Crypto Currents: Kraken challenges banks as U.S. Bancorp tests stablecoin

Traditional banking giants are exploring the blockchain, with U.S. Bancorp testing stablecoins, while cryptocurrency exchange Kraken blurs the lines between blockchain and banking. Stay up on the crypto news that matters with “Crypto Currents,” daily from The Fly. Join us at 2 PM ET for your essential briefing on the fast-moving world of cryptocurrency on FlyCast radio, Also, subscribe to our YouTube channel for the Crypto Fly By weekly recap.

U.S. BANCORP TESTS STABLECOIN AND CUSTODY AS KRAKEN TESTS BANKS: Major financial institutions are expanding their digital asset capabilities. U.S. Bancorp (USB) is testing its own stablecoin on the Stellar blockchain to facilitate faster, 24/7 payments, Bloomberg reports. While CEO Gunjan Kedia noted that client demand for payments remains “muted,” the bank is focusing heavily on custody solutions. Similarly, Standard Chartered (SCBFF) has secured a deal to provide custody services for 21Shares’ exchange-traded crypto products, as reported by Cointelegraph, signaling a shift where traditional finance firms directly challenge crypto-native custodians.

Conversely, crypto exchanges are encroaching on traditional banking turf. Kraken began a phased rollout of its “Krak” payments app, featuring a debit card powered by Mastercard’s (MA) payments network with 1% cashback, salary deposits, and high-yield vaults to position itself as a primary alternative to legacy banks. This product expansion arrives just as Kraken confirmed it has confidentially filed a draft registration statement with the SEC for a proposed IPO.

KLARNA DEBUTS STABLECOIN TO SLASH CROSS-BORDER FEES: In a significant pivot for the “buy now, pay later” giant, Klarna (KLAR) is launching a U.S. dollar stablecoin, KlarnaUSD, on the Tempo blockchain. The fintech firm aims to utilize the token to reduce the estimated $120B in annual fees associated with cross-border payments. The move makes Klarna the first bank to tap Stripe’s “Bridge” stablecoin infrastructure for blockchain-powered payments, marking a major shift for CEO Sebastian Siemiatkowski, who was previously a vocal skeptic of the technology.

BLACKROCK SHIFTS $400M BITCOIN AMID EXODUS ACQUISITION AND S&P 500 SNUB: On-chain data reveals significant movements from the world’s largest asset manager. BlackRock (BLK) transferred $400M worth of bitcoin (BTC-USD) to Coinbase (COIN) Prime as its IBIT ETF experienced record monthly outflows. Despite debates about liquidity tightening, analysts note that the majority of institutional holders are retaining their positions.

Public companies are also leveraging their balance sheets for expansion. Wallet provider Exodus Movement (EXOD) plans to use its bitcoin holdings to finance a $175M acquisition of W3C Corp. However, Strategy (MSTR) was once again bypassed for inclusion in the S&P 500 index, as the committee favored companies with more consistent earnings over the bitcoin treasury firm.

PRICE ACTION: As of time of writing, bitcoin was trading at $87,065.39, while ether (ETH-USD) was trading at $2,921.04, according to price data from CoinDesk.