SoFi’s new stablecoin looks, sounds, and (almost) behaves like a bank deposit—except it can move 24/7 on public rails. That difference matters, not because it is “crypto,” but because it turns regulation, liquidity, and interest income into product features.
On December 18, 2025, SoFi said it had launched SoFiUSD, a “fully reserved” U.S. dollar stablecoin issued by SoFi Bank, N.A., its OCC-regulated bank subsidiary.
That sounds like yet another entrant in a market already dominated by two giants. DefiLlama data shows total stablecoin supply around $309 billion, with USDT alone roughly 60% of the market.
But SoFiUSD is not trying to win by being bigger, faster, or louder. It is trying to win by being boring in the places where stablecoins have historically made regulators nervous—reserves, redemption, and oversight.
SoFi’s pitch is blunt: reserves are held 1:1 in cash, for “immediate redemption,” and because it is a bank it can keep those reserves “in cash at its Federal bank account,” while sharing incentives with partners and holders.
In other words: the stablecoin is not the product. The bank balance sheet and the Fed account are.
A stablecoin that wants to be infrastructure
SoFi’s own description of SoFiUSD reads less like a consumer crypto launch and more like a wholesale plumbing announcement.
The company says SoFiUSD is meant to support:
- internal settlement for SoFi’s crypto business (now relaunched inside the SoFi app),
- 24/7 settlement for “card networks, retailers, or businesses,”
- SoFi Pay (its remittance and payments roadmap), and
- Galileo partners—the fintechs and banks that use SoFi’s technology stack.
That scope is intentional. SoFi has both a consumer front door (12.6 million members) and a large “pipes” business (Galileo’s ~160 million accounts). If you believe stablecoins are becoming a new settlement layer, those two distribution channels are hard to ignore.
Still, the hardest part is not issuing a token. The hardest part is convincing the world the token is money enough.
SoFi’s answer is to make the reserve story almost insultingly simple.
The float is the feature
Traditional stablecoin economics are not mysterious. If a stablecoin has $10 billion in reserves and those reserves earn interest, the issuer has a revenue engine. That is why the debate about reserves is never just about “safety”—it is also about who gets the yield.
SoFi leans into this. In its Q3 2025 earnings transcript, CEO Anthony Noto argued that because SoFi is a “Tier one insured deposit institution,” it could place stablecoin reserves at the Fed and “earn Fed funds,” while avoiding credit and liquidity risk.
As of Dec. 26, 2025, the Fed’s interest rate on reserve balances (IORB) is 3.65%. The Fed’s target range for the federal funds rate was most recently set at 3.50% to 3.75% in the December 10 FOMC statement.
That math is not trivial. At ~3.65%, every $1 billion of “boring” stablecoin float can generate roughly $36.5 million of annual gross interest income—before costs, incentives, compliance, and technology. (That’s simple arithmetic using the Fed rate; the point is the incentive.)
SoFi explicitly says it expects to share “attractive incentives” with partners and SoFiUSD holders. This is the strategic core: stablecoins as a revenue-sharing settlement product for fintechs, banks, and large merchants that want speed without rebuilding everything.
If that sounds like a payments network business, that is because it is.
The uncomfortable question: is this a stablecoin or a deposit in disguise?
There is a reason SoFi keeps repeating “bank-grade” and “OCC-regulated.” Stablecoins are now mainstream enough to be measured in the hundreds of billions, and supply grew sharply in 2025 (Arkham described growth from roughly $205 billion to $300 billion during the year).
But they are also still burdened by a simple consumer fear: “If something breaks, do I have a claim like a depositor—or am I just holding a token?”
Here, the law is unambiguous. The GENIUS Act—enacted July 18, 2025, creating a federal framework for “payment stablecoins”—states that payment stablecoins are not backed by the full faith and credit of the U.S. and are not FDIC-insured, and it makes it unlawful to market them as such.
SoFi’s own crypto press release uses the same kind of bright-line language for digital assets: “Crypto and other digital assets are not bank deposits, not insured by the FDIC or SIPC.”
So how does a bank sell “regulated digital dollars” without implying “insured deposits”?
One emerging answer is to split the concept in two:
- A stablecoin (movable off-platform, typically no interest, no deposit insurance), and
- A tokenized deposit / deposit token (kept inside the banking perimeter, potentially interest-bearing, potentially covered like a deposit—depending on structure and supervision).
Ledger Insights noted that SoFi appears to be threading this needle by treating SoFiUSD held on the SoFi platform differently from SoFiUSD held elsewhere—closer to a deposit token inside, and a stablecoin outside—while raising open questions about legal structure, segregation, and bankruptcy remoteness.
This is not just semantics. It changes who bears risk, who earns yield, and how regulators classify the liability.
Regulation is now part of the product
For years, stablecoins operated like a gray-market version of money market funds: huge scale, huge utility, and uneven transparency.
The GENIUS Act tries to pull the category into a clearer box. In the bill text, reserve assets for permitted issuers must back outstanding coins 1:1, and allowable reserve categories include U.S. currency and “money standing to the credit of an account with a Federal Reserve Bank,” among other options.
The Richmond Fed’s summary of the law highlights the compliance direction of travel: disclosed redemption policy, monthly reserve attestations, and monthly CEO/CFO certifications of reports. And regulators are already drafting process: the FDIC proposed rulemaking (published Dec. 19, 2025) on approval requirements for stablecoin issuance by subsidiaries of FDIC-supervised institutions, including expectations around policies for custody, segregation of customer/reserve assets, and BSA/AML and sanctions compliance.
SoFi’s messaging fits this moment. It is selling oversight as a service:
- An OCC-regulated bank issuer,
- 1:1 cash reserves for immediate redemption,
- and “stablecoin infrastructure” that other institutions can white-label.
In an era when even large corporates and banks have openly explored stablecoin plans post-GENIUS Act, that “we already have the compliance machine” stance is a real competitive advantage.
What has to go right for SoFiUSD to matter
The temptation is to treat this as a binary story: either “banks adopt stablecoins” or “stablecoins disrupt banks.”
Reality will be messier. SoFiUSD will matter only if it wins on the boring, operational details that determine whether a payments rail becomes trusted infrastructure.
Three hurdles stand out.
1) Distribution beats technology
Public blockchains can move value quickly. That is not the scarce ingredient.
The scarce ingredient is distribution—who can persuade merchants, platforms, and fintechs to settle on their token. SoFi has a plausible wedge via Galileo and via partners who want stablecoin settlement without taking on issuer risk themselves.
But it is entering a market where incumbents already have deep liquidity and integrations. DefiLlama’s snapshot shows USDT dominance above 60%. Liquidity is habit-forming.
2) “Instant settlement” must coexist with real-world frictions
Even if a token settles in seconds, businesses still live in the world of chargebacks, fraud, disputes, refunds, and compliance checks.
SoFi implies SoFiUSD can be used by “card networks” and retailers for 24/7 settlement. That is ambitious—but it will require careful product design so that the stablecoin sits behind familiar user experiences rather than forcing users to think in tokens.
In practice, the winning product might look like this: consumers swipe cards and tap phones as usual; merchants keep “dollars”; SoFiUSD simply becomes the settlement and treasury layer you never see.
3) The legal and balance-sheet structure cannot be hand-waved
Stablecoin failures rarely start with code. They start with legal structure: what happens in bankruptcy, what assets are segregated, what claims are senior, and how redemptions are handled under stress.
That is why the GENIUS Act’s marketing and reserve requirements matter, and why regulators are already focusing on segregation, recordkeeping, redemption policies, and auditability.
Ledger Insights’ questions about reserve segregation and bankruptcy remoteness are not nitpicking. They are the difference between “digital cash” and “digital promise.”
The bigger story: a bank is trying to turn money into an API
A decade ago, fintechs competed by making banking feel modern—sleek apps, faster onboarding, better UX.
SoFiUSD is a bet that the next phase is making banking operate modern—programmable settlement, 24/7 liquidity movement, and embedded financial rails sold to other businesses.
That would shift SoFi’s identity from consumer brand to financial infrastructure provider, with a token that is less a product than a protocol: a way for partners to plug into bank-regulated “digital dollars” without building the compliance stack themselves.
Whether SoFi pulls it off is uncertain. But the direction is clear: as stablecoin supply scales into the hundreds of billions and regulation tightens, the competitive advantage moves away from “who can mint a token” and toward “who can make that token feel like real money—legally, operationally, and economically.”
SoFiUSD is one of the first serious attempts by a consumer-facing bank to package that advantage and sell it as infrastructure.
It won’t be the last.
