Onigiri Weekend Digest: Institutional Lens #46

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Happy weekend from Onigiri!

This week, the two headliners at first glance sit at opposite ends of the market. BlackRock is entering deeper into the stablecoin ecosystem, while Circle—the company behind USDC—is navigating the expectations of public-market investors.

Recap on the two headliners this week:

SS #123 — BlackRock Launches Stablecoin Reserve Funds

SS #124 — Circle Q2 Revenue Misses Estimates

But together, they tell a much more important story. Stablecoins are no longer one product category. They are becoming an entire financial stack.

BlackRock’s launch of dedicated reserve products shows traditional asset managers increasingly competing for the hundreds of billions of dollars that sit behind stablecoins. Fidelity, State Street, Morgan Stanley and other institutions have moved in the same direction as the GENIUS Act establishes clearer parameters for eligible reserve assets.

Meanwhile, Circle’s Q2 results highlight the other side of the equation. Revenue increased 7% year-on-year to approximately $701M, slightly below consensus estimates of roughly $713M, while net income reached $48M and USDC circulation ended the quarter at approximately $73.3B, up 19% year-on-year. Circle is simultaneously attempting to expand beyond reserve income through payments, infrastructure and Arc.

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🍙 Onigiri Take

For the last several years, stablecoins were largely understood through the issuers themselves: USDT meant Tether; USDC meant Circle.

That framework is becoming outdated.

As stablecoins move deeper into regulated finance, their economics are separating into distinct layers:

1. Issuance & Brand: Who creates the stablecoin, maintains the peg and owns the customer relationship.

2. Reserve Management: Who custodies and invests the underlying cash, Treasuries and other permissible reserve assets.

3. Banking & Liquidity: Who provides fiat rails, redemption liquidity, FX and access to banking systems.

4. Blockchain & Settlement: Which chains ultimately carry transactions and provide settlement guarantees.

5. Distribution & Orchestration: Which wallets, PSPs, fintechs, exchanges and payment providers put stablecoins into the hands of businesses and consumers.

6. Applications: The actual economic activity being facilitated—payments, remittances, treasury management, payroll, lending, capital markets and machine-to-machine transactions.

BlackRock's latest move suggests that reserve management itself is becoming a standalone institutional product category.

The GENIUS Act effectively standardises much of what qualifying reserves can consist of. That creates a natural opportunity for large asset managers with existing money-market expertise, custody relationships, regulatory infrastructure and distribution networks.

For issuers, outsourcing parts of reserve management can reduce operational complexity.

For BlackRock and its peers, stablecoins potentially represent a new pool of extremely sticky institutional AUM.

But this creates an interesting consequence: The larger stablecoins become, the less certain it is that stablecoin issuers themselves capture all of the incremental economics.

As asset managers compete for reserves, banks compete for custody and cash-management relationships, networks compete for settlement activity, and fintechs compete for distribution, stablecoins increasingly resemble an open financial infrastructure layer rather than a vertically integrated product.

Circle appears to understand this.

Its strategic expansion into Arc, Circle Payments Network and broader infrastructure can be interpreted as an attempt to capture value beyond USDC reserve income.

That may ultimately become more important than whether Circle beats or misses revenue expectations in any individual quarter.

🍙 Winners & Losers: Institutional Outlook

🍙 Under the Hood: The Stablecoin Stack Is Being Repriced 

BlackRock’s launch matters because it shows stablecoin reserves are becoming a standalone institutional asset-management category.

As regulation standardises what issuers can hold, reserve management is increasingly shifting toward large asset managers, custodians and regulated money-market structures. This means stablecoin economics are no longer captured by issuers alone.

At the same time, Circle is moving in the opposite direction. As reserve income becomes more competitive, it is expanding into payments, settlement infrastructure and Arc to capture more value above the issuance layer.

The stablecoin stack is therefore being unbundled:

Reserve Management → Issuance → Liquidity → Settlement → Distribution → Applications

The key investment question is shifting from “Which stablecoin wins?” to “Which layer captures the most durable economics?”

Our view: as stablecoins mature, value will increasingly accrue to players controlling distribution, liquidity, infrastructure and enterprise workflows, rather than issuance alone.

🍙Stablecoin ≠ Crypto —  Digital Dollars Are Becoming Financial Infrastructure

Perhaps the most important shift this week is conceptual.

• Stablecoins are increasingly being evaluated less like crypto assets and more like financial infrastructure.

• BlackRock is not launching reserve products because it expects retail speculation around stablecoins.

• Banks are not developing stablecoin infrastructure because they want exposure to crypto volatility.

• Corporates are not examining stablecoin settlement because they want another investment asset.

They are interested because stablecoins potentially provide a better movement layer for money. The distinction matters.

🍙 Institutional Risks & Unknowns

1. Economics are fragmenting: As asset managers, banks and infrastructure providers enter the stack, stablecoin growth may not translate directly into higher issuer margins.

2. Reserve risk is changing, not disappearing: Higher-quality reserves improve safety, but concentration in Treasuries, custodians and redemption infrastructure creates new systemic dependencies.

3. Regulation remains fragmented: Different regimes across the U.S., Europe and Asia create complexity around licensing, custody, AML and cross-border settlement.

4. Infrastructure still needs real usage: Platforms like Arc must convert institutional partnerships into actual transaction volume, liquidity and recurring revenue.

5. Stablecoins themselves may commoditise: As more regulated issuers emerge, value may shift toward interoperability, liquidity, distribution and orchestration rather than the token itself.

Onigiri Capital (onigiri.vc), a US$50 million blockchain-focused investment fund, launched by Saison Capital, the venture arm of Japan’s Credit Saison. Onigiri Capital is on a mission to chart the next chapter of finance and invest in seed and Series A blockchain startups in stablecoins, payments, RWAs, DeFi and financial infrastructure. The fund’s strategy emphasizes connecting startups to Asia’s growing digital asset markets.

If you'd like to discuss or contribute to the next Institutional Lens, contact us at [email protected]

Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.