Stablecoin and AI Agents Will Reinvent Banking, According to a Crypto Pioneer
By Steve Cocheo, Senior Executive Editor at The Financial Brand
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Executive Summary
- With final passage of pro-stablecoin legislation in the offing, the new venture of Sean Neville, the co-founder of the USDC stablecoin, is well-placed for the combo of this crypto category with agentic commerce.
- Neville says the legislation could jump start use of stablecoins for payment — anticipated once to be a key, early use case, but one that didn’t come off.
- Critical protocols must be devised to make agentic payments work and Neville sees stablecoins as a critical ingredient.
Sean Neville is a big believer in agentic commerce and concurrent agentic payments, so much so that he thinks they’ll be taking over most financial transactions in the future. Even as people debate the developing role of artificial intelligence in commerce and society, Neville sees AI-driven agents handling both sides of most transactions, with consumers and companies dealing with the agent on every deal or purchase.
The currency of choice, he believes, will be the stablecoin. Many payment companies and even nonfinancial firms have been busily putting an oar into the fledgling agentic commerce business, but Neville insists that stablecoins will be the currency to watch.
“Stove piping agentic AI onto the existing financial rails will be inefficient, uneconomical and too expensive,” says Neville. And as AI takes over transactions, there are risks that current processes are inadequate for.
“So what we really need is a new mechanism that’s more machine-native for machine intelligence to use to send money back and forth,” says Neville, “and that’s where stablecoins come in.” Proponents speak of a future with programmable payments, smart contracts and more.
It’s understandable that Neville has faith in stablecoins — cryptocurrency backed by assets like real money or gold — taking on this potentially expansive role.
Neville co-founded Circle (formally, Circle Internet Group), which began issuing USD Coin (USDC), a stablecoin pegged to the U.S. dollar, back in 2018. A July report by Fitch Ratings indicates that today USDC is the second-biggest stablecoin, in terms of market capitalization, globally. It represents 23% of stablecoin capitalization, per Fitch.
Issuance of the USDC stablecoin was initially in conjunction with Coinbase, but now Circle handles the digital currency on its own. Neville stepped down from his daily duties at Circle in 2020 but remained on Circle’s board while taking a sabbatical.
Earlier this year, Neville unveiled a new company, Catena Labs, which he hopes will become the first fully regulated AI-native financial institution. Initially the company will work using money transmitter licenses, which are issued by state financial regulators. Whether the company takes things as far as obtaining an actual bank charter will depend on how its business evolves, according to Neville. The first step is working with a set of open-source protocols it released in May for agentic commerce.
Neville goes on to say that he doesn’t think stablecoins are a “silver bullet.”
“But they offer some advantages in terms of low cost and nearly instant settlement, especially across borders — and machines like AI actors don’t recognize borders,” says Neville.
The spark that will set off additional activity in the stablecoin arena is the widely anticipated passage of federal legislation establishing a regulatory approach and guardrails for the various digital currencies falling into this category. Two similar approaches have been taken, one in the Senate-passed “GENIUS Act” (Guiding and Establishing National Innovation for U.S. Stablecoins) and the other in the House-passed STABLE Act (Stablecoin Transparency and Accountability for a Better Ledger Economy).
The House is poised to vote on the GENIUS Act, along with two related bills, during the week of July 13. [Update: As of late afternoon July 17, the House passed the GENIUS Act.]
“When we started Circle, we thought surely the first use case that would be addressed by blockchains with the ability to move money safely around the world would be payments — and that hasn’t actually happened yet,” says Neville. With the federal legislation nearing passage — the Trump administration favors the broad concepts — “we feel like now it’s finally beginning to be unlocked.” The key, he explains, will be regulatory clarity.
Neville predicts that at some point the use of stablecoins will grow so commonplace that the name will fade away.
“At some point it’s just going to be ‘money’,” he says, “‘digital money’.”
How Will His AI Financial Institution Plug In
Catena’s strategy calls for starting with the basics to bring stablecoins to agentic commerce.
“We’re starting at the bottom of the stack, addressing fundamental protocols,” says Neville. Neville says at this point he doesn’t see Catena issuing its own stablecoin, but instead functioning as a facilitator.
Among the first round of protocols to solve:
- How do payments happen between two machines — AI to AI?
- How do payments happen between humans and AI?
- How do players solve the identity problem — verifying that an agent facilitating money transfer is ‘who’ all parties think it is?
- How are agents empowered to pay and be paid?
- How can an audit trail be established back to the licensed entity that handles the money transfers? (That’s one of the roles envisioned for Catena.)
At some point, these building blocks will lead to bigger matters, says Neville. This will run from foreign exchange to global treasury management and ultimately, he predicts, to more sophisticated functions, such as debt market services.
But the essentials must be licked first.
Read more:
- Are American Consumers Ready to Let AI Agents Shop and Pay on Their Behalf?
- Your Customers Are Already Deploying AI Agents. Are You Ready to Respond?
- ‘Do It for Me’ Will Power the Next Phase of Innovation in Banking
Agentic Payments is Still Very Much Under Construction
Right now, Neville points out, a consumer who wants to buy something on Amazon.com can assure themselves that they are really dealing with the mega retailer, and not on a spoof site. Technology such as HTTPS — Hypertext Transfer Protocol Secure — and ecommerce encryption make this possible.
“We don’t yet have that security for agent-to-agent commerce,” says Neville. “We need to build some of those fundamentals before we can unlock some of the higher-ordered use cases.”
Among those advanced functions — at least, seen that way now — is the ability to use digital currency across multiple ecosystems, he says. He believes that as things begin to move in the field the solutions will come quickly. Acting as “bridge” between ecosystems is one of the roles Neville sees for Catena in the future.
Solving these challenges must happen before an AI-native financial institution can be built.
“The word ‘bank’ is conceptually accurate. It is a new kind of global bank that will be operated almost entirely by AI,” says Neville. “We do still have humans, though it’s hard to tell over a screen. But we are building the financial institution from the ground up with AI actors in place.”
Those actors will handle compliance, risk management, anti-money-laundering reporting and more — “with humans in the loop.”
The flip side, according to Neville: “Ultimately, we believe that many of the customers will be AIs that we’ll be servicing.”
Handling that may not require having a full-service bank charter. “But it may require some sort of special purpose charter and we’ll look at that in the future,” he adds. Initially Catena will be relying on banking partners to execute certain activities.
In late June, Circle announced that it has applied to the Comptroller’s Office for a special trust charter to found “First National Digital Currency Bank, N.A.” The initial purpose would be to manage USDC’s reserves in a way anticipated to meet anticipated requirements of final federal legislation.
Read more: Why Five Industrial Bank Bids Are the New Competitive Threat You Need to Watch
A Foundation of Trust is Required If Agentic Payments Can Grow
Trust is a critical factor that must be developed at multiple points in both the stablecoin and agentic commerce areas to ensure acceptance, according to Neville. A good deal of how agentic commerce will function will be unseen by users and at times the agents on both sides of a transaction will be functioning independently of each other.
“What that ultimately means is that certain kinds of shopping use cases will be ‘real world’ before others,” says Neville. “It may be that there are certain kinds of purchases that are just annoying to make and we’ll trust agents to dealt with them. But other shopping experiences are pretty pleasurable, so maybe those won’t be touched quite as quickly.”
For those shopping functions that people come to rely on agents for, guardrails will be a necessity. A consumer should be able to instruct an agent to shop only on this or that website, and stick to a budget, he says.
A key matter to be resolved is “what happens when it breaks, and guardrails are escaped,” says Neville. “Who has the liability if the AI makes a purchase that shouldn’t have been made?”
On the payment side, a basic of stablecoins is the concept that “a dollar is a dollar is a dollar,” Neville says. The final legislation is expected to require backing for stablecoins at least matching the “dollar is a dollar” standard. The Fitch Ratings report notes that the top 10 stablecoins, measured by market capitalization, are pegged to the U.S. dollar.
As stablecoin issuers begin to resemble banks, and perhaps obtain charters, Neville sees a examination regimen that will evolve. Initially, he says AI actors will need to be examined almost as if they were human employees. But in time the AI agents will need to be regulated directly, in some way.
“And then — it almost sounds like science fiction — you’ll have semi-autonomous or even fully autonomous banks operating,” says Neville. “But that’s way far in the future.”
Read more: Why Fifth Third is Getting Serious About Crypto and Stablecoins
