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BlackRock has said stablecoins must remain interchangeable with bank deposits and central-bank money if they are to function as regulated settlement assets.

Stablecoins need recognition across banking systems

The European Blockchain Convention’s Day 1 media briefing attributed the position to Nikhil Sharma, BlackRock’s head of digital assets, during a panel on how tokenized forms of money can operate together.

Sharma said the central issue is the “singleness of money,” a principle under which different forms of the same currency remain interchangeable at face value. The form of payment may change, but users must understand the claim, backing, access conditions, and recourse attached to it.

“When you think about what you’re using as cash for payments and settlement, you look at what’s the claim, what’s the backing, what’s the form, what’s the access,” Sharma said.

His comments addressed how privately issued stablecoins, commercial-bank deposits and central-bank money could operate within one financial system. A user paying with a dollar stablecoin, for example, would need the recipient’s bank to recognize the asset and convert it into a deposit liability without creating uncertainty over its value.

“In tangible terms: I could pay through a stablecoin, and the banking infrastructure needs to accept that, transform it into a deposit liability, and provide that recourse.”

Banks would also require a settlement system for payments moving between institutions. Sharma placed central banks at that final layer, where obligations between regulated financial institutions can be settled in central-bank money.

Different forms of cash create different risks

Sharma said investors can benefit from having several forms of digital cash, but each form carries its own economic exposure and redemption structure.

“From an investor-optionality standpoint, having different forms of cash is a good thing. But from a recourse, economic exposure, and risk standpoint, singleness of money is an imperative.”

A commercial-bank deposit represents a liability of the bank, while a stablecoin represents a claim structured by its issuer and governing terms. Central-bank money carries a direct claim on the monetary authority.

Stablecoin users therefore depend on the issuer’s reserves, custody arrangements, and ability to process redemptions. Even when a token tracks one dollar in normal trading, liquidity pressure or concern over its backing can cause it to trade below its stated value.

Interoperability alone would not remove those differences. According to Sharma, banking acceptance, conversion into deposits, and access to a final settlement mechanism must work together if stablecoins are to serve regulated financial markets.

Speaking from a central-bank perspective, Philipp Müller of the Swiss National Bank said commercial banks could issue stablecoins if they chose to do so. His institution, however, must provide banks with a safe payment method suited to their requirements.

“That could be wholesale CBDC, it could still be fiat money. Only time will tell,” Müller said.

His remarks separated retail products from central-bank infrastructure. Commercial banks may offer cash instruments to customers, while the central bank concentrates on settlement between regulated institutions and financial stability.

Dollar stablecoins have created a U.S. policy question

For U.S. users, BlackRock’s argument concerns both the safety of stablecoins and their place in the dollar system. Most large stablecoins reference the U.S. dollar and keep substantial reserves in cash, Treasury bills, or similar liquid assets.

The United States enacted the GENIUS Act in July 2025, creating a federal framework for payment stablecoins. Under the law, only permitted issuers may issue payment stablecoins in the country, subject to reserve, disclosure, and regulatory requirements.

Dollar-linked tokens can extend access to the currency outside conventional banking hours and across national borders. Their growth can also increase demand for the reserve assets issuers use to support redemptions.

As crypto.news previously reported, European Central Bank Executive Board member Isabel Schnabel said dollar-backed stablecoins could strengthen the dollar’s international position as the sector approached a market value of $300 billion. Euro-denominated stablecoins accounted for only a small share of the market, according to her remarks.

The same development has raised concerns in Europe about dependence on dollar payment products. Schnabel supported the digital euro as a public payment option, with a pilot expected in 2027 and potential readiness for issuance targeted for 2029.

Stablecoin reserves also connect token holders with the U.S. government-debt market. When issuers use short-term Treasuries to back circulating tokens, growth in stablecoin supply can translate into additional demand for those securities.

For holders, reserve quality does not make a stablecoin identical to an insured bank deposit. Redemption terms, legal priority, eligible customers and access to deposit protection can differ by product and jurisdiction.

Tokenized markets still depend on settlement cash

Sharma said the infrastructure needed for stablecoins and tokenized deposits begins with bank acceptance before moving to interoperability between institutions and final settlement.

“How will that happen? It’s about the layers of infrastructure coming together, starting with the banking infrastructure, in terms of acceptance and interoperability between tokenised deposits and stablecoins,” he said.

The final stage would involve a settlement layer capable of completing obligations without disrupting existing banking systems. Sharma said the mechanism could be provided in a “potentially unintrusive way,” although he did not specify one technical model.

Tokenized securities make the cash question more urgent because trading an asset on a blockchain does not guarantee that the payment side can settle on the same schedule. Markets may offer continuous transfers while banks, payment systems and foreign-exchange services continue to observe limited operating hours.

A recent examination of the weekend dollar funding gap found that always-open tokenized markets can face liquidity pressure when conventional dollar rails are unavailable. Settlement may remain incomplete even after the asset side of a transaction moves onchain.

During another Day 1 panel, ARK Invest’s Lorenzo Valente put the digital-asset market at about $3 trillion, with stablecoins accounting for roughly $300 billion and tokenized assets between $30 billion and $40 billion.

Valente said crypto had primarily been a retail market during its first decade because institutions lacked scalable tools, privacy, and sufficient compliance controls. He argued that the market had become large enough to draw more institutional capital as those gaps began to narrow.

BlackRock’s Sharma focused instead on how institutions could use different forms of regulated cash without losing a common settlement value. Banks would accept stablecoins, convert them into deposits, and settle their obligations through a layer supported by central-bank infrastructure under the model he described.

A 50–49 Senate vote that stalled the CLARITY Act has raised the risk that crypto companies will rely on more custodians and permissioned systems, according to GenLayer Labs CEO Albert Castellana.

GenLayer Labs CEO and co-founder Albert Castellana told crypto.news that the Senate result was disappointing because the proposal had been moving toward a principle he considers important: regulation should follow control.

Entities that hold customer funds, decide who may transact, or stand between two parties perform a different role from developers who publish software or users who join an open network, according to Castellana.

Without rules that recognize the difference, he said companies may respond by adding custodians, restricting access or placing another intermediary between users and blockchain applications.

“Every one of those decisions can look reasonable on its own. But you do that enough times, and suddenly you’ve rebuilt most of the intermediaries crypto was supposed to get rid of.”

CLARITY Act failure could encourage centralized safeguards

The Senate voted 50–49 against invoking cloture on H.R. 3633, leaving the proposal 10 votes short of the 60 required to open formal debate.

As crypto.news previously reported, the failed motion blocked immediate consideration of a framework that would divide oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission.

The proposal would have given the CFTC authority over qualifying digital commodities and registered spot-market intermediaries. The SEC would have retained jurisdiction over assets and transactions governed by securities laws.

Other provisions addressed decentralized software developers, stablecoin rewards, government ethics and prediction-market contracts that could conflict with state or tribal gambling rules. A revised classification framework also would have treated XRP as a digital commodity in secondary-market transactions, regardless of Ripple’s holdings.

Castellana said regulatory uncertainty does not necessarily cause companies to stop developing products. Instead, legal concerns influence how they design and offer them.

“You add another custodian. You make the frontend permissioned. You use a centralized provider because it’s easier to explain to lawyers. You block the US. You keep an admin key because somebody wants a clear responsible party,” he said.

For American users, such decisions can determine whether they retain direct access to a protocol or must use a company-controlled interface that can restrict transactions, impose identity checks or exclude US residents.

Control provides a test for deciding who should face regulation

Rather than asking whether an entire project is decentralized, Castellana proposed examining where each system places the power to force an outcome.

“For me the simplest test is: who can actually force an outcome? Can you freeze my money? Move it? Stop my transaction? Change the rules underneath me? Override the result? If you can, then you have control.”

Publishing code does not necessarily give a developer control over the finished protocol, he said. Operating one validator or owning governance tokens also may not provide enough power to determine what happens to funds or transactions.

Different parts of the same product may distribute authority in different ways. Castellana cited a permissionless protocol with a company-controlled frontend as one possible structure, while another network could use independent validators but retain an administrator key capable of changing its rules.

“I would much rather regulate the place where the power actually exists,” he said.

The distinction matters for developers because market-structure legislation has included protections intended to separate passive software development from regulated financial activity. With the Senate motion defeated, federal agencies retain responsibility for interpreting existing securities and commodities laws unless Congress revives the proposal.

Stablecoin rules leave DeFi and wallet questions unresolved

The GENIUS Act has already created clearer requirements for payment-stablecoin issuers, including rules for reserves and redemptions. Castellana said the law resolves an important part of the regulatory question, but its focus remains on the money rather than the applications built around it.

“So I don’t think stablecoin payments are waiting for CLARITY. They aren’t. But we are getting clarity on the money faster than we are getting clarity on the economy that will be built around it.”

Once stablecoins enter decentralized finance, custody products, self-hosted wallets or trading applications, companies must still decide whether a participant acts as an intermediary or merely provides software, according to Castellana.

The SEC’s work on tokenized securities offers one example of regulation proceeding through separate measures. A Sep. 11 report covered the agency’s proposed 60-day rulemaking process for transfer agents, which would permit blockchain-based systems to maintain securities ownership records.

Castellana said the SEC has also opened a path for tokenized stocks to use public, permissionless blockchains, although access to trading venues remains controlled and the exemption is temporary.

“Maybe that’s a reasonable bridge for now,” he said. “The risk is that bridges have a habit of becoming permanent infrastructure.”

For US investors, blockchain settlement alone does not determine whether a token gives its holder legal ownership of a share. The issuance structure, official ownership register, custody terms and applicable securities rules continue to determine voting, dividend and other shareholder rights.

Hougan says the bull market does not depend on Congress

Bitwise Chief Investment Officer Matt Hougan has taken a less cautious view of the vote’s effect on crypto prices.

In January, Hougan warned that a failure to pass the CLARITY Act could stall the 2026 bull market. One day after the Senate vote, however, he described the result in a Sep. 16 client memo as “a speed bump, not a roadblock.”

Hougan based his revised view partly on the difference between Bitcoin’s performance and the bill’s declining prospects. Bitcoin rose from a July 1 low of $57,950 to more than $80,000 on Sep. 4, while Polymarket traders reduced the probability of passage.

The immediate vote still caused losses across major crypto assets. BTC fell 3.7%, ETH lost 5.2%, and XRP declined 7.3%, while liquidations reached $669 million.

Institutional companies also continued developing blockchain products while the bill remained uncertain, Hougan said. He cited Robinhood’s blockchain launch, Morgan Stanley’s Solana ETF and the Depository Trust & Clearing Corporation’s first settlement of tokenized stock trades.

Hougan argued that SEC and CFTC rulemaking could support continued development without a new statute, although he acknowledged that a later administration could reverse agency rules.

AI agents raise another question about control

Castellana applied the same control principle to AI agents that can negotiate agreements or initiate transactions. A company or person that gives an agent authority over funds must remain accountable for that decision, he said.

“I don’t think ‘the AI did it’ can become an excuse,” Castellana said.

Automated agents may eventually enter large numbers of agreements that cannot account for every possible result in advance. Disputes could involve whether work was completed, whether its quality met the agreed standard or whether one party broke the terms.

GenLayer is developing a system in which agents can set terms, acceptable evidence and collateral requirements before entering an agreement, according to Castellana. If a dispute occurs, independent validators evaluate the evidence, while participants retain the ability to challenge the result.

“We need to verify the agreement, the evidence and the process used to reach the outcome,” he said.

The House passed H.R. 3633 by a 294–134 vote in July 2025, but the Senate later prepared different language. Any revived Senate version would still need approval from the House or reconciliation between the two chambers before it could reach the president.