Compliance, Liquidity, Distribution: Where is the Real Battlefield for Stablecoin Issuance?

Author | Chuk (former Paxos employee)

Compiled by | Odaily (@OdailyChina)

Translator | Ding Dang (@XiaMiPP)

Introduction: Everyone is Issuing Stablecoins

Stablecoins are evolving into application-level financial infrastructure. Following the introduction of the GENIUS Act and clearer regulatory frameworks, brands like Western Union, Klarna, Sony Bank, and Fiserv are shifting from "integrating USDC" to "launching their own dollars" through white-label issuance partnerships.

Fueling this shift is the explosive growth of "stablecoin issuance-as-a-service" platforms. A few years ago, Paxos was almost the only choice in the market; today, depending on the project type, there are over 10 viable paths, including new platforms like Bridge and MoonPay, compliance-first players like Anchorage, and industry giants like Coinbase.

The increase in options makes stablecoin issuance seem like a capability that is being commoditized—at least at the underlying token infrastructure level, that is true. But "commoditization" depends on who the buyer is and the specific task to be accomplished. Once you separate the underlying token operations from liquidity operations, regulatory compliance posture, and peripheral capabilities (on/off-ramps, treasury orchestration, account systems, card services), this market no longer resembles a price war, but rather a layered competition: the truly difficult-to-replicate "outcomes" are where pricing power is most likely to concentrate.

In other words: Core issuance capabilities are converging, but in areas with high operational outcome requirements—such as compliance, redemption efficiency, launch time, and bundled services—suppliers are not easily replaceable.

White-label stablecoin supply is growing rapidly, creating a vast issuer market beyond USDC/USDT. Source: Artemis

If you view issuers as completely interchangeable, you will miss where the real constraints lie and misjudge where profits might be retained.

Why Do Companies Launch Their Own Branded Stablecoins?

This is a reasonable question. Companies are primarily motivated by three factors:

• Economic Gain: Retain more value from customer cash flows and balances, and expand peripheral revenue streams (treasury management, payments, lending, card services).
• Behavioral Control: Embed customized rules and incentive mechanisms (e.g., loyalty programs), and independently determine settlement paths and interoperability to match their own product forms.
• Accelerate Implementation: Stablecoins allow teams to launch new financial experiences globally without rebuilding the entire banking system.

It's worth noting that most branded stablecoins don't need to grow to the scale of USDC to be considered successful. In closed or semi-open ecosystems, the core metric may not be market capitalization, but rather improvements in ARPU (Average Revenue Per User) or unit economics—that is, how much new revenue, retention improvement, or efficiency gain the stablecoin functionality brings to the business.

How Does White-Label Issuance Work? Deconstructing the Tech and Operations Stack

To judge whether issuance is "commoditized," one must first clarify the specific division of labor: reserve management, smart contracts and on-chain operations, and distribution channels.

The issuer typically controls reserves and on-chain operations; the brand controls demand and distribution. The real differences lie in the details.

The white-label issuance model allows brands to launch and distribute their own stablecoins while outsourcing the first two layers to the "issuer-of-record."

In practice, responsibilities are roughly divided into two categories:

• Primarily Brand-Controlled: Distribution and use cases (distribution channels)—including where the stablecoin is used, the default user experience, wallet entry points, and which partners or platforms support it.
• Primarily Issuer-Controlled: Issuance operations. The smart contract layer (token rules, admin privileges, mint/burn execution) and the reserve layer (asset composition, custody, redemption processes).

From an operational perspective, most of these capabilities are now productized via APIs and dashboards, with launch cycles ranging from days to weeks depending on complexity. Not all projects need a US-compliant issuer today, but for institutions targeting US enterprise clients, compliance capability itself has become part of the product, even before the full implementation of the GENIUS Act.

Distribution is the hardest part. Within a closed ecosystem, getting the stablecoin used is primarily a product decision; in an open market, integration and liquidity are the bottlenecks. Here, issuers often step in to support secondary liquidity (exchange/market maker relationships, incentive design, initial liquidity injection). While demand is still controlled by the brand, this "market entry support" is precisely where issuers can significantly alter outcomes.

Different buyers weigh these responsibilities differently, so the issuer market naturally splits into several clusters.

Market Stratification: Commoditization Depends on the Buyer

Commoditization refers to a service being sufficiently standardized that switching suppliers doesn't change the outcome, shifting competition to price rather than differentiation.

If switching issuers changes the outcomes you care about, then issuance is not commoditized for you.

At the underlying token level, switching issuers often doesn't affect outcomes much, making them increasingly interchangeable: most institutions can hold similar Treasury-bill-like reserves, deploy audited mint/burn contracts, provide basic control functions like freezing/pausing, support major blockchains, and expose similar APIs.

But brands rarely just buy a "simple token deployment." They buy outcomes, and the needed outcomes depend heavily on the buyer type. Overall, the market roughly splits into several clusters, each with a key point where "substitutability begins to fail." Within each cluster, teams in practice often end up with only a few truly viable choices.

Enterprises and Financial Institutions are driven by procurement processes and optimize for trust. Substitutability fails on compliance credibility, custody standards, governance structures, and the reliability of achieving 7×24 redemptions at scale (potentially hundreds of millions of dollars). In practice, this is a "risk committee-style" procurement: the issuer must be defensible on paper and operate stably, predictably, even "boringly" in production.

• Representative players: Paxos, Anchorage, BitGo, SoFi.

Fintech Companies and Consumer Wallets are product-oriented, focusing on delivery and distribution capabilities. Substitutability fails on launch time, integration depth, and those value-added peripheral tracks (e.g., on/off-ramps) that enable the stablecoin to be used in real business workflows. In practice, this is a "deliver within this sprint" procurement strategy: the winning issuer is the one that minimizes KYC, on/off-ramp, and treasury flow coordination work and gets the entire feature (not just the stablecoin itself) live the fastest.

• Representative players: Bridge, Brale (MoonPay / Coinbase might also belong here, but public information is limited).

DeFi and Investment Platforms are on-chain native applications, focusing on optimizing composability and programmability, including structures designed for different risk trade-offs and yield maximization. Substitutability has a slight impact on reserve model design, liquidity dynamics, and on-chain integration. In practice, this is a "design constraint" compromise: teams are willing to accept different reserve mechanisms as long as it enhances composability or yield.

• Representative players: Ethena Labs, M0 Protocol.

Issuers cluster according to enterprise-grade compliance posture and customer onboarding approach: Enterprises & Financial Institutions in the bottom right, Fintech / Wallets in the middle, DeFi in the top left.

Differentiation is moving up the tech stack, particularly evident in the Fintech / Wallet space. As issuance itself gradually becomes a feature, issuers are starting to compete by bundling comprehensive supporting services to complete the overall job and aid distribution. These services include compliant on/off-ramps and virtual accounts, payment orchestration, custody, and card issuance. This approach can maintain pricing power by altering time-to-market and operational outcomes.

Within this framework, the question of "commoditization or not" becomes clear.

Stablecoin issuance is commoditized at the token level but not at the outcome level, because buyer constraints make suppliers difficult to replace.

As the market develops, issuers serving each cluster may gradually converge on the capabilities needed for that market, but we are not there yet.

Where Might Durable Advantages Come From?

If the token layer has become table stakes and peripheral differentiation is slowly eroding, an obvious question is: can any issuer build a lasting moat? For now, it looks more like a customer acquisition race, retaining them through switching costs. Changing issuers involves moving reserves and custody operations, compliance processes, redemption mechanisms, and downstream system integrations, so issuers are not "replaceable with a click."

Beyond bundling services, the most likely source of a long-term moat is network effects. If branded stablecoins increasingly require seamless 1:1 convertibility and shared liquidity, value may accrue to the issuer or protocol layer that becomes the default interoperability network. What remains uncertain is whether this network will be controlled by issuers (strong value capture) or evolve into a neutral standard (broader adoption, weaker value capture).

A trend worth watching: Will interoperability become a commoditized function or a primary source of pricing power?

Conclusion

• Currently, the core of token issuance is commoditized, with differentiation at the edges. Token deployment and basic controls are converging, but outcomes still diverge in operations, liquidity support, and system integration.
• For any buyer, the market is not as crowded as it seems. Actual constraints quickly narrow the candidate list, and "credible options" are often just a handful, not dozens.
• Pricing power comes from bundling, regulatory environment, and liquidity constraints. The value is not in "creating the token" itself, but in the entire suite of orbital infrastructure around making the stablecoin work.
• Which moats will hold long-term remains unclear. Network effects through shared liquidity and exchange standards are a plausible path, but who captures value as interoperability matures is still uncertain.

What to watch next: whether branded stablecoins will converge to a few exchange networks, or if interoperability ultimately evolves into a neutral standard. Regardless of the outcome, the conclusion is the same: the token is just the foundation, the business model is the core.