On September 20, we gave you a simple way to think about stablecoins in The Perfect Alibi: money moves into a token, and short-term government debt gets a new buyer.
We said it too broadly.
A token issuer can buy a Treasury bill. That does not mean every customer dollar becomes a bill purchase, or that every purchase gives Washington an additional source of funding. Where the customer found the dollar and what the issuer does with it both count.
And if the dollar came out of your bank, the next question is where the issuer's payment settles. That is the question for anyone who owns bank shares.
We need to follow the dollar all the way through before we turn a payment product into an investment thesis.
The Dollar Makes Two Trips
A customer's purchase of a token is the first trip. The issuer's placement of the proceeds is the second.
Those trips can end in different places.
If a customer pays from a bank account, that customer's deposit balance falls. It would be easy to stop there and call the token a loss of bank funding.
If the issuer then uses the proceeds to buy an existing Treasury bill from a seller who deposits the payment at another bank, the money takes another route. The first bank loses a balance, while the second bank gains one. The issuer now owns a bill and the customer owns a token.
In that example, the deposit moved between banks. The bank whose customer bought the token has a funding question. The banking system as a whole has a different question.
The seller could also use the payment to buy another asset or pay a debt. Each step changes the next balance sheet. A simple count of tokens cannot tell you where the chain ends.
If the issuer keeps the proceeds in a bank account instead of buying a bill, there is no bill purchase in that transaction. We cannot infer the issuer's actual choice from the customer's decision to hold a token.
Our old shorthand joined the first trip to one possible second trip. An investor who treats them as the same event can misread both a bank's funding and the demand for Treasury bills.
A Buyer Can Replace Another Buyer
Even when an issuer buys a bill, we still need to ask what its customer sold to pay for the token.
A customer who uses idle cash at a bank can set one chain of transactions in motion. A customer who sells an investment already backed by bills can set another in motion.
In the second case, the issuer may become the direct owner of bills while the customer's former investment loses an owner. There is an issuer purchase to record. There may be little change in ultimate demand for bills once we account for the position the customer gave up.
Who sells the bill to the issuer also affects the cash trail. In a sale between investors, the seller receives the proceeds and decides what to do with them. A record of the issuer's bill holding will not tell us what the seller bought next.
This is why a growing token balance alone cannot support a forecast for bill demand. It measures a claim held by customers. It does not identify the reserve assets behind that claim or the assets customers surrendered.
We would want an issuer's reported reserve composition before calling it a durable bill buyer. We would also want to know whether new token holders brought cash that had been sitting outside bills.
That second part is harder. No single issuer statement can show every prior asset its customers sold. We can describe direct purchases when they are disclosed. We should be more cautious about calling those purchases a net new bid for government debt.
The distinction has an investment consequence. A forecast for Treasury demand built on token supply alone assumes away the customer's side of the trade. That is too much certainty to put into a position.
The Bank Shareholder Has Another Test
Now the same transaction looks different from the bank's side.
The bank whose customer sends funds to a token issuer may lose a deposit. If that balance was a useful source of funding, replacing it could cost the bank more. That is a possible risk for the shares.
A different bank may receive the money when the issuer places reserves or pays a seller. That bank could gain funding. Neither result tells us what happens to every bank, and neither can be inferred from a token announcement alone.
The claim the customer owns also counts. A bank deposit leaves the customer with a claim on the bank. A separately issued token follows its own terms. We need the governing document before deciding how a particular product is treated.
A screen can make two payment balances look alike. The funding statements of the bank will show whether customer money stayed as deposits.
For shareholders, we would start with reported deposits, their cost, and management's explanation of changes in bank filings. If those disclosures show a persistent loss of customer funding to a token product, we can estimate what replacement funding might do to earnings.
If deposits hold up while a bank offers a new payment interface, we should not mark down the shares on the theory that every digital balance left the bank. The product name cannot settle the balance-sheet question.
The upside is that a bank could keep customers and their funding while payments change. The risk is that customers leave and the bank pays more to replace their balances. The bank's filings can show whether customer funding held up as payment habits changed.
What We Would Own While We Wait
A short-term Treasury bill gives us a direct claim on the government's payment rather than an indirect bet on how an issuer might invest its reserves. For someone seeking bill exposure, we prefer that direct route until an issuer's holdings are disclosed.
That choice still has a risk. The return available when a bill matures may differ from the return available today, and an investor who sells before maturity faces a market price. We are choosing a return tied to the bill's terms, with rate and sale risk still present.
For bank shares, we would make the funding test company by company. A bank with resilient customer deposits and a manageable funding cost has a stronger answer to token competition than a bank relying on a product announcement to tell the story.
We cannot name a winning bank from the information in this correction. A ticker would imply that we had checked the company's deposit filings and product terms. We have not done that work here.
What can we measure by year-end? First, whether issuers publish reserve breakdowns that identify bills separately from other assets. Second, whether banks describe a change in deposits or funding cost that they themselves connect to customer use of token products. The Fed's H.8 release is one place we will check the wider deposit trend, without assigning a cause from the aggregate alone.
We also need to return to the Board's September 24 announcement, its issuer proposal, and its separate bank application proposal before drawing a regulatory conclusion. Those links identify the documents to check. We are leaving their specific terms out of this investment case until we can read them.
We will check those items through December 31, 2026. A bank filing, an issuer reserve report, and the final governing text can each answer a different part of the trade. None can answer all of it by itself.
Until then, the number of tokens in circulation cannot tell us what to buy. It does not identify who held the customer's dollar before the purchase or who holds the issuer's payment afterward.
In The Perfect Alibi, we compressed those steps into a single bill buyer. We are correcting that claim before building a Treasury or bank-stock thesis on top of it.
The token can change hands.
The dollar still has to land.
Seek the truth and be prepared,
Equedia
Sources
- Federal Reserve, H.8: Assets and Liabilities of Commercial Banks in the United States
- Federal Reserve, Stablecoin proposal announcement, September 24, 2026
- Federal Reserve, Proposed issuer rule
- Federal Reserve, Proposed bank application rule
- The Equedia Letter, The Perfect Alibi
Disclaimer: This letter is for informational and educational purposes only and does not constitute investment advice. Past predictions and performance are not indicative of future results. Please see our full terms of use and disclaimer at equedia.com.
