Banks, exchanges and stablecoins keep tripping over each other on the same onchain rug 🤝

The line between crypto firms and traditional finance is shrinking fast as banks, exchanges and stablecoin issuers compete for the same onchain ground. Binance agreed to buy a $100 million stake in Circle, Canada's six largest banks are jointly exploring tokenized Canadian dollar deposits, and the New York Stock Exchange is working with Blockchain.com to bring US stocks and ETFs onchain, developments that put both sides on increasingly overlapping turf in payments and traditional assets.

Binance is deepening its ties to Circle through a $100 million investment in the stablecoin issuer and a five-year agreement to expand USDC adoption across the exchange. According to a Tuesday filing with the US Securities and Exchange Commission, Circle issued Binance 1,237,011 shares of Class A common stock at $80.84 apiece in a Sept. 17 private placement, a price below Circle's market price before the deal closed. CRCL shares rose following the announcement. Circle will pay Binance a monthly incentive fee based on the amount of USDC held through the exchange's Modular Smart Contract Wallet infrastructure, and Binance is restricted from selling, transferring, pledging or otherwise disposing of the Circle shares for up to two years, though the lockup can end earlier under certain termination provisions. Binance retains voting rights on the shares during that period.

Separately, Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank Group are jointly exploring tokenized Canadian dollar deposits that would allow digital representations of bank deposits to move between financial institutions. The first phase will focus on transfers between participating banks, with the system potentially connecting to other digital asset networks later. The project follows Canada's Office of the Superintendent of Financial Institutions clarifying on Sept. 10 that tokenized deposits are "not legally distinct from traditional deposits," meaning the use of blockchain or other technology does not change their underlying legal treatment. Unlike fiat-backed stablecoins, tokenized deposits remain liabilities of the issuing banks, and other deposit-taking institutions could potentially join in the future.