Why BlackRock actually cares about stablecoins, with David Birch

Why this conversation matters now: #

Stablecoins have been circulating in the industry conversation for two years despite blockchain having existed for more than a decade. In this episode of the Fintech Garden Podcast, recorded at the Fintech Garden Budapest studio, David G.W. Birch — one of the most established commentators on digital money and digital identity globally — walks host Igor Tomych through the historical, technical, and strategic reasons that make stablecoins consequential now, and why most of the industry conversation is focused on the wrong layer. The conversation is deliberately structural rather than promotional. It maps how the current moment fits into a 200-year historical pattern, why the big institutional players are really in this space, and what happens next as agentic finance becomes real.

The industrial revolution had stablecoins too: #

David opens with the historical parallel most of the industry has missed. In late-1700s England, as the country transitioned from a rural to an industrial economy, factory owners needed money to pay workers — and the state had not yet produced enough of it in the new form the economy required. So private actors stepped in. Factory owners minted their own tokens, usually in copper, and those tokens circulated as money. Businesses grew. Supply chains formed. New industries came into existence. These were, functionally, stablecoins — private-issued instruments filling a gap the state could not yet fill. Over time, the state absorbed the function. But something more important happened alongside: entirely new institutions — banks, the banking system as we recognise it today — emerged to interface with the new economy. The tokens themselves disappeared. The institutions they created stayed.

The pattern is repeating, with the same likely ending: #

David’s read of the current moment is that we are watching the same pattern repeat. There is now an explosion of stablecoin issuers. Over time, the state will step in — either by absorbing the function through central bank digital currencies, or by regulating it into a small number of dominant issuers. The margins on the medium of exchange are structurally thin (you cannot charge much more than a dollar for a dollar), so most current issuers will not survive as independent businesses. What will survive is the new class of institutions being built to interface with, manage, and control this infrastructure — companies like Fireblocks, and increasingly the incumbents who understand that this is the game being played. The stablecoins themselves are probably not the durable object. The institutions they are producing are.

The trigger is that the new economy needs new money: #

The specific reason stablecoins are appearing now is that a new kind of economy is emerging that needs money capable of operating within it. Distributed ledgers, AI agents, and networks of interacting bots all require money that functions in their environment. Traditional bank money does not. David is careful here about what stablecoins are actually being used for today — not much of it is genuine payments yet. A large share is still cryptocurrency speculation, wash trading, and adjacent activity. But real-world usage is growing, and payment volume will follow. The demand behind this is worth naming precisely: it is not demand for cryptocurrency. It is demand for dollars. Cryptocurrency, in most emerging markets and even much of the developed world, was an imperfect way of getting dollars. Stablecoins are simply a better way to get them.

AI is likely to be the dominant user of stablecoins: #

Citing Mike Novogratz and endorsing the argument himself, David makes the point that end-users are probably not the audience most fintech operators should be optimising for. The dominant users of stablecoins over the next several years may not be humans at all. Networks of AI agents interacting on behalf of people and businesses — booking, buying, negotiating, paying each other — need a form of money that operates natively in digital environments, without the friction of traditional banking rails. The stablecoin architecture answers this need in a way legacy infrastructure does not. This shifts the strategic question from “how do consumers use stablecoins” to “how do agents use them, and what emerges from that.” The second question is bigger.

Regulation and usability are the two maturity gaps: #

Two structural gaps still need to close before stablecoins move fully into the mainstream. The first is regulatory. The US has moved aggressively with legislative infrastructure, which fits an environment where most people already want dollars. Europe has leaned harder into consumer protection. The UK sits somewhere between the two. Global synchronisation will take time. The second gap, which David identifies as more important than regulation, is usability. In a recent Substack piece David references, Jeremy Light illustrates the problem cleanly: if you want to send someone USDT, there are around ten different chains offering it. Which one do you use? How? What UX works best in that environment? The industry is nowhere near settled on these answers. This is what keeps stablecoins in the “grey zone” for mainstream users.

AI changes what interoperability means: #

David makes an important point about the standardisation problem. The historical fintech assumption has been that interoperability requires common standards, established protocols, and shared APIs — the tedious, multi-year work of getting a fragmented ecosystem to agree on formats. He recently saw a demonstration of an AI that was querying open banking APIs autonomously — probing, learning, and figuring out which endpoint did what without any standardisation. Within a short period, it could talk to all the banks in scope. If AI can bridge fragmented infrastructure at query time, the pressure for formal interoperability diminishes. This is a genuine reframe of a problem the industry has been solving for two decades.

Why BlackRock actually cares — and it isn’t about payments: #

This is the strategic insight most fintech commentary is not making. The reason large institutional players like BlackRock are interested in stablecoins is not that stablecoins are a better way to move money. It is that stablecoins are the pathfinder for digital assets. The technical difference is worth spelling out. Swift is a messaging network — it sends messages, not money, with clearing and settlement happening separately underneath. That separation is expensive. In a stablecoin architecture, money and data flow together in the same transaction. There is no separate clearing and settlement layer. Once the networks are in place to move stablecoins, they can move digital assets. Initially those digital assets get exchanged for stablecoins. Downstream, digital assets get exchanged for other digital assets. The cost reduction on financial intermediation, David estimates, is roughly 80%. That is not an optimisation. That is the game.

Digital identity is the missing layer: #

The BIS calls the emerging infrastructure the “next generation FMI” — Financial Market Infrastructure — and it describes it as the internet of value. What is missing, David argues, is the digital identity layer. Money moves, but the trust framework around who is moving it and whether they are authorised to do so has not yet been built to the same standard. This becomes especially consequential in an agentic environment, where agents themselves need identities. China has just passed a regulation requiring all robots to have identities — literally, robot passports — a legislative response to a coming reality. The open question David flags is whether agent identity should be built by extending existing human digital identity infrastructures, or by creating new identity systems for agents that interoperate with the human ones. This is the design decision that will shape the next decade of financial services.

The five-year view: financial services disappear behind bots: #

Asked where this goes over the next five years, David’s answer is direct. Most people will stop interacting with the underlying financial services altogether. AI bots will handle those interactions on their behalf. David’s own example is car insurance: “I never want to talk to my car insurance company again.” Once a bot can handle it, most people will hand it off. The financial services layer does not vanish — it just retreats behind an interface most users never touch. This has consequences for how banks and fintechs should think about brand, distribution, and customer experience, because the customer over five years may increasingly be another bot rather than a human.

The longer view: money itself may disappear: #

The most philosophically striking point in the conversation comes at the end. If digital assets can be traded continuously in globally liquid markets 24/7, then any transaction between two parties can be resolved as an exchange of digital assets. You never need to convert into fiat currency to settle. You just exchange baskets of assets: what do you have, what do I want, what can we agree on. In that world, money as we currently understand it becomes redundant — an abstraction layer no one needs anymore. David acknowledges this sounds radical, but points out that for humans it feels crazy only because we are used to negotiating in currency. For bots, exchanging half an Apple share for a flight ticket in New York is trivial. The reframe Igor offers here — that money is a derivative of the value it represents, and if you can exchange the primary objects directly you no longer need the derivative — David explicitly endorses.

Innovation is flowing to stablecoins, and NFTs come with it: #

Two closing observations from David worth noting. First, the entrepreneurs building AI and bot-based services today are not asking to be given bank accounts or credit cards. They are simply building on stablecoins. This is where innovation is being drawn, which means unexpected new services will emerge from this space — not the simple DeFi replicas the industry has already discussed. Second, NFTs are quietly becoming useful again. After the “chimpanzees with sunglasses” era discredited the category, the durable use cases are re-emerging. Ticketing is the clearest example: tickets are perfect non-fungible tokens because you want them to be transferrable but uncopyable. When you can trade fungible tokens (stablecoins) for non-fungible tokens (NFTs), you have the underlying structure of an entirely new class of economic activity.

Why listen: #

This is one of the most structurally intelligent conversations on stablecoins available in fintech right now. David brings 40 years of pattern recognition across digital money, digital identity, and the history of financial infrastructure — and applies it directly to the current moment. For founders, product leaders, bank executives, and investors, the episode delivers three concrete reframes: the historical parallel that explains where this is going, the correct read of what BlackRock and the big institutional players are actually doing, and the design questions around agent identity and the trust layer that will shape the next decade. It is dense with material that is genuinely difficult to find elsewhere.