Visa, Mastercard Back Stablecoin That Keeps Reserve Yield In-House

Visa and Mastercard are backing a new US dollar stablecoin project designed to keep the interest earned on reserve assets inside the financial system rather than letting it flow to issuers like Tether or Circle, people with knowledge of the plans said. The consortium includes several crypto-native companies alongside the two payment networks, giving it a distribution footprint that spans both traditional card rails and digital-asset exchanges.

The core mechanism is familiar. Stablecoin issuers hold dollar reserves in low-risk instruments and collect the yield. Tether's USDT and Circle's USDC together account for roughly 90% of the $200 billion market, according to CoinGecko data. Their reserve income runs into the billions annually. A project backed by Visa and Mastercard could segment the user base: institutions that prefer a regulated, payment-network-linked token over the existing options, and retail traders who want the deeper liquidity of USDT but may shift for lower fees or integration with the card networks.

The simple read is that this is a direct threat to Tether's dominance. The better market read is more nuanced. Distribution matters more than technology in stablecoins. Visa and Mastercard already have relationships with thousands of banks, merchants, and payment processors. If the new token becomes the default settlement asset on those rails, it bypasses the need for users to acquire USDT or USDC through an exchange. The consortium's crypto partners add on-ramps from the spot market. That two-sided distribution bet is what differentiates this push from earlier attempts like the discontinued Libra project.

Mastercard, with an AlphaScala Alpha Score of 65, faces moderate risk-reward in this regulatory push toward tokenized deposits. The company's revenue from cross-border fees and settlement services could face pressure if stablecoins displace traditional card flows over time. Participation in the consortium hedges that exposure. Visa's position is similar.

The regulatory path is the biggest unknown. Circle holds a BitLicense in New York and has registered with the SEC for its proposed IPO. Tether operates from offshore jurisdictions. A US-based consortium would need either a federal stablecoin framework or state-by-state money-transmitter licenses. The SEC review that opened the door for crypto ETFs and prediction markets also signals that the agency is watching stablecoin structures closely.

The consortium has not announced a launch date. A spokesperson for Mastercard declined to comment. The stablecoin market is about $200 billion, with two players controlling 90% of supply. A third entrant with the backing of the largest payment networks has the distribution to change that. Regulatory clarity is the gatekeeper.