Visa has announced an offering to settle transactions for U.S. banks using Circle’s USDC stablecoin, a move that materially expands the settlement rails available to institutional counterparties and treasury operations. The proposal introduces USDC as a new settlement instrument for participating banks, even as detailed technical and contractual parameters were not immediately available from the primary feed at publication.
Operational impact on settlement and liquidity management
Adopting USDC as a settlement medium changes how participating banks will manage finality, custody and reconciliation. Because a stablecoin is a digital token pegged to fiat to reduce price volatility, banks must define whether USDC will constitute final legal settlement on their own ledgers or be systematically converted back into USD, and then embed that choice into existing reconciliation, intraday liquidity and end-of-day balancing processes.
From a compliance standpoint, banks and payment processors will face heightened requirements around customer due diligence, transaction monitoring and recordkeeping. Using a token issued by a private entity shifts custody and counterparty exposure to that issuer and its underlying custody providers, making contractual clarity on reserve composition, redemption rights and failure scenarios a prerequisite for onboarding.
Traceability expectations need to be explicitly documented so that token movements can be mapped to underlying customers and use cases. Well-defined traceability requirements in onboarding documentation are essential to preserve audit trails and support anti-money-laundering and counter-terrorist-financing obligations.
Treasury desks and risk teams will have to reassess operational, liquidity and settlement risk created by this additional rail. Segregated custody arrangements, clear custodial reconciliation procedures and calibrated intraday limits, collateral policies and contingency actions for token suspensions or network outages become central controls before any meaningful USDC settlement volume is allowed to flow.
On the systems side, integration testing between existing payment infrastructure and token settlement APIs will be mandatory. End-to-end reconciliation of on-chain token movements against internal accounting entries is required to validate that posting logic, exception handling and break resolution operate reliably under production conditions.
Counterparty credit and operational due diligence must extend beyond the payment network to the token issuer itself. Risk teams will need documented assessments of the issuer’s reserve model and redemption mechanics, supported by contractual service-level agreements governing availability, processing timelines and dispute-resolution regimes.
Banks offering custodial services around USDC must ensure that governance frameworks cover asset segregation and outsourcing oversight. Custody models must address how client token holdings are ring-fenced, how operational responsibilities are allocated across providers and how capital-and-liquidity treatment of token positions aligns with prevailing prudential expectations.
If adoption scales, the introduction of token-based settlement by a major payment network raises systemic risk considerations. Concentrating settlement flows on a single token or issuer creates the possibility of correlated liquidity shocks, so risk managers should be prepared to stress-test rapid redemption scenarios and temporary suspension of token transfers, with credible fallback to fiat rails and pre-negotiated liquidity facilities.
Regulatory reporting and transparency expectations will have to be codified in both contractual and operational documentation. Supervisors are likely to expect demonstrable controls over custody, AML/CFT processes and reserve disclosure practices to protect depositors and maintain market integrity as token-based settlement volumes grow.
Visa’s move to support USDC settlement for U.S. banks is therefore more than a technical tweak; it introduces a new settlement option that compels changes to custody design, compliance programmes and risk governance before it can operate at institutional scale.
