The conflict between stablecoins and the banking industry probably does not exist.

_Original author: _Noah Levine

Translation | Odaily Planet Daily_ Wenser_

Editor’s note: For a long time, the crypto industry and traditional financial institutions have been in a tense standoff. The proposed and stalled regulations like the GENUIS ACT for stablecoins and the CLARITY ACT for crypto structures are highly related to this opposition. For traditional banks, they worry that stablecoins will eat into their deposit shares and large user base, threatening their industry position and survival; for the crypto industry, finding a harmonious coexistence with traditional banking and bringing in massive liquidity from traditional financial markets has become one of the few “lifelines.”

The truth is, this conflict may not even exist. As a16z Crypto partner Noah Levine said: “Just like the ‘Javon’s Paradox’ that once existed between ATMs and bank tellers, the development of crypto might help traditional banking find new growth paths.” Odaily Planet Daily has compiled his lengthy article below, inviting readers to re-examine this industry contradiction from supply and demand perspectives.

The Javan’s Paradox Sweeping the Financial Industry: That machine “stealing jobs” ultimately creates more employment

(According to previous assumptions), bank tellers were expected to be replaced by ATMs.

But in reality? ATMs significantly lowered the operating costs of bank branches, yet banks opened more branches. Over forty years, the number of bank tellers doubled.

In 1865, William Stanley Jevons discovered the same pattern in the coal economy—higher efficiency of the steam engine led to increased coal consumption, because the applications for coal expanded. This phenomenon is named after him. Today, it is reshaping the financial services industry from both supply and demand sides.

Supply Side: Infrastructure Collapse and Reconstruction

To operate in the U.S., Venmo needs partnerships with five banks, licenses in 49 states, and middleware connecting over 12,000 financial institutions—and it can only operate within one country.

Each major market requires its own system: some rely on government-led channels like PIX and UPI; others depend on private internet platforms like M-Pesa and Alipay. Currently, about 80 countries worldwide have real-time payment systems, but they are almost entirely disconnected from each other.

The regionalization dilemma in fintech stems from each independent market having its own payment channels, bank APIs, and compliance barriers.

Blockchain replaces this fragmented puzzle with an open ledger, and self-custody wallets eliminate the hassle of finding banking compliance partners in each market. As a result, companies like Sling Money can build a global payment product with just 23 team members and three licenses—though currently limited to about 70 countries with fiat on-ramps. Sling CEO Mike Hudack pointed out: “Stablecoins have shifted payments from ‘pre-funding and reconciliation issues’ to ‘interoperability issues.’”

Not only startups are betting on this wave of reform.

Stripe acquired stablecoin issuer Bridge and wallet provider Privy for $1.1 billion, then launched stablecoin financial accounts in 101 countries, far surpassing its previous coverage of 46 countries. Notably, the same Bridge infrastructure supports Sling’s virtual accounts and operates within this giant ecosystem processing $1.4 trillion annually.

A merchant in Nairobi exemplifies this infrastructure: she receives payments from U.S. importers via virtual USD accounts, uses stablecoins linked to bank cards to spend at over 150 million merchants, and earns 4% to 7% interest through on-chain lending protocols on idle balances.

No bank account, no bank.

Three years ago, this was just a PPT vision; today, it’s all realized, built by different teams, with increasing composability.

According to World Bank data, about 1.3 billion adults lack bank accounts—not because they don’t need financial services, but because the cost of serving them exceeds the revenue they generate. (Odaily Planet Daily note: the input-output ratio is low; the cost to serve one person far exceeds the profit they can provide.) For example, a $200 remittance to Sub-Saharan Africa can incur fees as high as 8.45%, nearly $17—enough to cover a family’s weekly food, children’s tuition, or life-saving medicines.

What happens when transfer costs plummet?

History offers examples: M-Pesa reduced mobile payment costs in Kenya to near zero, increasing financial inclusion from 27% to 85%. IMF studies show this is incremental growth, not zero-sum; India’s UPI started near zero fees, and digital payment transactions soared from 18 million to 228 billion in less than a decade.

This means more service providers, broader markets, and more mature products, as entry costs are driven to the limit.

This is the supply-side Javon’s Paradox.

Cost Side: Compliance Burdens and the Solution of Shared Ledgers

Now, look inside banks.

In North America alone, the financial industry spends $61 billion annually on anti-financial crime compliance.

42% of senior executives’ time is spent on regulatory compliance, and from 2016 to 2023, compliance-related staff hours increased by 61%.

In other words, the data shows that—banks are no longer “financial institutions that do compliance on the side,” but “compliance institutions that also provide financial services.”

Most of these expenses, whether compliance or technical costs, are used to restore or preserve information that “should never have been lost.”

Visit a bank audit, and you’ll see auditors doing: reconciling accounts, verifying agent bank balances; navigating opaque bilateral relationships among three or four intermediary banks, tracing transactions that no single party can end-to-end clearly identify.

(The blockchain industry’s) shared ledger directly solves this problem.

When all parties (the ledger entries) are written into the same ledger, reconciliation steps disappear—not because compliance requirements are lowered, but because the information is already there.

JPMorgan’s Kinexys platform processes over $2 billion daily, settling more than $20 trillion since launch. Its core scenario involves a multinational using JPMorgan’s services across multiple markets, needing real-time internal fund transfers. Traditional core banking ledgers operate in silos and batch processes; Kinexys overlays programmable money, enabling settlement in seconds instead of end-of-day batch, freeing idle funds previously trapped in batch gaps.

Currently, JPMorgan is launching JPM Coin on the Canton Network, with Goldman Sachs, DTCC, Broadridge, and others participating. Banks may prefer tokenized deposits over stablecoins, but the underlying logic is the same: shared infrastructure to eliminate reconciliation layers.

On the demand side, lower compliance costs mean institutions can serve more clients and expand into more markets economically.

Convergence: Two forces, same direction

For banks, external entrants are increasing because the cost barriers are collapsing; meanwhile, for many crypto platforms and native players, internal operational costs are decreasing as infrastructure upgrades continue.

As frameworks like GENIUS Act and MiCA clarify regulations, these two forces point toward the same outcome: more people gaining access to more financial services at lower costs. (Odaily Planet Daily: the so-called “financial inclusion”)

In the real world, cloud computing has not (as once imagined) eliminated data centers, but instead allows anyone with an API key to access computing power. Now, stablecoins are doing the same for banking: this mature system will not disappear but become part of the infrastructure, enabling others to build more products on top.

During the steam revolution, Jevons observed that increased engine efficiency and coal consumption rose together, calling it a “paradox.” In fact, it’s not a paradox but a pattern: when the unit cost of a fundamental service drops enough, the market not only doesn’t shrink but reaches everyone previously excluded by high structural costs.

In 2026, we will see clearly how many people are behind that vast, boundless market.