How Will Visa’s USDC Settlement on Solana Impact stablecoins">US Banks?
Visa has launched a pilot program allowing US banks to settle transactions using the USDC stablecoin on the Solana blockchain. This initiative aims to leverage blockchain technology to enhance transaction speed and liquidity management, marking a notable development in the integration of digital currencies within regulated banking infrastructure.
What happened
Visa announced a pilot program enabling US banks to settle transactions via USDC (USD Coin), a fully-backed stablecoin regulated under US financial laws and issued by Circle and Coinbase, on the Solana blockchain network. The pilot specifically targets direct settlement between banks using USDC on Solana, bypassing some traditional intermediaries to reduce settlement times from days to near real-time.
This integration capitalizes on Solana’s blockchain features, including fast transaction finality of approximately 400 milliseconds and a high throughput capacity of around 50,000 transactions per second, which Visa identifies as critical for scaling digital currency settlements. Visa has previously tested blockchain settlement on other networks such as Ethereum Layer 2 but is now focusing on Solana due to its speed and cost advantages.
According to Visa, participating US banks can use USDC on Solana to manage liquidity pools more efficiently, potentially reducing the need to hold large reserve balances traditionally required for settlement. This pilot thus represents a shift toward using blockchain-based stablecoins as a settlement layer within regulated US banking operations.
Why this matters
Visa’s pilot signals a broader institutional acceptance of stablecoins as a settlement mechanism within regulated financial infrastructure. By leveraging Solana’s high-performance blockchain, the initiative could reshape liquidity management for US banks by enabling near-instant settlement finality. Faster settlements reduce counterparty risk and may lower capital costs associated with delayed transaction clearance.
If successful, this approach could disrupt legacy settlement rails by demonstrating the viability of blockchain networks to handle high-volume, regulated bank transactions efficiently. It may encourage other payment networks and financial institutions to explore similar integrations with high-throughput blockchains.
Moreover, the use of USDC, which is fully backed and regulated, addresses some compliance concerns that have historically constrained stablecoin adoption in mainstream banking. This could pave the way for more widespread blockchain adoption in traditional finance, aligning digital currency innovation with regulatory expectations.
What remains unclear
Several important questions remain unanswered. The pilot’s performance metrics, such as transaction volumes and concrete improvements in settlement speed, have not been publicly disclosed. The number and identity of participating banks have also not been revealed, limiting insight into the scale and representativeness of the trial.
Regulatory clarity is another significant unknown. It remains uncertain how US regulators will classify and oversee USDC settlement in banking operations over the coming years. No official guidance yet clarifies whether stablecoin-based settlement will be treated as equivalent to traditional fiat settlement for compliance and capital requirements.
Operational risks related to blockchain outages or smart contract vulnerabilities, particularly given Solana’s history of network congestion and outages, have not been addressed in detail. The pilot’s integration with existing bank payment and settlement systems, as well as the interoperability of USDC settlement on Solana with these legacy systems, is also not explained.
Finally, the long-term economic impact on banks’ liquidity ratios, capital requirements, and overall cost structures remains speculative without detailed data or regulatory frameworks.
What to watch next
- Regulatory developments clarifying how USDC settlement will be overseen within US banking operations over the next two to three years.
- Disclosure of pilot performance data, including transaction volumes, settlement speed improvements, and operational stability.
- Expansion plans from Visa regarding whether the pilot will include additional blockchains or stablecoins beyond Solana and USDC.
- Development and adoption of new liquidity management tools by banks to fully leverage USDC settlement capabilities on Solana.
- Responses to operational risks, including how banks and Visa address potential network outages or smart contract vulnerabilities.
Visa’s USDC settlement pilot on Solana represents a significant step toward integrating blockchain-based stablecoins into regulated banking infrastructure. However, the initiative’s broader impact depends on regulatory clarity, operational resilience, and measurable improvements in liquidity and settlement efficiency, all of which remain to be demonstrated as the program progresses.
Source: https://cointelegraph.com/news/visa-usdc-settlement-us-banks-solana-2026?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.