““First they ignore you, then they laugh at you, then they fight you, then you win.” That quote is often attributed to Mahatma Gandhi, though the Indian independence leader never said it. To the crypto industry, the apocryphal phrase is a popular mantra. Digital pioneers have endured snootiness, mockery and derision from Wall Street’s elites. Now, they are mightier than ever.
Bankers and digital-asset purveyors alike have had a bountiful year. The crypto industry has gained ground, largely owing to the legal certainty given to stablecoins by the GENIUS Act passed in July.
Bank stocks have climbed by 34% since Donald Trump’s election victory, on expectations of friendlier regulation. Even among bankers who find Mr Trump objectionable for other reasons, vanishingly few prefer the regulatory approach taken under Joe Biden.
Nonetheless, tension between the old and new is growing, and the threat from crypto is bigger than many bankers once believed. Even though lenders stand to benefit from deregulation, their once privileged position as the financial aristocracy of the Republican Party looks shakier than ever before. Sharing that role with crypto-industry upstarts poses a long-term threat.
The immediate concern for bankers is stablecoin regulation. The Genius Act prohibits stablecoins from offering yields to their buyers, a concession that was intended to keep the coins from sapping demand for bank deposits, and thereby reducing lending. But a workaround means stablecoin issuers such as Circle (which issues the popular USDC coin) can share their revenue with exchanges like Coinbase, which in turn pay “rewards” to the users buying stablecoins. Banks want this loophole closed.
But yields are not the only issue. Elsewhere, crypto is threatening to dip below the velvet rope. In October Christopher Waller, a Federal Reserve governor and candidate for chair, alarmed bankers when he suggested more firms might gain access to the central bank’s payment rails. Mr Waller later walked back the statement, saying holders of such Fed accounts would still need bank charters.
At last, on December 12th, crypto jammed its foot in the door of the federal banking system. An American banking regulator approved new national bank-trust charters for five digital-finance firms, including Circle [1] and Ripple [2]. Although the designation does not qualify the institutions to take deposits or lend money, it does let them provide custody for assets nationally, rather than relying on a patchwork of state-level approvals. Banks had pressed regulators not to approve charters for the crypto intruders.
On its own, each development—a speech, a banking charter, some regulatory workarounds by stablecoin issuers—could be written off as small beer. Taken together, though, they are a serious threat to traditional banks. Lenders have already had their central roles in making loans and brokering trades chewed away by private credit and whizzy marketmakers outside the banking system. They are loth to lose out again.
Crypto firms believe banks’ preferential treatment creates an unequal playing-field and hurts competition. The general argument may be reasonable, but offering “rewards” in the place of yields on stablecoins is a brazen side-stepping of the rules. That legislators who banned yields on assets only months ago are not stepping in to end the practice reveals the real problem for banks: their sharp loss of political clout.
Banks are no longer the foremost financial constituency of the Republican Party. Instead, crypto has found a home among the countercultural, anti-elite politics of the new American right. The industry’s largest political action committees boast hundreds of millions of dollars in cash ready to be deployed in the 2026 midterm elections, which always helps. Where the interests of banks clash with those of the newcomers, the outcome is no longer certain, or perhaps even likely to fall in their favour.
Bankers may have bristled at the Biden administration’s regulatory squeeze. But in a considerable irony, they now find themselves relying on a group of Democratic Party senators who are more worried about the camouflaged payment of stablecoin yields, as well as risks related to money-laundering. In their opposition to crypto firms getting banking licences, America’s biggest lenders find themselves in bed with trade unions and centre-left think-tanks. As Gandhi also did not say, “The enemy of my enemy is my friend.”” [3]
1. Circle is a major financial technology firm in crypto, best known for issuing the stablecoins USDC (USD Coin) and EURC, which are pegged to the U.S. dollar and Euro, respectively, enabling seamless digital payments and financial applications. They provide infrastructure like the Circle Payments Network (CPN) and the Arc blockchain, connecting traditional finance with digital assets for businesses and developers, and recently went public with an IPO.
Key Aspects of Circle:
Stablecoins:
Issues USDC and EURC, regulated stablecoins, providing stability in the crypto market.
Infrastructure:
Offers APIs and platforms for businesses to integrate crypto payments, leveraging public blockchains like Algorand and their own Arc blockchain.
Payments Network:
The Circle Payments Network (CPN) facilitates global, near-instant money movement using stablecoins.
Business Focus:
Primarily serves financial institutions, enterprises, and developers to build the "Economic OS for the internet".
Public Offering:
Became a publicly traded company (CRCL) in 2025, aiming to connect crypto with global finance.
How it Works:
Minting/Redeeming:
Businesses and individuals can use Circle Mint to create (mint) and redeem stablecoins, converting traditional money to digital dollars (USDC) and back.
Transactions:
USDC and EURC can be sent across different blockchains and used for payments, with Circle earning revenue through related financial services and market making.
In essence, Circle builds the rails for digital currency, making stablecoins like USDC a bridge between traditional banking and the decentralized internet.
2. Does Ripple have a good future?
XRP's future is viewed with cautious optimism, driven by institutional interest via new ETFs, Ripple's focus on Real World Assets (RWA)/stablecoins [4], and an EVM-compatible sidechain for developers, but challenges persist, including competition, lingering regulatory questions, and proving its utility beyond remittances against other blockchain networks.
Price predictions vary widely, from moderate growth to significant gains if mass adoption occurs, with some analysts seeing potential in its developing financial tools, while critics worry about its centralized aspects and competition from more established smart contract platforms.
Bullish Factors (Reasons for Optimism)
Institutional Adoption:
New spot XRP ETFs launched in late 2025 saw significant inflows, signaling strong institutional belief in XRP's future, notes Nasdaq and The Motley Fool.
Ripple's Product Development:
Ripple is expanding into RWA tokenization, stablecoins (like RLUSD), and has launched an EVM-compatible sidechain to attract Ethereum developers, increasing utility, says Benzinga and The Motley Fool.
Global Payments/Remittances:
XRP's core function of low-cost, fast international payments remains a strong potential use case, argues Forbes and Benzinga.
Technical Momentum:
Positive short-term technical indicators and institutional interest suggest potential price upside, according to analysis from CoinDCX and TipRanks.
Bearish Factors & Risks (Concerns)
Competition:
XRP competes with established blockchains like Ethereum for RWA and DeFi development, notes The Motley Fool and Webopedia.
Centralization/Utility Tension:
Some critics worry Ripple's control or the rise of stablecoins might reduce XRP's direct transactional demand, say The Motley Fool and Webopedia.
Market Volatility:
Like all crypto, XRP faces high price swings and macroeconomic factors, notes CoinTracking and Yahoo Finance.
Regulatory Lingering Effects:
While partly resolved, ongoing regulatory clarity remains crucial, says Benzinga.
Conclusion
XRP's future hinges on Ripple's success in integrating XRP into global finance, building out the XRP Ledger's ecosystem, and navigating intense market competition, notes Benzinga.
3. A new financial aristocracy. The Economist; London Vol. 457, Iss. 9479, (Dec 20, 2025): 60.
4. Real-World Assets (RWAs) are tangible or traditional financial assets (like real estate, bonds, gold) represented as digital tokens on a blockchain, while RWA stablecoins are a specific type of RWA (like USDC, USDT) backed by fiat or yield-generating assets, bridging DeFi
and traditional finance (TradFi) by offering on-chain liquidity, transparency, and access to real-world value and income streams, enabling fractional ownership and improved accessibility for previously illiquid or exclusive investments.
What are Real-World Assets (RWAs)?
Definition: Physical items or traditional financial instruments (like stocks, bonds, real estate, commodities, private credit) converted into digital tokens on a blockchain.
Tokenization: The process of creating these digital representations, allowing for fractional ownership, easier trading, and enhanced liquidity for assets that were once hard to divide or trade globally.
What are RWA Stablecoins?
Function: Digital tokens designed to maintain a stable value, but unlike typical stablecoins backed by cash reserves, RWA stablecoins are backed by specific, income-generating real-world assets, such as U.S. Treasuries or money market funds.
Benefits: They offer stability, liquidity, and the ability to earn yield from the underlying assets directly within the blockchain ecosystem, connecting traditional finance's income-generating power with DeFi's programmability.
Key Examples & Benefits
Examples: Tokenized U.S. Treasuries, tokenized real estate, gold-backed tokens, private credit.
Benefits:
Accessibility: Opens up exclusive investments (like high-value real estate or bonds) to a broader audience.
Liquidity: Makes illiquid assets tradable 24/7 on-chain.
Yield Generation: Provides real yield from traditional assets directly to crypto users.
Transparency: Offers verifiable ownership on a public ledger.
How They Work Together
Stablecoins like USDC and USDT are themselves considered large RWA categories, acting as the "financial fuel" for DeFi.
RWA stablecoins enhance this by bringing productive off-chain assets onto the blockchain, creating more diversified, yield-bearing digital assets that fuel DeFi applications and offer users a tangible link to the broader economy.
How do you convert Real-World Assets (RWAs) into tangible or traditional financial assets (like real estate, bonds, gold) represented as digital tokens on a blockchain and back?
Converting Real-World Assets (RWAs) into digital tokens on a blockchain, and back again, is a process that involves a blend of legal structuring, physical asset management, and blockchain technology, particularly smart contracts and custodianship. The digital tokens represent verifiable, legal ownership or rights to the underlying physical asset, creating a link between the off-chain and on-chain worlds.
Tokenization Process
The tokenization process transforms illiquid, tangible assets into highly efficient and potentially fractional digital securities.
Asset Identification and Legal Structuring: The issuer (e.g., a fund manager) identifies an asset (real estate, gold, bonds) to be tokenized. A legal structure, often a Special Purpose Vehicle (SPV) or fund, is established to own the physical asset. This ensures that the digital token legally represents a claim to the underlying asset and defines the rights of the token holder.
Custodianship and Verification: A trusted third-party custodian, such as a bank or a specialized digital asset custodian, takes physical or legal possession of the asset. For commodities like gold, third-party auditors and services like Chainlink Proof of Reserve are used to periodically verify that the off-chain reserves match the on-chain token supply, ensuring the tokens are fully backed.
Smart Contract Development and Token Issuance: Smart contracts are developed and deployed on a chosen blockchain (e.g., Ethereum, Solana). These contracts embed the rules for ownership, transferability, compliance (e.g., KYC/AML checks (KYC (Know Your Customer) and AML (Anti-Money Laundering) verification are mandatory compliance processes in finance and other industries to prevent financial crimes like money laundering and terrorist financing)), and automated functions like dividend payouts. Tokens are then minted in a quantity proportional to the asset's value.
Distribution and Secondary Trading: The tokens are distributed to investors, typically on permissioned or public exchanges that enforce compliance rules. This enables fractional ownership and creates secondary market liquidity, allowing investors to buy and sell portions of the asset 24/7.
Redemption Process (Conversion Back to Tangible Assets)
Redemption reverses the process and is often more complex, requiring coordination between on-chain requests and off-chain actions by custodians.
Redemption Request: A token holder submits a redemption request through a platform, initiating an on-chain smart contract function (e.g., redeem(amount)). This often involves compliance and eligibility checks, and in some cases, entering a queue.
Off-Chain Settlement and Liquidation: The custodian or asset manager is notified of the request. They then arrange for the liquidation or transfer of the corresponding fraction of the physical asset in the traditional finance system. This step can take time (days) depending on the asset's liquidity and the settlement method (e.g., SWIFT wire transfer).
Token Burning and Confirmation: Once the off-chain transfer of the asset (or its fiat equivalent) to the investor is confirmed, an oracle relays this data back to the blockchain. The smart contract then burns the redeemed tokens, reducing the total supply and ensuring synchronization between the digital and physical realms.
Key Actors and Components
Issuers: Entities (like fund managers or banks, e.g., BlackRock, JPMorgan Chase) that acquire the physical assets and initiate the tokenization process.
Custodians: Trusted institutions responsible for securely holding and managing the underlying physical assets.
Smart Contracts: Self-executing code on the blockchain that defines the rules of the token, manages issuance/redemption, and enforces compliance.
Oracles: Secure services (e.g., Chainlink) that bridge off-chain data (asset valuations, settlement confirmations, proof of reserves) to the blockchain, ensuring the digital representation is accurate.
Regulators: Government bodies (like the SEC) that oversee the process to ensure compliance with securities and property laws, which currently require parallel legal structures to exist off-chain for enforceability.
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