GLXY (Galaxy Digital), BK (BNY Mellon), Anchorage, BitGo, MoneyGram, quiet. BAC, WFC (beyond the one tokenized-deposit item), MS, no dedicated stablecoin commentary.
Read-throughs
Card networks / interchange: Mastercard's CEO drew the map cleanly, stablecoins for cross-border B2B/P2B, cards for consumer checkout, and card-grade protections layered over both. That protects consumer interchange for now while conceding the correspondent-banking business. Visa, meanwhile, is sponsoring bank token issuance via VTAP. The networks are entrenching in settlement and defending the consumer toll, but the CEO's own "in five years this might look very different" is the tell that even they don't think the consumer moat is permanent.
Money-center & correspondent banks: This is where co-option is real and accelerating. Citi's "$4 trillion a day" franchise is now doing billions in 24/7 tokenized deposits, explicitly aimed at the same cross-border/liquidity pain that Mastercard is targeting with stablecoins, meaning the correspondent-banking layer is being attacked from two incumbent directions at once. The megabank consortium remains vaporware, but individual banks (Citi, Wells, NatWest) are shipping their own products, which is a more serious competitive answer than a shared press release.
Payment processors: Still the soft spot, still silent, a fifth straight week with no stablecoin strategy from Fiserv, FIS or Global Payments, even as banks and networks ship live product. The gap between the processors and everyone else keeps widening.
Custody / exchange infrastructure: The picks-and-shovels keep compounding. Fireblocks is quoted at "over $100 billion in monthly stablecoin volume" powering Visa, Bridge and Revolut; Citi is partnering with Coinbase for stablecoin pay-ins/pay-outs and building its own custody solution (Tokenized, Aug 6). The "banks as reserve-and-settlement layer, infra players as the plumbing" structure keeps firming up.
Treasury-bill demand: Circle's reserve base still feeds the T-bill bid, and Citi's Stablecoin 2030 base case ($1.9T circulation by 2030, $4T bull) implies a multi-trillion reserve pool over time. The delayed yield fight matters here too: as long as issuers can't legally pass reserve yield to holders, the coupon stays with the issuer and its distributors (bullish issuer/affiliate margins, and a fat structural Treasury bid either way).
What changed vs last week
The Clarity cliffhanger resolved, and it's a punt, not a pass. Last week the setup was a hard August 7 wall, a policy insider claiming "99% of this is agreed to," and a bank-lobby word-swap fight over yield. This week: no vote at all, delayed to September 14, and the binding constraint turned out to be the ethics provision over Trump's crypto money, not the stablecoin-yield clause. New opponents (Jerry Moran) and a dug-in Elizabeth Warren made September look harder, not easier (Thinking Crypto, Aug 7; The Rollup, Aug 6). The industry lobbyist's own "if there are no procedural votes in a week, we failed" test got falsified.
Circle went from narrative to numbers. Last week the Circle story was the OpenUSD threat to its distribution economics, an argument. This week the earnings put the argument on paper: 62% of reserve income paid away, rising, and the Coinbase deal renewed on existing terms, removing one tail risk while confirming the structural one (Empire, Aug 7).
Bank co-option stopped being theater. Last week a bank consultant dismissed the megabank tokenized-deposit network as "a press release about a press release." This week the individual banks answered with live product: Citi at billions of volume, NatWest piloting the GBTD, Wells Fargo rolling out corporate tokenized deposits, Mastercard's CEO on the record. The co-option thesis moved from slideware to shipping (Tokenized, Aug 6; OMFIF, Aug 6; Motley Fool, Aug 9).
"Regulators will do it anyway" hardened into a posture. Last week that theme was Frax's founder noting the OCC blew its own rulemaking deadline. This week CFTC Chair Selig and SEC Chair Atkins reportedly went further, a joint memorandum and a 16-asset commodity taxonomy they'll implement whether or not Clarity passes (Discover Crypto, Aug 6).
The deposit-leakage scoreboard from last week didn't get a sequel. Last week's standout was a bank consultant quantifying the bleed (56% of new accounts to fintechs, 90% of community banks losing customers to Coinbase). No new hard leakage data this week, the story shifted from "deposits are walking out" to "here's the tokenized-deposit product banks built to keep them."
Several last-week names went quiet. SoFi (held up last week as the design to copy), Goldman's Solomon, Ripple/RLUSD, and Frax/Erebor all dropped off the coverage list as the Clarity-endgame noise crowded them out.