Digital Asset, the company behind the Canton Network, raised $355m on 11 June in a round led by a16z's crypto fund who cornerstoned it with $100m. The number is not the story, the cap table is the story.

Citadel Securities. Apollo. BNP Paribas. HSBC. CME Ventures. The Abu Dhabi Investment Authority. Earlier rounds brought in Goldman Sachs, DTCC, Nasdaq, Tradeweb and BNY Mellon. That is not a crypto venture syndicate, that is the institutions of Wall Street, assembling en-masse.

Canton is what they are assembling around.

It is a public blockchain whose central feature is privacy: institutions transact on shared infrastructure while controlling exactly who sees what. A general-purpose chain shows every transaction to everyone. Canton shows each one only to the parties who need it.

And the core is already migrating onto it. JPMorgan's Kinexys is issuing its deposit token natively on Canton. DTCC is tokenising US Treasuries. The London Stock Exchange Group is building 24/7 settlement. Visa joined in March as the first major payments company among more than 40 Super Validators, then added Canton to a stablecoin settlement pilot.

The network now clears around $350bn in tokenised repo a day, the short-term funding plumbing of the dollar itself. Where the repo goes, the system goes.

This is the first pillar of the Singularity made concrete. Bank gravitational capture is not forecast any more. It is a build, and the incumbents are paying for it. They are not being disrupted. They are constructing the thing that disrupts them, so that when the dollar finishes moving from correspondent banks onto tokens, they still own the rail it moves on.

Why this matters

The rail that wins institutional settlement is being chosen now, by the institutions that will use it, with their own capital. That is a different signal from a bank running a pilot. A pilot is a hedge.

A $355m round alongside Goldman, Citadel and DTCC is a position.

For a treasurer, this is the early shape of where tokenised cash and collateral will actually settle. If JPMorgan moves native cash and DTCC moves Treasuries onto Canton, the question stops being whether tokenised settlement arrives and becomes which network your counterparties are already on.

For a fund manager, watch what privacy buys. A chain that hides positions from rivals while satisfying regulators removes the main reason institutions stayed off-chain. The objection was never the technology, it was visibility. Canton is engineered to answer it, and that is what turns a decade of experiments into migration.

And for everyone reading, note the ownership. The dollar's move onto tokens is not being led by disruptors taking ground from the banks. It is being led by the banks, building the rail so the ground never moves at all.

The inside is rebuilding the inside.

MUFG, Mizuho and SMBC signed an MOU on 10 June to jointly issue a yen stablecoin, targeting live commercial transactions before fiscal 2026 closes in March 2027. It runs on Progmat, the MUFG and NTT Data ledger. Project Pax is aiming at ¥1 trillion of B2B volume by 2028, with the ruling LDP pushing yen stablecoins as settlement rails across Asia.

This is an ally choosing to build rather than be captured. But the gravity shows in the blueprint.

Dollar stablecoins are not most of this market. They are effectively all of it, around 99% of the roughly $300bn in issue, with every non-dollar coin combined under two per cent. And the Project Pax roadmap ships a US dollar version after the yen one.

So, you build your own inside, and you still cut a dollar door into your own house.

Why this matters

This is the first serious parallel build from inside the G7.

Not capitulation to the dollar, not exile from it. A third path, chosen by an ally with three systemic banks and a government behind it. When Japan moves, other allies read it as permission.

For a treasurer with any Asian settlement exposure, a yen stablecoin backed by MUFG, Mizuho and SMBC is not a someday. It is a near-term rail with the balance sheets and the regulator already aligned. But note what you will be offered on it. A dollar version, on the same rail, from the same banks. Even the hedge against the dollar comes with a dollar option attached.

For a fund manager, the number to watch is whether this dents the dollar's near-total share, or merely re-routes flow back to it. A rival rail that settles in dollars is not a rival. It is a feeder.

And that is the tell. The most capable and reliable ally in the system, building deliberately to reduce dollar dependence, cannot design the rail without fitting a dollar door into its own house. If Japan cannot build a clean exit, the question for Part 3 writes itself.

Who can?

A7A5 is a rouble-pegged stablecoin built by sanctioned actors to route around Western enforcement. A report dated 3 June found it has processed around $110bn and taken 43% of the entire non-dollar stablecoin market in under a year. The EU named it the first cryptocurrency ever placed under an explicit transaction ban, and its holder count still climbed from roughly 13,000 to 29,000.

Notice the sequence.

A7A5 emerged after Tether froze sanctioned Russian exchange Garantex in March 2025. The freeze switch was thrown, and a rouble rail grew where the dollar one was cut. By 26 May the UK was sanctioning the surrounding network, which it says moved over $90bn for Russia's war effort.

The stick does not only punish, it instructs. Every freeze is a blueprint for the exit, and someone outside is already building from it.

Why this matters

This is the answer to the question Japan left open. Someone is trying to build a clean exit. It is the adversary, and it is growing.

For anyone running sanctions or counterparty risk, the lesson is that enforcement has a ceiling. The freeze switch is devastating against a wallet, an exchange, a single address. It is far weaker against a parallel system that forms in response. A banned rail that doubles its users is proof the switch stops the actor, not the architecture.

For the strategic reader, this is the cost the stick does not advertise. Every freeze is effective on the day and instructive forever after. It shows the next target precisely what to route around, and it hands every sanctioned economy the same incentive to pool into a shared alternative.

Weaponise the dollar often enough, and you fund the case for leaving it.

That is the tension that Part 3 will attach probabilities on. The exit now exists. It is rouble-shaped, sanctioned, and hunted. Whether it becomes a genuine escape or stays a costly detour is no longer a question of whether sovereigns want out.

It is a question of odds.

Three stories, three directions.

Inside, beside, outside.

They look like three separate developments. They are one.

Each is a sovereign, or a sovereign's banks, responding to the same force.

Not to a policy, not to a rival currency, but to gravity.

Capital is being drawn onto USD stablecoin rails, and every actor in the system is now positioned by where they stand relative to that pull. This is sovereign gravitational capture, the second pillar of the Stablecoin Singularity, and it is the subject of this issue.

The mechanism is simpler than the geopolitics around it.

For most of the world that is not a worse dollar than the one in the banking system. It is a better one. It crosses borders without correspondent banks, it survives local currency collapse, and it does not require permission from a government that may not deserve trust.

And the United States, carrying a debt approaching $40 Trillion, has every reason to let them, because every dollar stablecoin in circulation is a buyer for that debt and a thread of dollar dependency stitched into another economy.

That is the pull. The posture built on top of it is what this issue examines, and it has two settings.

The carrot extends the dollar inward, into places and pockets it could never previously reach, until adoption becomes dependence. The stick falls on the economies that refuse the carrot and try to build a door of their own. One offers membership. The other enforces exile. Both leave capital exactly where the United States wants it.

We will take them in turn. The carrot first, because it is the one that does not look like power.

THE CARROT: INSIDE FROM BELOW

Start with the country that proves the carrot needs no one's permission.

Argentina has run from its own currency for half a century. The peso is not failing, it has failed, repeatedly, as a matter of national routine. What changed is not the distrust. The distrust is ancient, what has changed is the exit.

For most of that history, fleeing the peso meant physical dollars.

Notes under a mattress, queues outside casas de cambio, a black market rate and an official one and the gap between them where ordinary savings went to die. Holding real dollars took effort, cash, and usually a degree of illegality.

The state could not stop it, but it could make it hard.

A dollar stablecoin removes the friction entirely.

An Argentine with a phone can now hold US dollars that arrive in seconds, cost almost nothing to move, and never queue for anything. No US bank account. No capital control cleared. No permission asked, and none required.

So they hold them. Not as speculation, as survival. Wages converted on payday. Savings parked out of reach of the next devaluation. Rent and invoices increasingly quoted and settled in the digital dollar rather than the currency the state actually issues. This is not a trader's position. It is a household's defence of its purchasing power, and it has become ordinary.

Look closely at what that means, because it is easy to miss inside a familiar story about a troubled economy. A sovereign currency is being abandoned, in real time, by its own citizens, in favour of a dollar issued by a private company in another country.

The state in Buenos Aires did not agree to this. It was not consulted. It woke up to find its monetary base quietly emptying into an asset it does not control, cannot devalue, and cannot tax at the point of use.

That is the carrot. And here is what makes it the most dangerous instrument the United States holds. It does not feel like capture, it feels like relief.

Nobody is coerced. No fleet arrives. The dollar is simply the better product, freely chosen by people acting entirely in their own interest, each transaction rational, each one voluntary. The aggregate is a sovereign losing control of its own money supply one citizen at a time, and the genius of it is that the citizens are grateful. You cannot organise resistance to a thing that helps you. The carrot disarms the very response it should provoke.

And every one of those digital dollars is, somewhere upstream, a claim on a US Treasury bill. The Argentine household defending itself against the peso is, without knowing it or intending it, financing the issuer's reserve, and that reserve is American government debt. Their flight to safety is Washington's funding. The monetary base does not just leave Argentina. It crosses the border, and it lands exactly where the United States needs it to.

The peso leaves through the side door. One phone at a time.

THE STICK: FORCED OUTSIDE

The carrot works on the willing.

The stick is for everyone else.

In February 2022, the United States and its allies did something that had never been done to an economy of Russia's size. They froze roughly three hundred billion dollars of its central bank reserves. Not sanctioned a few oligarchs. Not embargoed a sector.

They reached into the reserves of a G20 central bank and switched them off.

Understand what that money was.

Russia had done what every prudent state is told to do. It had saved. And it discovered, in a single weekend, that savings denominated in dollars and held in the Western system were never fully its own. They were a position the issuer could close.

That is the stick in its purest form. Not a tariff, not a sanction on a company, but the revocation of access to the dollar itself. SWIFT messages stopped. Correspondent lines were cut. The world's reserve currency, which Russia had spent decades accumulating, became a door locked from the other side.

And here the story turns, because what Russia did next is the part that matters.

It did not return to the cold.

Locked out of the dollar system, Russia reached back into it, through the one entrance that could not be closed.

Sanctioned Russian trade began settling in USDT, the same digital dollar an Argentine uses to buy groceries, now moving oil and machinery across borders the formal banking system had sealed. The exile could not leave.

Even cut off, Russia wanted dollars, because there was no liquid alternative worth the name.

Read that carefully, because it inverts the obvious lesson. You would expect the most-sanctioned major economy on earth to be the proof that you can live outside the dollar. It is the opposite. Russia is the proof that you cannot. When the front door was bolted, it climbed through the window, and the window was still made of dollars.

Then it tried to build a window of its own. You have already seen how that went.

A7A5, the rouble-pegged stablecoin engineered to move value beyond Western reach, is the most serious attempt yet to construct a genuine exit, and it grew at remarkable speed. But look at what it is: a stablecoin.

Built in the image of the dollar instrument it was meant to escape. The exit exists, and it is shaped exactly like the cage. Even so, the moment it began to matter, the West reached out and named it the first stablecoin ever banned outright.

You can build a door out of the dollar system. You cannot build one the dollar system cannot reach.

Iran is the same lesson at a different angle.

For years it has tried to route oil revenue around US sanctions, latterly through corridors priced in yuan and, increasingly, in stablecoins and crypto. And the United States has spent those same years hunting the corridors, freezing the wallets, sanctioning the intermediaries.

This spring, a private stablecoin issuer (Tether) froze more than three hundred million dollars of USDT tied to the Iranian central bank, working with US authorities, the same day. Not a government acting against a government. A company switching off a sovereign's reserves. The freeze switch is no longer a theory about what could happen. It is a thing that has a date.

Step back and the architecture is plain. The carrot extends the dollar to those who want it. The stick falls on those who do not, and the stick has two parts.

First, expulsion, the freezing of reserves and the cutting of access. Then, the discovery that expulsion does not lead anywhere, because the only liquid escape route runs back through dollars the issuer can also freeze.

There is no outside the dollar. There is inside, where you are owned. And there is punished, where you are still paying the toll, in the issuer's own currency, on rails the issuer still controls.

THE TURN: INSIDE IS OWNED

Argentina took the carrot. Russia got the stick. Venezuela got both, at once, on the same rail.

The state is sanctioned. So it uses USDT, through its oil company, to move crude revenue around the blockade. The citizens are ruined by hyperinflation. So they use USDT to buy food. Regime and household, captured by the same instrument, for opposite reasons, in the same country, on the same dollar.

Look at what that tells you. The carrot and the stick are not two policies. They are one rail, doing two jobs. Extend the dollar to those who want it. Punish those who do not. Same infrastructure, same issuer, same freeze switch underneath all of it.

Which raises the question this whole issue has been circling. Why did the United States, holding this, choose not to build a central bank digital dollar of its own?

It was not an oversight. It was a decision. In January 2025, an executive order prohibited a Fed digital dollar. The GENIUS Act then made private stablecoins the official US strategy. Washington looked at the most powerful monetary weapon available and handed it to private companies on purpose.

Here is why that was the smarter move.

A central bank digital dollar is a government product. It announces itself. Adversaries refuse it, allies hesitate, every transaction wears a US government flag. A private dollar stablecoin does the opposite. It spreads on its own, looks apolitical, and slips into the economies of countries that would never touch an official American instrument.

Russians hold it. Iranians hold it. Venezuelans hold it.

And it still does everything the state needed. It funds the Treasury, because every coin is backed by US debt. And it freezes on coordination, because the issuer sits under US law. A weapon that does not look like a weapon. Reach without fingerprints.

So return to Gekko, and to the kid he brought inside.

Bud Fox wanted in. Gekko gave it to him. Access, money, the floor. And the moment Bud was inside, he was owned. Every trade tied him tighter, every favour was a hook, and the door he walked through only opened one way.

That is the dollar. The carrot is the invitation. The stick is for anyone who tries to leave. And inside, where it all looks like membership, is where the ownership is total.

The dollar never had to be the best currency. It only had to be the one you could not get out of. So far. Every state is now placing its bet. Part 3 places ours, with probabilities, across every future at once.

-Thanks for reading.

Mark McKendry, Stablecoin State

P.S. If you would like to contact our team just reply to this email - we read every response.

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