How much does it cost to issue a stablecoin? Why are banks rushing to enter the stablecoin space?

Once upon a time, stablecoins were merely "casino chips" used for hedging and trading within the crypto world. Today, it has transformed into a behemoth with a market capitalization surpassing $300 billion, shaking the foundations of global financial infrastructure. From payment giants like PayPal and Stripe to Wall Street financial powerhouses like JPMorgan and Charles Schwab, even traditional card organizations like Visa are all diving in.

This raises two core questions: how much investment is actually required to issue a seemingly simple stablecoin? And why is the traditional banking industry willing to take on the dual challenges of regulation and technology, competing to enter a field that appears to be monopolized by Tether(USDT) and Circle(USDC)? This article will delve into the true costs behind the issuance of stablecoins and reveal the deeper strategic motivations of banks in the stablecoin space.

The hard battle of capital and compliance

Many people mistakenly believe that issuing a stablecoin is as simple as deploying a smart contract. However, launching a globally compliant stablecoin involves costs and complexities that are comparable to establishing a medium-sized bank.

1. Traditional Path: Million Dollar Entry Ticket

For publishers who want to be hands-on, the costs are mainly reflected in three fundamental projects:

Compliance and Legal System: This is the most expensive "entry fee". Issuers need to deal with regulations from multiple jurisdictions and obtain key licenses, including the MSB (Money Services Business) in the United States, the Bit License in New York, the MiCA in the European Union, and the VASP in Singapore. Behind each license are detailed financial disclosures, strict anti-money laundering (AML) mechanisms, and ongoing monitoring reporting obligations. According to market analysis, just applying for the VASP license in Hong Kong can incur costs totaling up to tens of millions of Hong Kong dollars. Overall, a stablecoin issuer with global operational qualifications can easily reach compliance and legal expenditures of tens of millions of dollars annually.

Reserve Management and Liquidity: The credit foundation of stablecoins lies in their reserves. Issuers need to invest the funds deposited by users into high-quality liquid assets (such as U.S. Treasury bills). When the size of the reserves reaches billions or even tens of billions of dollars, their operating costs can rise sharply. Just for fund custody alone, the annual fee can reach tens of millions of dollars. In addition, to ensure that users can "redeem immediately", issuers must maintain sufficient liquidity positions to cope with large redemptions in extreme market conditions. This risk preparation mechanism is very close to traditional money market funds.

Technical Systems and Security Operations: This is not just about deploying an ERC-20 contract. Issuers must establish a highly stable and auditable technical system that covers smart contract deployment, multi-chain minting and burning, cross-chain bridge configuration, wallet whitelisting, on-chain transaction monitoring, security risk control, and API integration, among others. This system, which serves as the "public settlement layer," has technical and operational costs that remain at the million-dollar level year after year.

2. Emerging Model: "Stablecoin as a Service" Lowers the Threshold

Just when people thought that stablecoins were a game exclusive to the giants, a new model is emerging. Taking payment giant Stripe's acquisition of Bridge and M0 as an example, their goal is not to issue their own stablecoin, but to become "arms dealers for stablecoins."

Stripe will package the complex financial processes of issuing stablecoins (such as licensing, reserve management, and compliance) into an API, allowing businesses to issue their own brand stablecoins in a matter of weeks, just like integrating online card payment functions. The mUSD launched by the world's largest crypto wallet Meta Mask is the first representative case under this model. This means that issuing stablecoins is evolving from a highly specialized financial issue into an engineering problem. This also indicates that the future market will usher in an era of "a hundred flowers blooming" for stablecoins.

The Inevitable Choice of Banks

Since the issuance cost is high, and the market already has two giants, USDT and USDC, why do banks and other financial institutions continue to rush in? The answer is far more complex than simply "interest rate differential returns."

1. Direct inducement: The "risk-free" profits that cannot be ignored.

The business model of stablecoin issuers is extremely attractive. They purchase U.S. Treasury bonds with the dollars deposited by users (without paying interest), earning a stable interest margin of 4% to 5% per year in the current high-interest environment. Tether's quarterly financial report shows profits reaching billions of dollars, demonstrating the astonishing profitability of this model. For banks holding large amounts of customer deposits, this represents a massive source of income with almost no credit risk.

More importantly, a new "earning era" has arrived. Emerging stablecoins like Ethena's USDe are starting to distribute the earnings from underlying assets to holders, directly challenging the traditional model of banks "absorbing cheap deposits and earning high spreads." When users can earn over 4% annual yield by holding stablecoins, the insignificant 0.07% interest on bank accounts seems extremely ironic. This competitive pressure forces banks to face the reality of stablecoins, or they will risk a massive outflow of deposits.

2. Strategic Layout: Deep Considerations Beyond Profit

However, for institutions like Charles Schwab or JPMorgan Chase, strategic significance far outweighs short-term profits. Issuing their own stablecoin is a critical layout concerning survival and leadership in the next decade.

Branding, Narrative, and Leadership: In the wave of fintech, issuing stablecoins has become the most direct way for institutions to demonstrate their "innovation capability" and "keeping up with the times." This is not only a payment tool but also a powerful brand declaration, announcing that they are the definers of the future of digital finance, rather than passive followers.

Control and ecological closed loop: What banks least want to see is customers converting their funds into USDC or USDT, detaching from their financial system. Issuing proprietary stablecoins can firmly lock customer funds and transaction behaviors within their own ecosystem, preventing value outflow. This not only retains interest income but also allows control over key user data and transaction flows.

Paving the way for future tokenization: The future of traditional finance is asset tokenization (RWA). Whether it's stocks, bonds, or real estate, they may be issued and traded on the blockchain in the future. Stablecoins are the underlying settlement tools for this future trading market. Banks are now laying the groundwork for stablecoins, just like building toll booths before the highway is completed, preparing infrastructure for a much larger tokenization market in the future.

Opportunities brought by regulatory clarification: With the advancement of regulations such as the U.S. "GENIUS Act", the regulatory pathway for stablecoins is gradually becoming clearer. This provides a compliant entry framework for traditional financial institutions. Under clear rules, banks can leverage their extensive compliance experience and brand reputation to issue products that are more trusted than existing crypto native stablecoins, turning regulation from a barrier into a moat.

New Financial Order

The evolution of stablecoins seems to be a history where a decentralized ideal is co-opted by reality, ultimately integrating into mainstream finance. It has transformed from a revolutionary tool aimed at bypassing traditional systems into a financial infrastructure dominated by regulators and traditional giants.

So we may be witnessing a turning point of an era: The issuance threshold is polarizing: on one hand, the compliant heavy asset model has high costs; on the other hand, "stablecoin as a service" is spurring a large number of customized, functional stablecoins. The market structure is shifting from a duopoly to a multipolar system: the monopoly of Tether and Circle is being eroded by various stablecoins issued by exchanges, wallets, fintech companies, and even banks. The maturity of cross-chain technology has brought the cost of switching stablecoins close to zero, weakening the network effect. The ultimate form of stablecoins may be "programmable currency": its true revolutionary aspect lies not in transfer speed or cost, but in its programmability. From real-time salary settlements and automatically executed B2B payments to insurance claims without manual intervention, stablecoins are redefining money. This is also why payment giants like Visa are actively exploring the use of stablecoins for cross-border settlements.

Back to the initial question: banks entering the stablecoin space are not only aiming to get a piece of the pie but also to avoid being sidelined in the next generation of financial revolution. What they are issuing is not just a token, but a place for themselves in the future financial order. The outcome of this competition will no longer be determined solely by the size of the balance sheet, but rather by who can better encode trust, technology, and narrative into the underlying code of global finance. And this grand history has only just begun.