U.S. Bank Paid Its European Arm in Its Own Token

Happy Friday. This is Converge, The Defiant's weekly recap of tokenization, stablecoins, and real-world assets, by Chris Storaker.

TOP NEWS THIS WEEK

• U.S. Bank issues its own stablecoin on Stellar; DBS and Citi settle a weekend payment on Swift's ledger
• Circle buys Tazapay's payout rails as Latitude raises $35 million

ALSO IN THIS ISSUE

• Tokenized stock volume matched a full session; Nasdaq buys into Kraken's parent
• A revised CLARITY Act text before Tuesday's Senate cloture vote
• ARK asks the SEC to approve a tokenized share class; Valinor's BDC fund goes live
• Tenev on issuer consent; Block's OCC charter; Compound's institutional market

Converge reaches 20,000+ tokenization leaders and decision makers every week. Sponsor an issue →

STABLECOINS / BANKING

U.S. Bank Paid Its European Arm in Its Own Token

• U.S. Bank issued USBDC on Stellar and used it to move value between its North American and European entities, the bank said Wednesday, in a pilot that tested minting, redemption, freezing and clawback.

A federally regulated bank issuing its own token on a permissionless chain puts bank money on the rails USDT and USDC already run on. The transaction settled on Stellar while staying connected to the bank's core finance, risk, compliance and operations systems, and it validated the Digital Asset Platform the bank built in-house to issue and move tokenized assets.

The bank did not say how much money moved, what backs the token, where the reserves sit, or whether USBDC will be offered to clients. Liquidity management, collateral mobility and cross-border treasury operations are "under review," according to the release. U.S. Bank is not among the 21 institutions that committed last week to a joint stablecoin company, and on Stellar it joins Franklin Templeton and DTCC, according to representatives circulating the announcement for the network.

• Related: DBS and Citi moved dollars from Singapore to New York over a weekend on Sept. 5 using tokenized deposits on Swift's Digital Ledger, the second live use of the ledger after HSBC and Standard Chartered in August.

Swift calls the ledger an orchestration layer for bank-issued tokenized deposits that stay on each participating bank's own books. The blockchain coordinates the movement and final settlement remains in existing banking systems, so the test proved weekend operation and not onchain settlement. The transfer took minutes against what DBS put at an industry norm of up to two business days.

Seventeen banks across six continents are preparing pilots, and DBS is the only Asian-headquartered bank in the ledger's 12-bank core design group. DBS disclosed neither the value of the payment nor a timetable for client availability.

Our take

The two designs differ on where the money lives. USBDC is a bank-issued bearer token on a public chain, holdable by anyone the issuer has not frozen. A tokenized deposit on Swift's ledger stays a liability on the issuing bank's books, with the ledger coordinating and legacy systems settling. One approach puts bank money where the stablecoins trade; the other keeps it inside the banking perimeter and buys weekend hours.

The freeze and clawback tests are the price of the first approach: a supervised issuer will put a dollar token on a permissionless chain once it can reverse a transfer. U.S. Bank sits outside the 21-institution venture that cannot launch before 2027, and it moved real money this week. What to watch: whether USBDC reaches the bank’s clients any time soon.

STABLECOINS / PAYMENTS

Circle Agreed to Buy Tazapay for $400 Million in Stock

• Circle signed on Sept. 4 to acquire Tazapay for $400 million in Class A shares, bringing the Singapore company's local payout rails in more than 100 markets and its 60-plus banking and fintech partners inside the USDC issuer.

Tazapay carries $25 billion of annualized payment volume as of July 31, about 60% of it already running on stablecoins. The share count will be set on Circle's 20-day average closing price before completion, and the deal is expected to close in 2027 subject to approval from the Monetary Authority of Singapore.

Circle operates the Circle Payments Network, sets its rules and supplies the APIs, and says it does not move funds itself: an originating institution converts local currency into stablecoins and a beneficiary institution converts them back and pays the recipient. Tazapay has been a design partner on that network since 2025. Owning it puts Circle on the payout leg in the markets Tazapay already covers.

• Related: Latitude raised a $35 million Series A led by Oak HC/FT to connect stablecoin settlement to local payment rails, with NEA, Coinbase Ventures, Lightspeed Faction and OpenFX joining and total funding reaching $43 million.

Latitude holds the permissions itself, which is what its customers are buying: 39 money transmission licences, one state registration and five no-action letters, with Latitude Payments Inc. registered with FinCEN as a money services business. Payouts are live in Argentina, Brazil, Colombia, Mexico, the Philippines, India and most of Europe, with Chile, Peru, Uruguay, Thailand, Vietnam and several African countries in beta. "You shouldn't need to understand stablecoins to use them," said Cyril Mathew, the co-founder and chief executive.

• MoneyGram's virtual Visa card went live in Colombia, letting recipients keep dollars in the app and spend them at Visa merchants.

USDC backs the balance at launch, with MoneyGram's own MGUSD planned to follow. Crossmint runs the wallets, the funds move over Stellar and Rain issues the card, which Rain says spends at more than 175 million merchant locations. MoneyGram promised the card in September 2025 and has now shipped it in one of the 200-plus countries and territories where it serves 60 million customers. A physical card is due late in 2026, and the issuing bank is unnamed.

Our take

Settlement is the solved part. Moving a tokenized dollar between two wallets is instant and nearly free, while converting it into pesos, rupees or reais through a licensed local entity is neither, and that gap is what Circle paid $400 million for and what Oak HC/FT funded. Tazapay's 100-plus payout markets and Latitude's 39 licences are the same asset bought two ways.

MoneyGram marks the distance left to travel: a year between announcing the card and launching it, in one country, on a competitor's stablecoin. What to watch: whether MAS clears the Tazapay deal, and which market MoneyGram opens next.

OTHER STORIES WORTH YOUR TIME

Tokenized Stocks Matched a Full Trading Session Over the Weekend

The 42 largest tokenized stocks turned over $1.01 billion on Saturday and Sunday against $1.02 billion on Friday with the NYSE open, plus $398.3 million on Labor Day, CoinGecko data across the four main platforms shows. Robinhood's tokens took $572.8 million of the weekend, 57% of the total, on a book worth $133.2 million against Ondo's $860 million. The busiest instrument was QQQB, the bStocks version of the Invesco QQQ Trust, at $180.5 million against $1.34 million in circulation, 65 times the token's value in a day. Prices held: tokenized Nvidia never traded more than 1.4% above its $230.36 close. Robinhood Chain's decentralized exchange volume rose 26.5% in the seven days through Sept. 10 to $12.34 billion, with a record $2.06 billion on Sept. 8, while its gas revenue fell 82.6% from the Sept. 4 peak as congestion eased.

Nasdaq's venture arm then agreed on Thursday to put $100 million into Payward, Kraken's parent, at a $21 billion valuation according to Bloomberg, and Payward will run Nasdaq's surveillance technology across its venues. Payward co-CEO Arjun Sethi built the case on clearing collateral: the clearing house holds $10 billion to $20 billion against unsettled US stock trades, the 2024 move to T+1 released $3 billion of it, and "onchain settlement removes the wait." Nasdaq Equity Tokens are issuer-sponsored, with the blockchain record inside the issuer's share registry, and the SEC's March approval limits them to Russell 1000 stocks and certain ETFs in a DTC pilot. Launch is the second quarter of 2027, settled through the same Kraken that Nasdaq is buying into, which makes Nasdaq the third exchange group in Payward after Deutsche Börse and the London Stock Exchange.

Revised CLARITY Act Text Lands Before Tuesday's Cloture Vote

Senator Cynthia Lummis released an amendment in the nature of a substitute to H.R. 3633 on Thursday. Cloture on the motion to proceed ripens Tuesday at 2:15 p.m. and needs 60 votes; Republicans hold 53 seats, so seven Democrats carry it. Three changes: trading protocols that are not decentralized must register with the CFTC and comply with the Bank Secrecy Act, the DeFi title now covers only spot and cash digital commodity transactions, and the text clarifies which digital asset activities credit unions may conduct. Lummis said the bill incorporates "more than 114 separate provisions at my Democrat colleagues' request." The seven Democrats who said in July that the text "falls short" on ethics, consumer protection and illicit finance have posted nothing on the September version, and the ethics title is not among the three changes. The release names BlackRock, Fidelity, Franklin Templeton, Goldman Sachs, Charles Schwab and SoFi as supporters alongside four law enforcement groups; the most recent CLARITY document on the National Sheriffs' Association's own site is a July 31 letter asking senators not to vote on the bill as written. Polymarket puts enactment in 2026 at 18%.

ARK Asks the SEC to Approve a Tokenized Share Class

ARK Investment Management wants to issue a share class of its $562 million venture fund whose ownership is recorded on a distributed ledger, and hearing requests on the application are due Sept. 18. The filing takes the standard exemptive route under the Investment Company Act and asks nothing about the blockchain itself: a footnote says the applicants "are not seeking exemptive relief with respect to whether or how distributed ledger technology is used by a Fund to maintain a record of its shareholders." The Tokenized Class would sell at net asset value, trade on Reg ATS venues or peer-to-peer between whitelisted wallets, and stay off DeFi; a second Exchange Class would list on a national exchange. No tokenization vendor is named, BNY Mellon is the fund's current transfer agent, and the fund holds Securitize equity plus a $10 million convertible note. The SEC's tokenization exemption remains unproposed, and its transfer-agent overhaul of Sept. 1 takes comments until Nov. 3.

Valinor's Tokenized BDC Fund Launched With No Tokens Outstanding

The Valinor BDC Exposure Fund holds listed business development companies and offers daily dealing gated at 7.5% of net asset value, with $4,995,148 across 499,157 book-entry shares and a $100,000 minimum for qualified purchasers. Its token contract went live on Ethereum on Sept. 1 with a total supply of zero and no transfers, and Superstate lists the fund's DeFi integrations as "coming soon." Superstate Services, the platform's SEC-registered transfer agent, keeps the register. Fees stack at 1.25% on top of the BDCs' own base and incentive fees, and the wrapper imports the BDC discount: Blue Owl Capital Corp traded 22% below its June 30 net asset value on Thursday, FS KKR 35% below. Robert Leshner, Superstate's chief executive, called it "the first high-yield private credit fund that's tokenized, offers daily liquidity, and is usable in DeFi."

Tenev: Stock Tokens Should Not Automatically Require Issuer Consent

Robinhood's chief executive told CNBC on Sept. 9 that issuers "don't control other companies issuing their own securities that reference those shares," and confirmed token holders get no voting rights; Robinhood "hasn't really announced plans" for the votes on the custodied shares. The AMC fight had become an industry argument by last Friday: Dinari's Gabriel Otte called synthetic tokens "indisputably worse for the end investor than even common stocks," Uniswap's Hayden Adams compared them to early stablecoins, and Securitize's Carlos Domingo sided with AMC. The SEC's Jan. 28 staff statement sorts the designs into issuer-sponsored, custodial and "linked securities"; Robinhood's are the third.

Block Seeks an OCC Charter for an Uninsured Custody Bank

Builders Bank & Trust, N.A. would provide custody and fiduciary services, including for bitcoin and stablecoins, under OCC supervision, with no deposits, no loans and no insurance, Block said Sept. 8. The OCC's public table, which did not yet list Block, shows 11 pending digital-asset charter requests filed since February, after the agency's December conditional approvals for Circle, Ripple, BitGo, Fidelity Digital Assets and Paxos. The Bank Policy Institute has opposed the trust-charter route for bank-like products.

Compound Opens Institutional Market With 87% LTV

Compound Foundation's USDC market takes ETH at 87% loan-to-value, wstETH at 85% and WBTC and cbBTC at 81%, with a $10 million borrow cap on each. It is the first product from the $52 million program COMP holders approved in May. Borrowing is open to anyone; approval applies only to 200,000 USDC in supplier rewards on a $20 million cap. Delegate ugurmersin asked COMP holders on Sept. 9 to take control, writing that the DAO "does not currently appear to have ultimate control" over a market run by a treasury committee and a separate Safe. Compound holds $1.53 billion in TVL against Aave's $17.5 billion.

Even more this week:

• Spark opened its USDT savings vault to OKX users — the exchange pools customer deposits into a Spark vault on X Layer paying 3.5%, against 3.72% on Aave's Ethereum USDT market, on a chain Spark's own risk council said "relies heavily on the operator which can also instantly upgrade the chain"; that vault holds under $500 against a 750 million USDT cap, with $359.9 million sitting in the Ethereum vault.
• Standard Chartered forecast a five-fold rise in Sky's SKY token by 2028 — Geoff Kendrick's note calls the protocol "akin to a federal bank" and rests the $0.325 target on USDS supply growth; USDS stands at $6.66 billion against the $10.04 billion Sky reported in June and the $20.6 billion its own 2026 projection carried.
• Merck KGaA is piloting cocoa traceability on Hedera — with The Hashgraph Group and PwC Germany ahead of the EU deforestation rule on Dec. 30; the release names no cocoa company, and the scans authenticate the product without producing the farm coordinates the regulation requires.

Subscribe

Converge is produced by The Defiant. This briefing is for informational purposes only and does not constitute investment advice.