The Attractiveness of Stablecoins After a Rate Hike

Data through September 16, 2026

This Week in a Glance

• Real stablecoin transaction volume rebounded after two weeks of decline, signaling improving fundamentals.

• The CLARITY Act’s failure to clear the Senate procedural vote extends the regulatory uncertainty over yield-bearing stablecoins into 2027.

• The Fed raised rates 25 basis points to 3.75%-4.00%, its first rate hike since July 2023. Rate uncertainty is likely to shape near-term market decisions.

Stablecoin & Payments: This Week in Data

Stablecoin Market Overview

• Supply Growth Continues: As of September 16, the global on-chain stablecoin supply stood at US$316.6 billion (across 155 tokens), up 1.7% over the past 30 days. Supply rose month-over-month for the fourth consecutive period, with growth steadying at +1.7%, extending the momentum of supply-side expansion.

• On-Chain Activity Holds at Elevated Levels: Daily transfer volume averaged US$266.4 billion (MoM +5.7%), daily transactions reached 75.5 million (MoM +4.1%), and daily active addresses totaled 4.9 million (MoM -1.5%). Transfers and transactions continued to rise while active addresses edged lower.

Stablecoin Transaction Overview

• Adjusted Volume at 12.9%: Over the past seven days, nominal transaction volume reached US$1.7 trillion (accounting for 12.9% of nominal volume), with adjusted real transaction volume at US$218.9 billion; total transactions were 426.2 million, with adjusted real transactions at 61.0 million.

• High-Frequency, Small-Ticket Retail Usage: Adjusted retail transaction volume was approximately US$2.0 billion (accounting for 0.9% of total adjusted volume), while transaction count reached 44.6 million (73% of total adjusted transactions).

Week over Week: Real Settlement Rebounds After Bottoming Out

• Broad-Based Recovery in Both Volume and Count: As of September 16, nominal transaction volume rose 30.8%, adjusted real transaction volume rose 15.5%, total transaction count rose 10.4%, and adjusted real transaction count rose 13.0% week-over-week. Real settlement volume, which had declined for the prior two weeks, rebounded this week, with both volume and count turning positive – a fairly broad-based recovery.

• Retail Side Extends Its Expansion: Real retail transaction volume rose 11.1% and real retail count rose 15.5% week-over-week, advancing for the second consecutive week. The adjusted-to-nominal ratio eased from 14.6% last week to 12.9% this week, as nominal volume grew faster than the real side. Both real settlement and small-ticket retail posted genuine gains.

Structural Analysis: Real Settlement Stabilizes as Retail Strengthens

• Real Transactions Rebound After Bottoming Out: Adjusted real transaction volume rebounded to US$218.9 billion, reversing two consecutive weekly falls. Both transaction volume and count rose this week, unlike last week's pattern of falling volume against a stable count, making the improvement broader-based. The rebound confirms the earlier decline was short-term volatility tracking the wider market rather than a trend reversal.

• Retail Side Extends Its Expansion as Count Share Climbs to 73%: Real retail transaction volume (+11.1%) and real retail count (+15.5%) both strengthened, advancing for the second consecutive week and lifting the retail share of total adjusted real count to approximately 73%, from 71% last week. The barbell structure held – dominated by small-ticket retail on count and institutional large-value on volume – while underlying everyday payment demand continued to strengthen.

• Monthly Supply and Activity Improve Together: Artemis' 30-day metrics show total supply rose 1.7% over the past 30 days, growing for the fourth consecutive period, with daily transfers up 5.7% and daily transactions up 4.1%. Only active addresses declined by 1.5%. Supply expanded steadily and usage stayed active, consistent with the rebound in weekly real settlement, and the fundamentals continued to improve.

Sources: Artemis, Visa, OSL Research

Definitions: Adjusted real figures exclude arbitrage, fund transfers, market-maker round-trips, and similar noise. Visa classifies individual transactions below US$250 as retail and those of US$250 or above as non-retail.

This Week in Stablecoin Payments and Infrastructure

Good news: we can still pay out yield to clients. Bad news: that's a bigger check now.

1. OSL Supports Payment Asia in Completing B2B Payments With Regulated HKD Stablecoin HKDAP

• What Happened: On September 14, OSL Group, a global stablecoin payment and trading infrastructure company, together with Payment Asia, a Hong Kong one-stop electronic payment platform, and Anchorpoint Financial, a Hong Kong-licensed stablecoin issuer, announced the completion of business-to-business payments using the regulated Hong Kong dollar stablecoin HKDAP across two scenarios: logistics and corporate travel. OSL provided the institutional-grade digital-asset distribution and settlement infrastructure in the process.

• Why It Matters: The collaboration extends HKDAP into logistics and corporate-travel B2B payment workflows for the first time. According to the official announcement, the two scenarios validated how tokenized settlement can improve transaction processing efficiency and fund-flow transparency, and help operations, finance and compliance teams reconcile accounts and manage exceptions more effectively.

2. OSL Partners With Banking Circle to Expand Multi-Currency Stablecoin-to-Fiat Payment Channels

• What Happened: On September 15, OSL Group announced an expanded collaboration with Banking Circle, a licensed European payments-infrastructure bank, adding five currencies beyond the existing euro channel: Australian dollars, British pounds, Hong Kong dollars, Singapore dollars and US dollars. The move enhances OSL's institutional multi-currency payment rails and supports OSL's expansion into new B2B markets.

• Why It Matters: The collaboration will allow OSL's institutional clients to receive, convert and settle funds around the world 365 days a year, without maintaining separate banking relationships across jurisdictions, enabling more efficient movement of funds across markets, currencies and payment rails.

3. U.S. Senate Fails to Advance the CLARITY Act in Procedural Vote

• What Happened: On September 15, the U.S. Senate held a procedural vote on the motion to advance the CLARITY Act, which failed 49 to 50; several Republican senators also voted against it. Negotiators for both parties had reached a compromise on the more than 600-page text ahead of the vote, but disagreements remained on a few key issues, including government officials' conflicts of interest, the treatment of stablecoin yield and bank protections.

• Why It Matters: The failed cloture vote leaves the CLARITY Act short of formal floor debate and amendment, with little prospect of passing during the current 2026 congressional session. In summary: jurisdiction stays unresolved; rules made by agencies can be unmade; stablecoin yield question stays open.

4. Visa and Circle Lead Velocity's Series A Extension Fundraising

• What Happened: On September 15, Velocity, a UK-based stablecoin payment and treasury platform, announced the completion of a US$10 million Series A extension, with six investors including Visa Ventures, Circle Ventures and Ripple. Velocity closed a US$38 million Series A last month, bringing total Series A funding to US$48 million; the company plans to use the funding to provide stablecoin infrastructure to issuers, payment platforms and other financial institutions worldwide.

• Why It Matters: After BVNK, the stablecoin settlement platform Visa had long partnered with, was acquired by Mastercard in August, Visa continues to seek new opportunities to strengthen its stablecoin payment infrastructure. Beyond stablecoin firms Circle and Ripple, another participant in Velocity's fundraising, Haun Ventures, is also an investor in Bridge and BVNK.

5. Fed Hikes Interest Rate for First Time in Three Years

• What Happened: On September 16, the US Federal Reserve raised the federal funds target rate by 25 basis points to 3.75%–4.00% in a unanimous 12–0 FOMC vote, marking its first rate hike since July 2023. Immediately following the announcement, US 6-month and 2-year Treasury yields jumped 7 and 10 basis points respectively, while Circle’s stock price further plunged by as much as 5 percentage points intraday.

• Why It Matters: Rising risk-free yields increase the opportunity cost of holding yield-bearing stablecoins. Although issuers benefit from higher reserve income, they must offer competitive yields to retain users. With another rate hike expected in 2026 and high rates lasting into at least the second half of 2027, yield competition and broader economic drag add uncertainty to the outlook for high-growth stablecoin companies.

This Week in Brief

• On September 10, Open Standard founding CEO Zach Abrams wrote that the company aims to make Open USD the "most useful" stablecoin, one accepted for most goods and services worldwide, with reserve revenue shared as incentives to participants based on real commercial transaction volume rather than assets under management.

• On September 11, Japanese payment service provider Netstars announced plans to connect its StarPay and Stablecoin Pay to stablecoins on the Layer 1 blockchain Kaia, allowing Asian stablecoins pegged to the Korean won, Hong Kong dollar, New Taiwan dollar and Southeast Asian currencies complete cross-border payments at physical stores in Japan.

• On September 13, the Securities and Exchange Commission of Thailand opened a public consultation on stablecoin regulatory principles, proposing to bar users from topping up, or withdrawing to, another person's crypto wallet, and to set a daily limit of US$150,000 per person per operator for each of inflows and outflows.

• On September 14, U.S. Securities and Exchange Commission Chairman Paul Atkins said at the Solana Policy Institute Summit that, with or without congressional passage of the CLARITY Act, the SEC will continue to advance its digital-asset regulatory agenda, including rules for lawful capital-raising with digital assets, transfer-agent rules for tokenized shares, and a digital-asset custody framework.

• On September 15, the U.S. Department of Justice filed a civil forfeiture complaint over approximately 61.19 million USDT, alleging the funds were proceeds from Iranian black-market oil sales. Two intermediary firms used Binance accounts to launder the funds to the Iranian government and the Revolutionary Guard, with related addresses handling more than US$1.5 billion in illicit oil proceeds.

• On September 15, Grab, the Singapore super-app platform, announced it will acquire a 60% equity interest in "buy-now-pay-later" fintech company Atome Financial from Advance Intelligence Group for US$1.49 billion in cash. Both expected to close the deal in the third quarter of 2027 and to acquire the remaining 40% about two years after the transaction was completed.

• On September 16, Circle launched the mainnet of its Layer 1 blockchain Arc, using USDC as the token for network fees, with founding validators including BlackRock, Visa, DTCC, Intercontinental Exchange and Standard Chartered.

Analyst Deep Dive: The Attractiveness of Stablecoins After a Rate Hike

With the opportunity cost of holding stablecoins rising and banks now moving in of their own accord, does yield — one of the core selling points of stablecoins — still hold its value?

Most of the crypto world's attention this week fell on the U.S Senate's procedural vote on the CLARITY Act. As expected, hemmed in by irreconcilable conflicts of interest, the bill did not even clear Congress and never reached the final stage of floor debate and amendment. It was a decisive win for the banking lobby. The broad consensus is now that the bill has very little chance of becoming law in 2026, and whether it can advance from here will depend not only on the banking industry's hardened stance but also on the outcome of the U.S. midterm elections this November.

This bill, meant to establish a structural regulatory framework for the U.S. digital-asset industry, has always carried obvious controversy and contradiction. Plenty of industry figures and speculative money were still betting on its chances of passing, yet the market had clearly priced in this "certain uncertainty" well in advance. Circle recently offered another reminder of how speculative the crypto market can be. Hot money bid up its share price ahead of the vote, but the company's fundamentals, the level of interest rates and low market expectations for the bill's passage all kept Circle's stock from breaking through the highs it reached during the market frenzy in early 2026. It peaked and pulled back two weeks before the vote, and when the Federal Reserve announced its rate hike, an already soft share price widened its intraday losses.

The CLARITY Act long ago stopped being simply a set of rules for the crypto market. It has become a complex issue where U.S. partisan politics, presidential interests and risks to the banking system all intersect. After the procedural vote failed, Binance founder CZ said that the only consolation from the result, if there was one, was that stablecoins could still generate yield. The failed procedural vote does not mark the definitive end of the bill; it was closer to a piece of headline news that gave every faction an opening to air its interests. While the market debates whether stablecoins can still pay yield, and with the Federal Reserve raising rates for the first time in three years, practitioners might do well to return to a blunt but serious question: if this was already a difficult business to run, where exactly does the value of stablecoins lie for the market?

On September 16, 2026, the Federal Reserve announced a 25-basis-point increase in the target range for the federal funds rate, to 3.75% to 4.00%. Yields on U.S. six-month and two-year Treasuries immediately jumped 7 and 10 basis points, respectively. Highly liquid, highly rated short-term U.S. Treasuries have always been the reserve asset of choice for fiat-backed stablecoins, and their risk-free yield contributes a considerable amount of annual revenue to stablecoin issuers. In theory, a rate hike means that issuers' reserve income will grow as Treasury yields rise — a significant positive for company fundamentals.

But yield has also been one of the core selling points that leading stablecoins currently emphasize, controversial as it is. Stablecoins and the blockchain technology behind them can indeed move money efficiently and conveniently, beyond the limits of traditional financial infrastructure, and they genuinely address long-standing pain points for businesses and individuals in cross-border remittances, consumer payments and currency stability.

Even so, stablecoin companies now face two practical problems.

The first is that the cost of switching is rising for customers. In a low-rate environment, stablecoins can attract and retain a wide range of customers and partners — retail users, institutions, exchanges and market makers — on the strength of relatively stable and meaningful reserve yield. Stablecoin companies then encourage users to keep holding and circulating them through yield or rewards, forming a self-reinforcing business flywheel. But once the yield on easily purchased, risk-free U.S. Treasuries, and even on bank deposits, begins to climb, users — particularly non-native and institutional ones — have one less reason to choose stablecoins. For holders without strong on-chain needs of their own, keeping them will require offering higher yield and incentives. How much of the growth in reserve income a stablecoin company can retain on its balance sheet will depend on how much of that yield it is willing to give away, or even subsidize, to hold on to users.

The second is the active defense the banking industry has already begun. When banks themselves enter the field and mount a two-pronged squeeze — tokenized deposits alongside stablecoins within the banking system — do stablecoin companies have any way to fight back? For the vast majority of stablecoins, the answer is clearly no. With rigorous anti-money-laundering and compliance screening, well-developed node networks, and the tokenized-deposit revenue that banks themselves generate, the banking industry's position is one that can attack or defend with equal ease. The responses visible among stablecoin companies today come in three forms. One is to seize a first-mover advantage across real-economy use cases while bank stablecoins are still far from established. Another is to expand into public chains, staking and lending, and the agent economy to diversify revenue sources. The third is to apply for banking licenses and, amid the convergence of traditional finance and digital assets, move toward traditional deposit-and-lending institutions to become part of the emerging banking system.

According to the Federal Reserve's latest dot plot, U.S. monetary officials have clearly returned, in unison, to the defensive "higher-for-longer" policy path. The market expects at least one more rate hike before the end of 2026, and a high-rate environment that may last at least into the second half of 2027. Whether the growth in reserve income can offset all the challenges stablecoin companies now face is a calculation each firm will likely need to work out for itself.

The views Circle Chief Executive Officer Jeremy Allaire shared in a Reuters interview this February, in fact, already clearly reflect where the industry's leading stablecoin companies stand and how they see the market environment and their own strategy. Allaire welcomed rate cuts, because they create a better investment environment for the market and help stablecoins circulate. "Higher rates, in theory, bring us more revenue, but they actually slow the velocity of money through the economy, so we believe that lower rates are what will bring more adoption and growth for stablecoins."

Allaire's view drew a kind of long-distance echo from a competitor. Open Standard founding CEO Zach Abrams wrote this week that reserve revenue from the company's consortium stablecoin, Open USD, will be shared with participants as incentives based on real commercial transaction volume rather than assets under management. The consortium had already announced at its founding that it would share the vast majority of reserve revenue with participants; Abrams's latest remarks clarified the strategic path of this multinational consortium backed by payment giants such as Stripe and Visa. It is the path most aligned with current mainstream regulatory intent, and the one that looks the most romantically heroic: Open USD is not a corporate treasury product but a payment tool, one meant to put stablecoins to work for small and medium-sized merchants worldwide.

All of these projections rest, of course, in considerable part on the long-run assumption that banks succeed in promoting their stablecoins. This is neither conservative nor pessimistic. Stablecoins are without doubt a major opportunity for the global financial system, and they will ultimately become one of the cornerstones of the next generation of global financial infrastructure. The wheel of history rolls forward and the progress of technology cannot be stopped. The future stablecoin industry will most likely be a landscape of many players, each with its own strengths, coexisting along multiple lines, in which banks, stablecoin companies and businesses and financial institutions of all kinds will each have a chance to claim a share of this fiercely competitive field.

But it is destined to be a long journey of sifting the grain from the chaff.