Article by: Chilla Article compiled by: Block unicorn Foreword There's a principle in behavioral economics called mental accounting. People's attitudes towards money differ depending on where they store it. $100 in a current account feels like it's readily available, while $100 in a retirement account feels like it's untouchable. Although money itself is interchangeable, where it's stored influences how you perceive it. Frax founder Sam Kazemian calls this the "net worth theory." People tend to keep their spare change where most of their wealth already resides. If your net worth is primarily concentrated in Charles Schwab's stock and bond accounts, you'd keep your dollars in a linked bank account because transferring funds between the two is very convenient. If your net worth is mainly in Ethereum wallets and DeFi positions, you'd want your dollars to interact with the DeFi world just as easily. For the first time in history, a significant number of people are storing the vast majority of their wealth on the blockchain. They're tired of constantly transferring money through traditional banks just to buy a cup of coffee. Crypto banks are addressing this problem by building platforms that integrate all functionalities into one place. These platforms allow you to deposit money in interest-bearing stablecoins and spend with a Visa card without ever touching a traditional bank account. The rapid growth of these platforms is a market response to the fact that cryptocurrencies finally have enough real users and enough real on-chain funds, making it worthwhile to build such platforms. Stablecoins seamlessly integrate into daily consumption For over a decade, cryptocurrencies have promised to eliminate intermediaries, reduce fees, and give users more control. However, one persistent problem remains: merchants don't accept cryptocurrencies, and convincing all merchants to accept them simultaneously is impossible. You can't pay your rent with USDC. Your employer won't pay your salary with ETH. Supermarkets don't accept stablecoins. Even if you invest all your wealth in cryptocurrency, you still need a traditional bank account to live a normal life. Every exchange between cryptocurrency and fiat currency incurs fees, settlement delays, and friction. This is why most crypto payment projects fail. BitPay attempted to get merchants to accept Bitcoin directly. The Lightning Network built the peer-to-peer infrastructure but struggled with liquidity management and routing reliability. Neither achieved significant adoption due to high conversion costs. Merchants needed to be certain their customers would use the payment method. Customers needed to be certain merchants would accept it. Nobody was willing to be the first to act. The new cryptocurrency bank has completely hidden the coordination issues. You spend stablecoins from your own custodial wallet. The new bank converts the stablecoins into US dollars and settles with merchants via Visa or Mastercard. The coffee shop receives the dollars as usual. They have no idea that a cryptocurrency transaction is involved. You don't need to convince all merchants to accept cryptocurrency. You just need to streamline the conversion process so users can pay with cryptocurrency at any merchant that accepts regular debit cards (which is basically everywhere). The simultaneous maturity of these three infrastructure components by 2025 makes it possible after years of failed attempts. First, stablecoins have been legalized. The GENIUS Act, passed in July 2025, provides a clear legal framework for the issuance of stablecoins. Treasury Secretary Scott Bessant predicts that by 2030, the volume of transactions using stablecoins will reach $3 trillion. This is equivalent to the U.S. Treasury officially declaring stablecoins as part of the financial system. Secondly, the bank card infrastructure has been commoditized. Companies like Bridge offer out-of-the-box APIs, allowing teams to launch complete virtual banking products within weeks. Stripe acquired Bridge for $1.1 billion. Teams no longer need to negotiate directly with bank card networks or build bank partnerships from scratch. Third, people do now have wealth on-chain. Early attempts at cryptocurrency payments failed because users didn't hold significant net cryptocurrency assets. Most savings were held in traditional securities accounts and 401k retirement plans. Cryptocurrencies were seen as speculative instruments, not a place to store life savings. The situation is different now. Young users and crypto natives now hold significant wealth in Ethereum wallets, staking positions, and DeFi protocols. Mental accounting has shifted. Keeping funds on-chain and spending them directly from the chain is much easier than withdrawing them back to bank deposits. Products and their functions The main differences between new cryptocurrency banks lie in their yields, cashback rates, and geographic coverage. However, they all address the same core issue: enabling people to use their cryptocurrency assets without relinquishing control or frequently converting them into bank deposits. EtherFi processes over $1 million in credit card spending daily, a figure that has doubled in the past two months. Similarly, Monerium's EURe stablecoin has seen significant growth in both issuance and burn rate. This distinction is crucial because it demonstrates that these platforms are facilitating genuine economic activity, not merely speculation among cryptocurrencies. Funds are flowing out of the crypto sphere and into the broader economic system. That was the bridge that had been missing all along, and it's finally been built. The competitive landscape has undergone a dramatic transformation in the past year. Plasma One launched as the first native stablecoin bank, focusing on emerging markets with limited access to USD. Tria, built on Arbitrum, offers self-custodied wallets and gas-free trading. EtherFi has evolved from a liquidity restaking protocol into a mature new bank with $11 billion in total value locked (TVL). Mantle's UR, prioritizing Swiss regulation and compliance, is targeting the Asian market. The methods may differ, but they all address the same question: how to make on-chain wealth directly spend without spending time dealing with traditional banks? There's another reason why new crypto banks can compete, even if they're smaller: their users are inherently more valuable. The average American has a checking account balance of around $8,000. Crypto native users, however, frequently transact in six- or even seven-figure amounts across different protocols, blockchains, and platforms. Their transaction volume is equivalent to the combined volume of hundreds of traditional bank customers. This fundamentally changes traditional unit economics. New crypto banks don't need millions of users to be profitable; a few thousand suitable customers are enough. Traditional banks strive for economies of scale because each customer generates limited revenue. New crypto banks, however, can build sustainable businesses even with a smaller user base because each customer is 10 to 100 times more valuable than a traditional bank in terms of transaction fees, exchange fees, and managed assets. Everything changes when the average user no longer deposits $2,000 of their salary twice a month like a traditional bank does. Each new cryptocurrency bank has independently built the same architecture: separate spending and savings accounts. Payment stablecoins like Frax's FRAUSD, backed by low-risk government bonds, aim for widespread adoption, thus simplifying merchant integration. Yield-generating stablecoins like Ethena's sUSDe optimize yields through sophisticated arbitrage trading and DeFi strategies that can generate 4-12% annualized returns, but their complexity exceeds merchants' assessment capabilities. A few years ago, DeFi attempted to merge these categories, assuming all assets were yield-generating, but found the friction from merging these functions far outweighed the problems it solved. Traditional banks separate checking and savings accounts due to regulatory requirements. Cryptocurrencies are fundamentally re-examining this separation because you need a payment layer that maximizes acceptance and a savings layer that maximizes yield. Trying to optimize both simultaneously only harms both. New cryptocurrency banks can offer returns that traditional banks cannot match. They leverage the yields of government bonds backing stablecoins, adding a payment process simply for compliance. Traditional banks cannot compete on interest rates because their cost structure is fundamentally higher, including physical branches, legacy systems, and compliance expenses. These new banks eliminate all of these costs and pass the savings on to their users. The cryptocurrency space has made numerous attempts to build payment systems. What's different this time? This time, the situation is different because all three necessary conditions are finally met simultaneously. The regulatory framework is clear enough that banks are willing to participate; the infrastructure is mature enough that the team can deliver products quickly; and most importantly, there are enough on-chain users with sufficient wealth to ensure market viability. People's mental accounting has shifted. In the past, people kept their wealth in traditional accounts and speculated with cryptocurrencies. Now, people keep their wealth in cryptocurrencies and only exchange them for fiat currency when they need to spend it. New types of banks are building infrastructure to accommodate this shift in user behavior. Money has always been the story we tell about value. For centuries, this story has required intermediaries to validate it—banks kept the books, governments backed the currency, and card organizations processed transactions. Cryptocurrencies promised to rewrite this story without intermediaries, but it turns out we still need someone to bridge the gap between the old and new narratives. New banks might play that role. What's fascinating is that in building bridges between the two monetary systems, they haven't created anything entirely new. They've simply rediscovered patterns that existed a century ago, patterns that reflect the fundamental nature of the human relationship with money. Technology is constantly changing, but the story we tell about what money is and where it should exist remains remarkably consistent. Perhaps this is the real lesson: we think we're disrupting finance, but in reality, we're just moving wealth to places that conform to existing narratives. That's all for today. See you in the next article.Article by: Chilla Article compiled by: Block unicorn Foreword There's a principle in behavioral economics called mental accounting. People's attitudes towards money differ depending on where they store it. $100 in a current account feels like it's readily available, while $100 in a retirement account feels like it's untouchable. Although money itself is interchangeable, where it's stored influences how you perceive it. Frax founder Sam Kazemian calls this the "net worth theory." People tend to keep their spare change where most of their wealth already resides. If your net worth is primarily concentrated in Charles Schwab's stock and bond accounts, you'd keep your dollars in a linked bank account because transferring funds between the two is very convenient. If your net worth is mainly in Ethereum wallets and DeFi positions, you'd want your dollars to interact with the DeFi world just as easily. For the first time in history, a significant number of people are storing the vast majority of their wealth on the blockchain. They're tired of constantly transferring money through traditional banks just to buy a cup of coffee. Crypto banks are addressing this problem by building platforms that integrate all functionalities into one place. These platforms allow you to deposit money in interest-bearing stablecoins and spend with a Visa card without ever touching a traditional bank account. The rapid growth of these platforms is a market response to the fact that cryptocurrencies finally have enough real users and enough real on-chain funds, making it worthwhile to build such platforms. Stablecoins seamlessly integrate into daily consumption For over a decade, cryptocurrencies have promised to eliminate intermediaries, reduce fees, and give users more control. However, one persistent problem remains: merchants don't accept cryptocurrencies, and convincing all merchants to accept them simultaneously is impossible. You can't pay your rent with USDC. Your employer won't pay your salary with ETH. Supermarkets don't accept stablecoins. Even if you invest all your wealth in cryptocurrency, you still need a traditional bank account to live a normal life. Every exchange between cryptocurrency and fiat currency incurs fees, settlement delays, and friction. This is why most crypto payment projects fail. BitPay attempted to get merchants to accept Bitcoin directly. The Lightning Network built the peer-to-peer infrastructure but struggled with liquidity management and routing reliability. Neither achieved significant adoption due to high conversion costs. Merchants needed to be certain their customers would use the payment method. Customers needed to be certain merchants would accept it. Nobody was willing to be the first to act. The new cryptocurrency bank has completely hidden the coordination issues. You spend stablecoins from your own custodial wallet. The new bank converts the stablecoins into US dollars and settles with merchants via Visa or Mastercard. The coffee shop receives the dollars as usual. They have no idea that a cryptocurrency transaction is involved. You don't need to convince all merchants to accept cryptocurrency. You just need to streamline the conversion process so users can pay with cryptocurrency at any merchant that accepts regular debit cards (which is basically everywhere). The simultaneous maturity of these three infrastructure components by 2025 makes it possible after years of failed attempts. First, stablecoins have been legalized. The GENIUS Act, passed in July 2025, provides a clear legal framework for the issuance of stablecoins. Treasury Secretary Scott Bessant predicts that by 2030, the volume of transactions using stablecoins will reach $3 trillion. This is equivalent to the U.S. Treasury officially declaring stablecoins as part of the financial system. Secondly, the bank card infrastructure has been commoditized. Companies like Bridge offer out-of-the-box APIs, allowing teams to launch complete virtual banking products within weeks. Stripe acquired Bridge for $1.1 billion. Teams no longer need to negotiate directly with bank card networks or build bank partnerships from scratch. Third, people do now have wealth on-chain. Early attempts at cryptocurrency payments failed because users didn't hold significant net cryptocurrency assets. Most savings were held in traditional securities accounts and 401k retirement plans. Cryptocurrencies were seen as speculative instruments, not a place to store life savings. The situation is different now. Young users and crypto natives now hold significant wealth in Ethereum wallets, staking positions, and DeFi protocols. Mental accounting has shifted. Keeping funds on-chain and spending them directly from the chain is much easier than withdrawing them back to bank deposits. Products and their functions The main differences between new cryptocurrency banks lie in their yields, cashback rates, and geographic coverage. However, they all address the same core issue: enabling people to use their cryptocurrency assets without relinquishing control or frequently converting them into bank deposits. EtherFi processes over $1 million in credit card spending daily, a figure that has doubled in the past two months. Similarly, Monerium's EURe stablecoin has seen significant growth in both issuance and burn rate. This distinction is crucial because it demonstrates that these platforms are facilitating genuine economic activity, not merely speculation among cryptocurrencies. Funds are flowing out of the crypto sphere and into the broader economic system. That was the bridge that had been missing all along, and it's finally been built. The competitive landscape has undergone a dramatic transformation in the past year. Plasma One launched as the first native stablecoin bank, focusing on emerging markets with limited access to USD. Tria, built on Arbitrum, offers self-custodied wallets and gas-free trading. EtherFi has evolved from a liquidity restaking protocol into a mature new bank with $11 billion in total value locked (TVL). Mantle's UR, prioritizing Swiss regulation and compliance, is targeting the Asian market. The methods may differ, but they all address the same question: how to make on-chain wealth directly spend without spending time dealing with traditional banks? There's another reason why new crypto banks can compete, even if they're smaller: their users are inherently more valuable. The average American has a checking account balance of around $8,000. Crypto native users, however, frequently transact in six- or even seven-figure amounts across different protocols, blockchains, and platforms. Their transaction volume is equivalent to the combined volume of hundreds of traditional bank customers. This fundamentally changes traditional unit economics. New crypto banks don't need millions of users to be profitable; a few thousand suitable customers are enough. Traditional banks strive for economies of scale because each customer generates limited revenue. New crypto banks, however, can build sustainable businesses even with a smaller user base because each customer is 10 to 100 times more valuable than a traditional bank in terms of transaction fees, exchange fees, and managed assets. Everything changes when the average user no longer deposits $2,000 of their salary twice a month like a traditional bank does. Each new cryptocurrency bank has independently built the same architecture: separate spending and savings accounts. Payment stablecoins like Frax's FRAUSD, backed by low-risk government bonds, aim for widespread adoption, thus simplifying merchant integration. Yield-generating stablecoins like Ethena's sUSDe optimize yields through sophisticated arbitrage trading and DeFi strategies that can generate 4-12% annualized returns, but their complexity exceeds merchants' assessment capabilities. A few years ago, DeFi attempted to merge these categories, assuming all assets were yield-generating, but found the friction from merging these functions far outweighed the problems it solved. Traditional banks separate checking and savings accounts due to regulatory requirements. Cryptocurrencies are fundamentally re-examining this separation because you need a payment layer that maximizes acceptance and a savings layer that maximizes yield. Trying to optimize both simultaneously only harms both. New cryptocurrency banks can offer returns that traditional banks cannot match. They leverage the yields of government bonds backing stablecoins, adding a payment process simply for compliance. Traditional banks cannot compete on interest rates because their cost structure is fundamentally higher, including physical branches, legacy systems, and compliance expenses. These new banks eliminate all of these costs and pass the savings on to their users. The cryptocurrency space has made numerous attempts to build payment systems. What's different this time? This time, the situation is different because all three necessary conditions are finally met simultaneously. The regulatory framework is clear enough that banks are willing to participate; the infrastructure is mature enough that the team can deliver products quickly; and most importantly, there are enough on-chain users with sufficient wealth to ensure market viability. People's mental accounting has shifted. In the past, people kept their wealth in traditional accounts and speculated with cryptocurrencies. Now, people keep their wealth in cryptocurrencies and only exchange them for fiat currency when they need to spend it. New types of banks are building infrastructure to accommodate this shift in user behavior. Money has always been the story we tell about value. For centuries, this story has required intermediaries to validate it—banks kept the books, governments backed the currency, and card organizations processed transactions. Cryptocurrencies promised to rewrite this story without intermediaries, but it turns out we still need someone to bridge the gap between the old and new narratives. New banks might play that role. What's fascinating is that in building bridges between the two monetary systems, they haven't created anything entirely new. They've simply rediscovered patterns that existed a century ago, patterns that reflect the fundamental nature of the human relationship with money. Technology is constantly changing, but the story we tell about what money is and where it should exist remains remarkably consistent. Perhaps this is the real lesson: we think we're disrupting finance, but in reality, we're just moving wealth to places that conform to existing narratives. That's all for today. See you in the next article.