4.4 The Role of Stablecoins in RWA Settlement
Which cash token each live tokenized product actually settles in and at which step, how Treasuries and tokenized money market funds sit inside the stablecoins in turn, what tokenized deposits and central bank money can and cannot do yet, which rules decide the cash leg a regulated product may use, how the cash leg fails, and how to read any settlement design.
Section 2.3 already put the problem in one line: tokenization "produces the asset half of a DvP design. The cash half has to be solved separately." Section 2.1 already decided how this paper treats the obvious candidate for that other half: fiat-backed stablecoins pass its own five-question test, yet the paper treats them as settlement infrastructure rather than as RWA exposures in their own right. Section 4.3 closed on the same point from the asset side: the cash leg "is a token with its own issuer, custodian, and register," same as the products it settles against. For what a stablecoin is and how it is minted and burned, Section 2.3 of the stablecoins paper already covers the mechanics. For the argument that stablecoins have become a standing bid for on-chain yield, Section 1.3 already makes it.
This section works at the product level instead. It asks which cash token each live tokenized product actually settles in, and at which step of its lifecycle: subscription, redemption, secondary trading, borrowing, collateral. It follows the money the other way too, into the reverse flow by which Treasuries and tokenized money market funds now sit inside the stablecoins themselves. It covers the bank-side alternatives, tokenized deposits and central bank money, and states which of them is live and which is still a pilot, each dated. It reads the rules that decide which cash leg a regulated product may use. And it covers the documented ways the cash leg fails.
The pattern does not need softening. For public tokenized funds, the cash leg is overwhelmingly USDC (Circle), with PYUSD (Paxos), RLUSD (Ripple) and USDG (Paxos) at the edges. The two largest funds, BUIDL and BENJI, take stablecoins only through a conversion into dollars, not as a native settlement asset. Banks settle their own tokenized products in tokenized deposits, a separate cash token with a separate issuer. And central bank money arrived for tokenized assets in the euro area on 21 September 20261. What follows compares these designs on what they actually do; it takes no position on which cash token or rail a reader should prefer.
The Cash Leg Problem
The OECD's own list, already given in Section 2.3, names four ways to build the payment leg of a DvP design: central bank digital currency, tokenized deposits, suitable stablecoins, or a connection to existing wholesale payment rails. Live products fold a further behavior into that last item, one the list does not name directly: converting the stablecoin into ordinary bank money before the subscription and back again after the redemption. BUIDL takes this route through Securitize's integration with Zero Hash, where "qualified institutions can now convert their USDC to USD" in order to subscribe2.
The table below names who owes each settlement asset and where it actually settles tokenized products today, from OUSG's own currency list3 to Citi's branch network4 to the Pontes, Helvetia and Fnality services156 to the Zero Hash conversion rail and Franklin's own prospectus language27.
| Settlement asset | Who owes it | Where it settles tokenized assets today | Example |
|---|---|---|---|
| Public stablecoin | The issuer's obligation | Public blockchains | OUSG in USDC, PYUSD or RLUSD |
| Tokenized deposit | A bank's deposit liability | Bank ledgers, and a public chain for JPMD | Citi Token Services across five branches; JPMD on Base |
| Central bank money | The central bank | Central bank ledgers, live or piloted by jurisdiction | Pontes in the euro area from 21 September 2026; Swiss wholesale CBDC on SDX; sterling Fnality |
| Conversion into bank money | A conversion agent | The fund's own bank account, off-chain | BUIDL and BENJI via Zero Hash; Franklin processes only in business hours |
Atomicity is a property of the design, not of the token itself. OUSG's instant redemption pays out USDC in the same step that burns the OUSG token, capped at a "$50M Global Limit" and "$25M within 24 hours" per investor8. The Kinexys, Chainlink and Ondo test instead orchestrated two separate ledgers, one carrying the asset and one carrying a deposit account (Section 4.2). A wire is neither: an instruction that clears on a bank's own schedule, not the chain's.
Hours are a property of the cash leg too. Ondo's own docs list OUSG's accepted currencies as "USDC, PYUSD, RLUSD, or USD bank wire"3, with instant minting and redemption8. Franklin's fund processes purchases and redemptions "only … during normal business hours on business days," and names no stablecoin at all7. Superstate settles USTB orders paid in USDC "immediately (including non-business days, subject to available liquidity)," while a USD wire has to arrive before 5pm ET for same-day credit9. Same custodian arrangement, same fund family, two different clocks depending on which token moves.
The diagram reads top to bottom as the question a settlement design answers. Green marks the two designs in which a cash token actually settles on a ledger, same-chain or across two; red marks the design in which the cash never becomes a token at all. The bottom row names who owes the cash in each case: an issuer such as Circle, Paxos, Ripple or Tether; a bank or a central bank; or no one, because the money never left the banking system. The diagram simplifies. A single product can use more than one design at once: OUSG settles atomically in USDC and also accepts a wire, and BUIDL takes wires for subscription while offering a USDC exit through Circle's own contract. Pontes links ledgers together rather than settling everything on one chain. And "atomic" describes what happens at the ledger step, not whether the issuer behind the stablecoin itself redeems it instantly.
Where Stablecoins Enter the Lifecycle
Stablecoins enter a tokenized product's lifecycle at five distinct steps, and the currency accepted often changes between them.
Subscription. Ondo's own docs state that it currently supports "investing via USDC, PYUSD, RLUSD, or USD bank wire"3, with a $5,000 minimum for instant transactions8. Superstate's USTB "can be sent with a USD wire or USDC (on Ethereum, Solana, or Plume)"9. Anemoy's JTRSY accepts "Investments and redemptions in USDC"10. Spiko's UCITS T-bill funds "now accept subscriptions and redemptions in EURC and USDC," with Coinbase Payments approved by depositary CACEIS and by the AMF as a fund payment provider11, the section's one euro-denominated stablecoin. BUIDL takes a USD wire, or USDC converted to USD through Securitize's integration with Zero Hash2. BENJI's prospectus names no stablecoin at all and processes purchases and redemptions "only … during normal business hours on business days"7. xStocks' developer documentation describes a market flow in which holders "Send stablecoins (USDC, USDG, USDT) to the product-specific issuance address to issue xStocks tokens"12; the same page states no timing or minimum for that flow, so the table below reads not stated for those cells (Kraken's own trading hours, already covered in Section 4.3, describe the exchange, not the issuer).
Redemption and exit. OUSG's instant redemption pays out USDC, capped at a "$50M Global Limit" and "$25M within 24 hours" per investor, and "may also be limited by the availability of USDC tokens for instant redemption that Circle supports"8. BUIDL holders exit through a different rail: Circle's April 2024 smart contract "enables the frictionless transfer of BUIDL shares for USDC to Circle on the secondary market"13. BUIDL is one of the funds OUSG itself holds (Section 4.1). Maple's syrup pools take deposits in USDC, USDT or USDG, and withdrawals "normally have instant liquidity, but in rare cases withdrawals can take around 24h with the maximum possible time being 30 days"14.
Secondary trading. BUIDL trades against USDC on UniswapX (Section 4.1), and xStocks trade on Kraken, Bybit and Solana DeFi venues that Section 4.3's issuer table already names.
Borrowing. Aave Horizon lets qualified institutions borrow RLUSD, USDC or GHO against USTB, USCC, JTRSY and JAAA (Section 4.1). Morpho's own playbook describes a narrower loop: holders "supply sACRED as collateral, borrow USDC, and purchase more sACRED"15.
Collateral. Binance takes BUIDL as off-exchange collateral from institutional clients (Section 4.1); the token stays with a tri-party bank or custodian and only its value is mirrored on the exchange.
The table below carries the facts above into one view; Spiko's own blog describes stablecoin settlement as happening "at blockchain speed, often in a matter of seconds"11. Cells read not disclosed where no cited page states a figure, and not stated where xStocks' own documentation is explicit about stating nothing.
| Product | Subscribe in | Redeem in | Timing | Cap or minimum |
|---|---|---|---|---|
| OUSG | USDC, PYUSD, RLUSD, or USD wire | Same four options | Instant mint and redeem; non-instant by wire | $5,000 instant minimum; $50M/$25M instant caps |
| BUIDL | USD wire, or USDC via Zero Hash conversion | USD wire; USDC exit via Circle's contract (secondary market) | not disclosed | 5,000,000 USDC (Section 4.3) |
| BENJI (FOBXX) | USD only; no stablecoin named | USD only; no stablecoin named | Business hours on business days only | $20 (Section 4.3) |
| USTB | USD wire or USDC (Ethereum, Solana, Plume) | USD or USDC | USDC immediate incl. non-business days; wire cutoffs apply | $100,000 |
| JTRSY | USDC | USDC | Daily redemptions | not disclosed |
| xStocks | USDC, USDG, USDT | USDC, USDG, USDT | not stated | not stated |
| Spiko T-bill funds | EURC or USDC | EURC or USDC | Often a matter of seconds | not disclosed |
Behind every one of those flows sits an issuer with its own custodian and register, as Section 4.3 already argued, and rwa.xyz lists each cash token's issuer the same way, on 22 September 202616: USDT (Tether Holdings), USDC (Circle), PYUSD and USDG (Paxos), GHO (Aave). RLUSD is "issued through a limited purpose trust chartered by the New York State Department of Financial Services," with The Bank of New York Mellon selected in July 2025 for primary custody of its reserves17.
The Reverse Flow: Treasuries Inside the Stablecoin
On 22 September 2026, rwa.xyz put total stablecoin market cap at $305.30 billion, monthly transfer volume at $7.17 trillion, and holders at 290.88 million16. The ranking below carries that same date16. The Issuer column reproduces the tracker's own platform field as shown, including "RLUSD" for Ripple USD and "BitGo" for USD1. USDT and USDC together come to about 87.5% of the total.
| Stablecoin | Issuer, as listed | Market cap |
|---|---|---|
| USDT | Tether Holdings | $193.74B |
| USDC | Circle | $73.40B |
| USDS | Sky | $6.66B |
| USDe | Ethena | $4.82B |
| DAI | MakerDAO | $4.57B |
| USD1 | BitGo | $4.33B |
| PYUSD | Paxos | $2.77B |
| RLUSD | RLUSD | $2.37B |
| USDG | Paxos | $1.65B |
| GHO | Aave | $698.37M |
What actually backs the two largest tokens, from their own attestations. BDO's independent assurance report on Tether's reserves, as of 30 June 2026, lists U.S. Treasury Bills of $114,960,963,604 within total assets of $187,751,426,411, describing the Treasury Bills category as comprising bills "with a weighted average maturity of less than 90 days"18. Circle's Form 10-Q states that "As of June 30, 2026, approximately 84% of USDC reserves are held in the Circle Reserve Fund," a money market fund managed by BlackRock Advisors, LLC19 (Section 2.4 of the stablecoins paper covers reserve composition generally). Put plainly: the stablecoins the market uses as cash are claims on issuers whose reserves are mostly Treasury bills, held through banks and a registered fund.
Tokenized money market funds are becoming reserves in their own right, and the pattern now runs in both directions. USDtb "is fully backed by institutional-grade tokenized U.S. treasury fund products," initially BlackRock's BUIDL, with issuance, redemption and reserve management transitioned to Anchorage Digital Bank as of 13 October 202520. BlackRock itself launched BRSRV on 3 August 2026, "designed for digitally native institutional investors" and usable for "stablecoin reserve management"; BlackRock's own release states that the investment strategy behind both new funds is intended to make them "eligible reserve assets" for permitted payment stablecoin issuers under the GENIUS Act21.
The yield sits outside the coin by design. The GENIUS Act provides that no permitted issuer "shall pay the holder of any payment stablecoin any form of interest or yield"22. SEC staff's April 2025 statement covers what it calls "Covered Stablecoins" and expressly does "not express a view regarding the application of the federal securities laws to 'yield-bearing stablecoins'"23. Figure Markets' YLDS is the market's other answer: a stablecoin registered with the SEC as a public security, where "YLDS pays an interest rate of SOFR minus 0.50%. Interest is accrued daily and paid monthly in USD or YLDS."24 Section 1.3 already explains why the interest prohibition pushes that yield into tokenized Treasuries instead; this section does not restate its figures.
Tokenized Deposits and Central Bank Money
Banks are tokenizing their own deposits, and several of these are already live. JPMorgan's JPMD on Base and the Kinexys volumes behind it are already covered (Section 4.2). Citi Token Services for Cash is live in the US, UK, Singapore, Hong Kong and, as of its November 2025 expansion, Dublin, running on "a private, permissioned blockchain" and continuing "to process billions of dollars in transactions"4. HSBC's Tokenized Deposit Service is live in Hong Kong, Singapore, Luxembourg and the UK, and, from April 2026, the United States, with "facilitating settlement of tokenized assets" named among its use cases25. Hong Kong's EnsembleTX, the real-value phase of Project Ensemble that launched in November 2025, initially puts tokenized deposits to work in tokenized money market fund transactions, settling interbank transfers through the HKD Real Time Gross Settlement system before that layer is "progressively upgraded and enhanced to support settlement in tokenised Central Bank Money"26. None of the seven products in the table above settles in a tokenized deposit today; these rails move bank money among bank clients.
Central bank money for tokenized assets is a newer, shorter list, and the sources are careful to distinguish a live service from a pilot. The Eurosystem's Pontes launched on 21 September 2026 as a solution that "enables wholesale transactions in tokenised assets to be settled in central bank money," live with a core set of services among thirteen banks and four DLT operators, with full implementation expected by 20281. It follows 2024 trials in which "the Eurosystem processed over 200 transactions and a total value of €1.59 billion," with 64 participants, real settlement in the trials and mock settlement in the parallel experiments27. The Bundesbank's Trigger Solution and the Siemens bond it settled are already covered (Section 4.2). The Swiss National Bank has run wholesale CBDC on SIX Digital Exchange since the end of 2023, and extended the pilot "until at least mid-2027" in its June 2025 review5. The sterling Fnality Payment System went live on 14 December 2023, where "participants use settlement balances in an account directly at the central bank to make wholesale payments in real-time"6. BIS Project Agorá is earlier in its life: its July 2026 real-value test settled "approximately CHF 800,000" across twenty-eight institutions and central banks, a project its own page still calls a prototype rather than a finished product28.
Where public-chain products meet bank money today, they meet it through a conversion agent, the Zero Hash rail described above, or an orchestrator across ledgers, the Kinexys test described in Section 4.2, not through a settlement asset the two sides share. Section 4.5 of the stablecoins paper compares stablecoins against traditional payment rails directly; this section does not repeat that comparison.
What the Rules Decide
United States. The GENIUS Act, approved 18 July 2025, defines a payment stablecoin as a digital asset "that is, or is designed to be, used as a means of payment or settlement," whose issuer must stand ready to convert, redeem or repurchase it for a fixed monetary value (Section 2(22))22. Issuers must hold reserves "on an at least 1 to 1 basis" in cash, insured deposits, Treasury bills "with a remaining maturity of 93 days or less," overnight repo and reverse repo, a registered government money market fund invested solely in those assets, and, for the cash, deposit, Treasury bill and money market fund items, the same assets "in tokenized form" (Section 4(a)(1)(A))22. The Act bars issuers from paying holders "any form of interest or yield" (Section 4(a)(11))22, and takes effect on "the earlier of" eighteen months after enactment or 120 days after final implementing regulations (Section 20)22. The Treasury's August 2026 proposed rule gives "January 18, 2027, the expected effective date of the GENIUS Act"29. The reserve list is, in effect, a list of RWAs, and the tokenized-form clause lets most of the items on it, though not the repo items, be held as tokens.
European Union. The DLT Pilot Regime's Article 5(8) sets a hierarchy for the cash leg of a DLT settlement system: "The settlement of payments shall be carried out through central bank money, including in tokenised form, where practical and available or, where not practical and available, … through commercial bank money, including in tokenised form, in accordance with that Title, or using 'e-money tokens'"30. MiCA defines an e-money token as "a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency" (Article 3(1)(7)), and bars interest on it: "issuers of e-money tokens shall not grant interest in relation to e-money tokens" (Article 50(1))31. ESMA's June 2025 review of the Pilot Regime found that 21X AG settles "in euro-denominated (EUROe) or USD-denominated e-money tokens provided by Circle Internet Financial Europe SAS and Quantoz Payments B.V.," used "for on-chain DvP functionality," and warned that "the absence of central bank money settlement and limited fallback mechanisms increase exposure to edge-case failures"32. Section 6.2 of the stablecoins paper covers MiCA generally.
United Kingdom. The Bank of England's 22 June 2026 policy statement sets "a temporary issuance guardrail" for each systemic stablecoin, "initially set at £40 billion," with backing assets up to 70% in short-term gilts and the remainder in central bank deposits, no holding limits, and regime operation expected from 202733.
The US and UK rules push the same way: toward stablecoins backed by short Treasuries and bank deposits, with the yield kept outside the coin. That is the reverse flow above, written into law. MiCA takes its own route to the same end, barring interest on e-money tokens directly.
What Can Go Wrong at the Cash Leg
Section 5.1 of the stablecoins paper already covers depeg, counterparty and smart-contract risk generically, including the March 2023 Silicon Valley Bank episode; this section adds only what is specific to settlement, each fact dated.
Instant redemption depends on someone else's liquidity. OUSG's instant redemptions "may also be limited by the availability of USDC tokens for instant redemption that Circle supports"8, and Maple's withdrawals, though normally instant, can take up to their "maximum possible time being 30 days" in rare cases14.
One coin can mean several tokens once it crosses a bridge. Circle's own terms state that "Circle does not issue or redeem Bridged USDC" and that such a token "is not backed by US dollars or any of Circle's USDC-related reserves"; bridged USDC "can only be unbridged to Native Ethereum USDC"34 (Section 4.2 covers the same bridge-risk point on the asset leg). A product settling on one chain settles against whichever version of the token that chain actually holds.
Hours and cutoffs cut against 24/7 marketing. Franklin processes only in business hours7, against stablecoin rails that never close; a wire sent on a Saturday waits for Monday, while Superstate settles a USDC order the same day9.
The official framing is skeptical of the whole category. The BIS's 2025 Annual Economic Report found that stablecoins "offer some promise on tokenisation but fall short of requirements to be the mainstay of the monetary system when set against the three key tests of singleness, elasticity and integrity"35. Section 2.4 already covers settlement finality and the BIS/CPMI framework this claim sits inside. Sections 5.x of this paper take up risk analysis in full; this section stops at the cash leg.
How to Read a Settlement Design
Five questions, asked in order, read any settlement design here or anywhere else.
- What is the cash leg, and who owes it? A stablecoin from a named issuer, a deposit token from a named bank, central bank money, or a wire from a bank account.
- Is settlement atomic on one ledger, orchestrated across two, or a conversion? The design decides whether "instant" means one transaction or a business day.
- What are the hours, cutoffs and caps? 24/7 on the chain against business hours at the transfer agent, and per-day limits on instant redemption.
- Whose liquidity backs the instant leg? The issuer's own balance, a standing bid from the stablecoin issuer, or a market maker.
- Which rule governs the cash token, and is the yield inside or outside it? GENIUS, MiCA, the Bank of England's regime, and the interest prohibitions that keep the yield in the tokenized fund instead.
A settlement design that answers all five questions well for one product may answer them badly for the next, which is why the same fund can settle in USDC on one chain and by wire on another.
Bridge to Section 4.5
Every figure in this section has carried its own date: OUSG's limits and Superstate's cutoffs on 22 September 2026, the Tether and Circle reserve figures as of 30 June 2026, Pontes from 21 September 2026, the Bank of England's guardrail from June 2026. Each date is real, and each one is different, because this section moves product by product and chain by chain. Section 4.5 puts the tokenized market on one date instead: how large it is with the stablecoin layer included and excluded, how fast it has grown, and what the trackers actually count when they publish a total. That is a market-sizing question, not a settlement-design question, which is why it waits for its own section.
- The cash leg is a separate design decision. Live products use three patterns: atomic settlement on one ledger, an orchestrated flow across two ledgers, or a conversion into ordinary bank money before the transaction and after it.
- For public tokenized funds, the cash leg is overwhelmingly USDC, with PYUSD, RLUSD and USDG at the edges. The two largest funds, BUIDL and BENJI, take stablecoins only through a conversion into dollars, never as a native settlement asset.
- The reverse flow closes the loop: the largest stablecoins are backed mostly by Treasury bills, tokenized money market funds are becoming stablecoin reserves in their own right, and the GENIUS Act writes that structure into law while keeping the yield outside the coin.
- Banks and central banks settle bank products in tokenized deposits and central bank money. Pontes went live in the euro area on 21 September 2026; BIS Project Agorá remains a prototype, in its own words.
- The cash leg fails on liquidity, ledger fragmentation, hours and rules, not on the asset leg. Section 5.1 of the stablecoins paper already covers the generic risks this section does not repeat.