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Now let’s imagine stablecoins become widely used for asset settlement. As tokenization continues to develop, this will happen.

There’s nothing in the GENIUS Act that says stablecoin issuers have to buy reserve assets with traditional money. They can, in theory, buy tokenized Treasuries or tokenized money market funds (TMMFs) with stablecoins, acquiring the necessary reserves (in tokenized form, which in theory is allowed) but bypassing banks entirely, skipping the whole deposit transfer step.

Here’s where stablecoin issuers could end up enjoying an “exorbitant privilege” of money creation similar to that of banks. Above, I explained how a bank can “magic” up some money to buy an asset such as a government bond. It creates the money, deposits in the dealer’s account, and gets the bond.

A stablecoin issuer can, in theory, create stablecoins in order to buy tokenized reserves. It technically doesn’t have to have user demand to trigger this action. It can just do it. The stablecoins comply with the GENIUS Act because they are backed 1:1 by the requisite assets.

Again, this is not net new wealth due to the offsetting assets/liabilities – but it transforms assets that are not money (Treasuries and MMFs) into money (stablecoins). Much like banks do. Only stablecoin issuers aren’t banks.

From: (3) How stablecoins create money – by Noelle Acheson.

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On Tuesday, OpenAI said two artificial intelligence systems it was testing broke out of their test environment, hacked their way onto the internet and broke into another company.

The victim was Hugging Face, a provider of open-source AI tools. The cause was a cybersecurity benchmarking test that went very, very wrong.

From: OpenAI Models Escaped and Hacked a Company in Cybersecurity Test Gone Wrong – WSJ.

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President Trump’s Truth Social is selling stock market traders superfast access to his posts on the platform. Wall Street was already in on that game.

Many big investment firms have developed automated systems to monitor Truth Social, detect important keywords and take action—often within a fraction of a second—such as initiating or canceling positions, traders said.

A Wall Street Journal review of trading data shows how quickly some traders have pounced on the president’s online comments. In the minute following two of Trump’s posts about Iran last month, investors traded more than 2 million shares, according to data from DTN. These trades caused swings of more than 2% in almost two dozen energy and industrial stocks.

From: Why Wall Street Firms Are Paying $100,000 a Month for a Fast Track to Trump Posts – WSJ.

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Major Financial Institutions Unveil Bank-Led On-Chain Money Initiative
June 05, 2026
New York – A group of leading banks today announced a landmark digital payments initiative that will connect on-chain activity with traditional payment rails and enable clearing and settlement of tokenized commercial bank money at scale. The solution will combine the existing regulatory, operational, and settlement frameworks of established payment market infrastructure with the programmability and interoperability of blockchain-enabled financial activity.

The initiative will modernize money movement across emerging chain networks and will be operated by The Clearing House, a U.S.-based payments company that provides critical payment networks and is owned by 25 of the nation’s largest financial institutions. The initiative will deliver:

on-chain clearing and settlement of tokenized deposits between banks within the established banking framework, supporting automated workflows, richer transaction data, and 24/7 settlement; and
a connectivity layer linking blockchain-based activity with established fiat rails, such as the RTP® and CHIPS® networks, to facilitate movement between digital and traditional commercial bank money.

From: Major Financial Institutions Unveil Bank-Led On-Chain Money Initiative | The Clearing House.

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Vantage Bank and Custodia today announced the release of their white paper, “Hazel Network: Unified Tokenized Bank Deposit and Stablecoin Token.” The publication details a breakthrough, bank-architected token sub-ledger that safely and soundly bridges traditional banking with the tokenized systems, such as stablecoins, tokenized stocks and agentic commerce. Hazel Network offers attractive economics to banks of all sizes and delivers 24/7/365 programmable settlement, allowing banks to modernize payments directly from within the regulated banking system. Hazel Network programmatically executes the embedded compliance and operational controls that banks require, making it clear Hazel Network was built by banks for banks.

From: Vantage Bank and Custodia Release White Paper Unveiling “Hazel Network”.

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The following outlines the structure of a single enclave application:

In this diagram Host represents a standard AWS virtual machine. We run a basic application that receives traffic from the network and calls into the enclave. This creates a layer of insulation from our most secure environment and offers a convenient place to gather metrics and other operational information about the enclaves.
Enclave represents a machine with no external connectivity. The only connection it can have is a virtual serial connection to the host and its own secure co-processor. In AWS this is called the Nitro Security Module (NSM). This runs an instance of Turnkey’s enclave operating system, QuorumOS (QOS), and a secure application running on top of QOS.
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From: Secure enclaves – Turnkey.

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The Financial Conduct Authority (FCA) Emerging Technology Horizon Scan from June 2026 talks about “structural inclusion”. I strongly agree with their view that consumers previously excluded from financial services of all kinds because of low literacy, limited mobility or lack of documentation could access those services through agentic interfaces that bypass legacy barriers. Agents acting as “hidden heroes” can interpret intent, simulate eligibility and negotiate rationally on behalf of users, turning exclusion into participation.

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Second, intelligence isn’t in fact a perfect commodity, in part because applied intelligence makes itself smarter. Specifically, whoever is running inference is also collecting data, and that data goes into making the next iteration of the model better. This is, on one hand, all the more reason for the frontier labs to lower prices and increase usage as more compute comes online; on the other hand, this is why companies like Microsoft are increasingly obsessed with helping companies run their own models. That is much more viable if Chinese models are a viable alternative.

From: Who’s Afraid of Chinese Models? – Stratechery by Ben Thompson.

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One of the keynote’s most striking messages was that people are remarkably poor at identifying AI-generated content. Drawing on research conducted by his team, Farid said participants shown a mix of genuine and AI-generated images, audio clips and videos performed only slightly better than random chance when asked to distinguish between them. “We’ve trained them. We’ve explained to them how this works. They’re basically at chance.”

More concerning was that participants’ confidence bore little relationship to their accuracy. “The only thing that’s worse than this is there’s almost no correlation between their confidence and their accuracy. People who think they’re good at it are bad.”

From: UC Berkeley professor: ‘Things are getting weird’, even Mitch McConnell photos aren’t being trusted.

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Money 20/20 in Amsterdam saw the official launch of UK Payments Initiative (UKPI) backed by the country’s biggest banks with the explicit aim of chipping away at the dominance of US card networks in UK payments.

Barclays, NatWest, Lloyds and HSBC are among the major lenders behind the FCA-regulated scheme, which is designed to accelerate adoption of account-to-account payments that bypass card rails entirely.

From: Have The Card Networks’ Grip Just Got Looser?.

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