In the week to 26 October, two decisions reset the stablecoin question for banks. HSBC put its own licensed Hong Kong dollar stablecoin in front of more than 3.3 million PayMe users on 23 October, and two days earlier the Office of the Comptroller of the Currency (OCC) finalised its rule implementing the GENIUS Act. Read together, the coverage of both says the bank response to deposit migration is now a product decision, and that the size of the migration still depends on a yield question the OCC chose to settle case by case.
What happened in the week
HSBC issues a retail stablecoin inside an app it already owns
HSBC said HSBC RedCoin (ticker RCHKD), the bank’s first stablecoin, became available on PayMe by HSBC on 23 October. The coin is denominated in Hong Kong dollars and licensed and regulated by the Hong Kong Monetary Authority, which granted the bank a stablecoin issuer licence in April 2026. PayMe users can activate a wallet in the app and use the coin for person-to-person payments and at more than 100,000 merchants.
The bank plans to add stablecoin wallets to the HSBC HK Mobile Banking App later this year, and to let customers subscribe to tokenised investment products with RedCoin, starting with a share class of its HKD money market fund. Staff pilots with nearly 100 users ran the journey from minting to live transfers before launch.
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“We will soon add more products, including expanding into wholesale corporate and institutional use cases,” said John O’Neill, Managing Director, Digital Assets and Currencies, HSBC.
HSBC already runs a tokenised deposit service for wholesale payments in Hong Kong. RedCoin adds a retail coin to the same balance sheet, much as J.P. Morgan has extended its deposit token across public networks, covered here when J.P. Morgan brought JPM Coin to Ethereum for institutional clients.
The OCC finalises its GENIUS Act rule
On 21 October the OCC announced a final rule setting requirements for permitted payment stablecoin issuers and foreign payment stablecoin issuers under its jurisdiction, plus certain custody activities at OCC-supervised entities. Anti-money laundering and sanctions rules will follow in a separate rulemaking with the Treasury. The rule and the GENIUS Act take effect on 18 January 2027, and the OCC said it will announce separately when it starts accepting applications.
“We are providing a clear, practical framework for payment stablecoin innovation, with strong standards for reserve backing, redemption, and risk management,” said Comptroller of the Currency Jonathan V. Gould.
How three outlets covered it
PaymentsJournal reported on 22 October that the final rule dropped a proposed provision that would have barred crypto exchanges and other third-party platforms from offering yield on idle stablecoin balances. The OCC will evaluate those arrangements case by case. The law still bars issuers from paying interest to holders directly. The same report carried the Javelin Strategy & Research estimate that a shift from demand deposits to stablecoins could range from $257 billion to $1.129 trillion, or 1.2% to 5.4% of the modelled deposit base.
Four days later, PaymentsJournal set out the model behind that range. Javelin’s report, Migration Not Flight, estimates deposit losses of roughly 1% to 5% once adoption reaches a steady state, and it assumes the stablecoins pay no passive yield. It expects some of the largest outflows from commercial operating accounts, corporate treasury accounts and small businesses, and the largest potential losses in consumer demand deposit accounts.
Payments Industry Intelligence came at the same subject through cost. Its 22 October report on a Bank for International Settlements working paper found bank FX mark-ups of about 2.3% to 4.7% on liquid currencies in the researchers’ sample of international wires, against median costs of about 0.4% to 0.6% at fintech money transfer operators for transfers above $10,000 from the US into developed markets. For stablecoins, the paper places the cost around the blockchain, in exchange fees and fiat on- and off-ramps, and describes a “stablecoin sandwich” of fiat to coin to fiat.
IT Brief Asia framed the HSBC launch around the licence and the bank’s wholesale plans, and placed RedCoin alongside HSBC’s Orion digital bonds, Gold Token and tokenised deposit service.
Where the accounts differ
The sharpest split is over the yield decision. Javelin’s cryptocurrency analyst read it as room to compete. “The OCC gave issuers and their partners more room to offer rewards by backing away from treating certain third-party rewards programs as violations by default,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, in the PaymentsJournal report. The American Bankers Association read the same change as a loss for banks. “The result is a final rule that will preserve the status quo for crypto platforms despite Congress’s clear intent to protect local lending,” said Rob Nichols, ABA president and CEO.
The accounts also weigh the cost case differently. A PaymentsJournal webinar write-up on 22 October presented stablecoins as a way to remove many of the pain points of correspondent banking. The BIS paper, as Payments Industry Intelligence reported it, finds that exchanges take over some of the functions correspondent banks performed, and that thin stablecoin-to-fiat liquidity can mean slippage on larger transfers.
On HSBC there is no disagreement to report. The coverage we read repeated the bank’s own figures and plans, and none of it tested the launch against usage.
What the coverage adds up to
In our reading, the week’s reporting lines up behind one point that no single story makes. Javelin’s 1% to 5% deposit estimate assumes coins that pay no passive yield, and the OCC rule published four days earlier leaves third-party yield on stablecoin balances to case-by-case review. The most quoted deposit estimate of the week rests on an assumption the regulator has declined to fix.
The banks that are moving have stopped waiting for that number. HSBC put a coin it issues inside an app that 3.3 million people already use, and plans to connect it to its own money market fund. Chris Kennedy, SVP and Head of Enterprise Payments at Regions Bank, described the pattern in the PaymentsJournal webinar: “The natural defense mechanism you see is banks developing their own network.”
The cost evidence points the same way. If the savings in a stablecoin payment come from what happens at the ramps, a bank that already holds the customer’s fiat account runs one of the ramps itself. That gives it a cost position a standalone issuer lacks, whichever way the yield question is settled.
We set out the risk on the other side of this in an earlier column, Banks Are Issuing Tokens on Public Chains Before the Chain-Level Fixes Exist, and that argument still applies to any bank following HSBC.
What it means for the finance leader
For a bank treasurer, the deposit model needs two cases from now on: one with stablecoins that pay nothing, which is Javelin’s base, and one where third-party platforms are cleared to pay rewards on balances. The OCC has said it will review each arrangement on its facts, so the second case will arrive deal by deal, starting after 18 January 2027.
For a corporate treasurer, the Javelin finding that operating and treasury accounts may move first is a question about counterparties. If your bank offers a token on its own balance sheet, the question to ask is whether it settles inside that bank only, or across banks and public networks, and who carries the ramp costs at each end. Our earlier column on why corporate treasury will take tokenised deposits it never has to see covers the operational side.
How to act on it
Ask your bank three things before the GENIUS Act takes effect. Does it plan to issue a payment stablecoin or a tokenised deposit, and in which jurisdiction. Which of its partners pay rewards on stablecoin balances today, and how those programmes will fare under case-by-case review. And what the all-in cost is for a cross-border payment through its token compared with its wire and with a money transfer operator, using the BIS figures as a benchmark.
Watch for the OCC’s separate notice on when it will accept issuer applications, and for HSBC’s wallet launch in its main mobile app later this year. The first will show which US banks apply. The second will show whether a bank-issued retail coin gets used outside a payments app.
Source: Office of the Comptroller of the Currency, News Release 2026-92
