Western Union confirmed last week that USDPT, its dollar-backed stablecoin, is in final stages of readiness for a May 2026 launch.

The token will run on Solana, built in partnership with infrastructure provider Crossmint.

In our first issue, we wrote about the a16z’s coining of the "WhatsApp moment" for finance, where stablecoins replace incumbent payment rails.

We compared old networks like Western Union (using Butch Cassidy) being superseded by faster cheaper ones as the old West gave way to modern America.

Western Union sits squarely in the firing line of the stablecoin revolution.

But they are not the only ones.

Since 2020, Western Union's stock has fallen 67% as the S&P has rallied 167%.

This is their latest attempt to revitalise their flagging fortunes.

The strategy includes "Stable Cards" specifically marketed to users in high-inflation economies.

That is not a payments product.

That is a digital dollar account, distributed through a remittance network operating in more than 200 countries, into the exact emerging market populations where local currency depreciation is structural.

The market share they are targeting?

Clearly Tether's - the undisputed stablecoin champion of emerging markets.

USDT is already the dominant store-of-value stablecoin in high-inflation economies, distributed informally rather than through regulated rails.

Western Union owns the rails.

Why it matters.

A 175-year-old remittance incumbent has read the writing on the wall and is now competing directly with Tether for digital dollar share in emerging markets.

The corridors Western Union has dominated for a century are being rebuilt on Solana, with Western Union as the builder.

The trilemma corner Western Union is picking, regulated centralisation plus scalability, is also the corner the GENIUS Act will require US issuers to pick.

Different starting points, same destination.

Morgan Stanley Investment Management launched MSNXX on April 23.

It is being widely reported as Morgan Stanley's "entry into stablecoins."

It is not.

MSNXX is a government money market fund.

It holds Treasury bills and government-secured repo.

It targets a constant $1 NAV with daily liquidity.

Morgan Stanley already runs hundreds of billions of dollars in products that look exactly like this.

The novelty is the marketing, not the mechanics.

What Morgan Stanley actually did was time the GENIUS Act. The legislation, when it passes, will require US stablecoin issuers to hold reserves in regulated vehicles.

MSIM filed with the SEC on April 16. The fund went live on April 23.

The product will sit on the shelf, ready, the day issuers need it.

No assets on chain. No transparent reserves. No 24/7 access.

Trading hours until 5pm ET when the NYSE closes.

That is not real innovation.

That is a sales call timed to a regulatory deadline. Senior bankers will recognise the move.

Why it matters.

Morgan Stanley has positioned itself to be the reserve manager for the US stablecoin industry before the legislation is final.

Reserve management is a high-margin custody and asset management business at scale.

If even half of the $318B US-issued stablecoin market routes its reserves through products like MSNXX, the fees compound into a meaningful book.

Crypto press is calling this Wall Street validating stablecoins.

It is the other way around.

Wall Street is preparing to extract rents from the part of the stablecoin business the GENIUS Act will guarantee for incumbents, without putting anything on-chain.

In other words, a fund built to serve a 24/7 global asset class that operates on banking hours.

Luxembourg-based Banking Circle announced on April 27 that it has launched a stablecoin settlement service, following receipt of its Crypto-Asset Service Provider license earlier this month.

The product offers fiat-to-stablecoin and stablecoin-to-fiat conversion through the firm's existing core platform.

The key number Banking Circle quotes is not market cap but transaction volumes.

Monthly on-chain volumes at $8.7 trillion.

The on-chain figure is the one to watch.

$8.7 trillion a month is roughly seven times Visa's global monthly volume.

Even allowing for inter-exchange transfers and bot activity that inflate the headline number, the underlying payment volume now sits in the same league as the world's largest card networks.

CEO Laust Bertelsen called stablecoins "core infrastructure for cross-border settlement, treasury management, and financial inclusion."

He is not wrong.

Why it matters.

Banking Circle is not a household name in corporate treasury circles, but it should be.

The firm is building the licensed European bridge between fiat and on-chain stablecoin volumes that already rival the world's largest payment networks.

Cross-border B2B is where stablecoins displace correspondent banking first, because the cost and speed advantages are largest there.

A regulated EU institution offering both directions of conversion through a single platform is exactly the kind of plumbing that makes stablecoin settlement viable for treasurers who cannot use unregulated venues.

THE IMPOSSIBLE TRINITY

Mundell and Fleming did not propose that countries should not have free capital flows, or fixed exchange rates, or independent monetary policy.

They proved that a country cannot have all three at the same time.

The trilemma describes the shape of a binding rule.

It does not tell anyone which corner to choose.

Choosing is politics.

Living with the consequences of the choice?

That’s economics.

Every country in the world is sitting at one corner of the Impossible Trinity.

Most do not realise it. Some realise it and pretend otherwise.

A few build their entire macroeconomic strategy around the corner they have picked.

Three worked examples follow.

THREE COUNTRIES, THREE CHOICES

China has a managed exchange rate against a basket and an independent monetary policy.

The PBoC sets domestic rates and adjusts liquidity to suit Chinese conditions, not American ones.

The price of that flexibility is the architecture of capital controls that has surrounded the renminbi since the 1990s.

Quotas. Approvals. Reporting requirements.

Authorised channels for inbound and outbound flows.

The trilemma's third corner is policed every day by State Administration of Foreign Exchange.

SAFE is also one of the largest holders of US Treasuries in the world and their flows are highly feted by capital markets bankers across the globe.

Argentina has free capital movement and an independent central bank.

Note that ‘cepo’ aka ‘clamp’ and occasional capital controls have been used intermittently.

The peso is the variable that absorbs the consequences.

Inflation is currently running above 30% per year but has been in the triple digits.

The peso depreciates roughly in line with inflation, sometimes more, occasionally less.

Argentina has chosen capital flows and (constrained) policy independence.

The exchange rate takes the hit.

Saudi Arabia has free capital movement and a fixed exchange rate.

The riyal has been pegged to the US dollar at 3.75 since June 1986.

SAMA, the Saudi central bank, does not run an independent monetary policy.

When the Federal Reserve raises rates, SAMA raises rates.

When the Fed cuts, SAMA cuts.

The riyal interest rate tracks the dollar interest rate inside a permissible deviation that exists only on paper.

Saudi Arabia has chosen capital flows and a stable currency.

Domestic monetary conditions pay the price.

This was the price the Kingdom accepted in 1986 to anchor the petrodollar system.

We wrote about that anchor in Issue 3 - ‘The hard part about playing chicken.’

Three countries. Three corners. Three prices.

Each corner produces predictable consequences.

Argentine households hold their savings in dollars.

Chinese capital flight finds its way through Hong Kong, through trade misinvoicing, and increasingly through Tether on Tron.

Saudi monetary conditions move on Federal Reserve decisions.

The trilemma binds.

The leak finds the corner the country has chosen to police.

THREE NETWORKS, THREE CHOICES

Vitalik Buterin posted the blockchain trilemma in 2017.

A blockchain cannot deliver decentralisation, security, and scalability at the same time.

Three networks. Three different choices.

Bitcoin has chosen decentralisation and security.

Anyone can run a node on a laptop.

Anyone can verify the chain.

The network has not been compromised in seventeen years.

The cost of this choice is throughput. Bitcoin processes around seven transactions per second.

The mempool clears in fits and starts. Miners select transactions by fee.

When demand spikes, fees spike with it.

Bitcoin is a settlement network, not a payments network.

That is a feature, not a bug, for the corner Bitcoin has chosen.

Solana has chosen security and scalability.

The network processes thousands of transactions per second.

Block times are sub-second. Fees are fractions of a cent.

The price is decentralisation.

Running a Solana validator requires high-end hardware and meaningful capital.

The number of independent validators is smaller than Ethereum's by an order of magnitude.

The network has experienced multi-hour outages.

Solana is a payments network, not a settlement network.

That is also a feature, not a bug, for the corner Solana has chosen.

Ethereum has chosen decentralisation and security and tried to outsource scale to layer two.

Mainnet processes around fifteen transactions per second.

Rollups (Arbitrum, Optimism, Base) process the rest.

The rollups inherit Ethereum's security but introduce their own design choices on the decentralisation axis, particularly in sequencer architecture.

The trilemma has not been escaped. It has been distributed across two layers.

Three networks. Three corners. Three prices.

Some have tried to ignore the trilemma.

Terra/Luna was an algorithmic stablecoin and Layer 1 ecosystem that promised decentralisation, security, and scale at once.

It collapsed in May 2022.

$50 billion of value evaporated in three days. I wrote about it here.

The trilemma binds. The compromise finds the axis the network has chosen to under-resource.

STABLECOINS AT THE INTERSECTION

A stablecoin sits at the intersection of both trilemmas.

It is a dollar instrument crossing borders, which puts it inside Mundell-Fleming.

It is a token on a network, which puts it inside the blockchain trilemma.

The corner choices interact.

Three stablecoin examples below.

Each has picked a different combined corner.

Each produces a different geopolitical and economic outcome.

USDT on Tron. Tether has chosen centralisation in issuance and operates from offshore jurisdictions.

Tron has chosen security and scale at the cost of decentralisation.

The combination produces the most-used stablecoin payment rail in the world.

Tron processed two trillion dollars of USDT transfers in the first quarter of 2026 alone.

The transaction fee is cents.

The settlement is final in seconds.

The user does not need a bank account.

The geographic distribution is not coincidence.

USDT on Tron has become the digital dollar of choice for users in countries whose central banks have policed the wrong corner of Mundell-Fleming.

Argentine households who could not legally hold dollars now hold USDT.

Turkish savers who lost half their lira purchasing power in two years now hold USDT.

Iranian importers who cannot use SWIFT now settle through USDT on Tron.

The trilemma's leaks have found the rail with the lowest friction.

USDT solves a Mundell-Fleming problem by evading it rather than choosing within it.

Last week, the US Treasury froze $344 million of USDT on Tron under Operation Economic Fury, the largest single stablecoin freeze in history.

Iranian addresses linked to the Central Bank of Iran were sanctioned.

The pathway is real. So is its vulnerability.

USDC on Ethereum. Circle has chosen centralisation, US regulatory compliance, and full reserve transparency.

Ethereum has chosen decentralisation and security at the cost of mainnet scale.

The combination produces the dominant stablecoin among US-regulated venues, exchanges that need compliance, and corporate treasurers who cannot use unregulated rails.

For an emerging market user, the corner choice is hostile.

The same compliance that makes USDC institutionally palatable also means a US sanctions designation can freeze the address. The Mundell-Fleming dimension is not evaded. It is enforced.

USDC solves a regulatory problem by aligning with the trilemma rather than escaping it.

DAI on Ethereum. MakerDAO designed DAI to be the decentralised counterpoint to USDT and USDC.

No issuer. No frozen addresses.

Smart contracts and overcollateralisation in place of corporate balance sheets.

DAI was meant to be the stablecoin that picked decentralisation, the corner everyone else had sacrificed.

The trilemma had different ideas.

To maintain its peg at scale, DAI began accepting USDC as collateral through a Peg Stability Module.

Real-world assets, primarily short-term US Treasuries, were added as the protocol's largest collateral category.

By 2026, a meaningful share of DAI's backing sits in centralised stablecoins or US government debt held by regulated custodians.

The protocol survived. The decentralisation thesis did not.

DAI has chosen decentralisation in governance and accepted partial centralisation in backing.

The trilemma was not escaped. It was honoured.

Three stablecoins. Three combined corners.

Three completely different positions in the global monetary order.

The corner determines who the stablecoin serves, who can stop it, and where it routes capital that the legacy financial system used to route.

THE VIEW FROM THE TREASURY DESK

For a senior finance practitioner, three takeaways.

The corner determines the counterparty risk.

The stablecoin used to settle a transaction is not interchangeable with another stablecoin. It is interchangeable with the corner of the trilemma the issuer has chosen.

A treasurer holding USDC has the US Treasury as a third party in every settlement.

A treasurer holding USDT has Tether's offshore legal structure as a third party.

A treasurer holding DAI has MakerDAO's governance and collateral mix as a third party.

The dollar peg is the same. The risk is not.

The corner determines the geopolitical alignment.

A corridor that settles in USDT routes capital outside US jurisdictional reach, for the most part.

A corridor that settles in USDC routes capital inside it.

The choice of stablecoin in a cross-border treasury operation is now a foreign policy decision.

Most treasurers do not yet recognise it as such.

The Bank for International Settlements does. So does the US Treasury. So does the People's Bank of China.

The corner is not stable.

The trilemma binds in the long run, not the short.

DAI began as the decentralised stablecoin and ended up partially backed by US Treasuries.

The Tether ecosystem, on Tron, faces increasing regulatory pressure that may force it toward a different corner.

USDC will be tested when the GENIUS Act becomes law. The corner you settle through today may not be the corner that exists in two years.

You can't always get what you want.

But if you try sometimes, you just might find, you get what you need.

The world will not get the monetary infrastructure it wants.

Neither side of the trilemma debate gets to dictate the architecture.

Stablecoins make the trilemma legible. That is the contribution.

Mick Jagger explained it in 1969.

Thanks for reading.

-Until next week

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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