Key Insights
- Barclays invests in Ubyx to introduce a controlled stable coin settlement infrastructure.
- Ubyx targets clearance and redemption in a variety of stablecoin issuers.
- Regulators influence the manner in which the banks interact with the stablecoins and tokenized money.
Barclays’ stablecoin investment activity entered a new phase this week after the British lender confirmed its first-ever equity stake in a company tied directly to stablecoin infrastructure.
The bank disclosed that it has invested in U.S.-based Ubyx, a startup positioning itself as a clearing and settlement layer for fiat-pegged digital tokens.
This action is an indicator of a cautious expansion of Barclays’ long-term investments in blockchain technology and regulated electronic currency usage, without promoting speculative exposure to cryptocurrencies.
Ubyx, a project slated for rollout in 2025, will streamline the redemption and settlement processes for various stablecoin issuers.
Barclays confirmed the investment in comments cited by Reuters, describing the partnership as part of its efforts to develop “tokenized money within the regulatory perimeter.”
Barclays Stablecoin Investment and Ubyx’s Settlement Model
The Barclays stablecoin investment centers on infrastructure rather than issuance. Ubyx does not issue tokens itself; instead, it operates as a clearing layer designed to sit between stablecoin issuers, financial institutions, and payment systems.
Barclays stated that the transaction represents its first direct investment in a company related to stablecoins. The bank declined to disclose the size of the stake or Ubyx’s valuation.
According to Pitchbook data cited by Reuters, Ubyx has previously attracted backing from the venture capital arms of Coinbase and Galaxy Digital, giving the start-up exposure to both crypto-native and traditional financial investors.
https://twitter.com/ReutersLegal/status/2008696365350592620
Furthermore, a Barclays spokesperson said the investment aligns with the bank’s broader strategy of exploring new forms of digital money, including stablecoins, while operating within existing regulatory frameworks.
Banks Explore Joint Stablecoin Issuance
The Barclays stablecoin investment follows earlier collaborative efforts among major banks. In October, Barclays became one of 10 international financial institutions, including Goldman Sachs and UBS, to discuss the possible issuance of a stablecoin pegged one-to-one to reserves and tied to G7 currencies.
That project marked the increased attention of large banks in maintaining a stake in the digital settlement infrastructure, in case stablecoins become more widespread in wholesale finance.
No issuance has been announced, but deliberations focused on the common themes of reserve support, governance, and regulation. Researching Ubyx would bring Barclays closer to the technical nature of such systems, rather than investment in the issuance of tokens.
Trends in the market and utilization of stablecoins
The stablecoin industry has grown tremendously over the past few years, which is mostly fuelled by the demand in cryptocurrency markets. Tether is still the biggest issuer with nearly one hundred eighty-seven billion dollars worth of tokens in circulation, according to CoinMarketCap.
Stablecoins are primarily used to transfer value between trading venues, provide liquidity, and settle cryptocurrency transactions, as opposed to facilitating routine retail payments.
Moreover, most stablecoin activity occurs within digital asset platforms, although they are large in scale.
Their expanding market liquidity has, however, attracted the attention of more banks, payment providers, and regulators who are exploring how the instruments can be incorporated into existing financial systems.
Regulatory scrutiny affects the involvement of banks
The Bank of England in the United Kingdom has proposed placing a limit on the issue of systemically important stablecoins. The Barclays approach to investing in stablecoins revolves around regulatory issues.
Banks engaging with stablecoins must strike a balance between the benefits of faster settlement and programmable money and the need for these regulatory safeguards.
In addition to that, infrastructure providers such as Ubyx are attempting to bridge that gap by designing systems that resemble existing clearing and settlement processes familiar to regulated institutions.
Barclays’ Broader Blockchain Strategy
Barclays’ involvement in blockchain technology predates the recent focus on stablecoins. In 2018, the bank submitted several blockchain-related patents and collaborated with Coinbase the same year.
Since that time, it has proceeded to test distributed ledger technology both internally and with specific investments.
Among these efforts is involvement in Finality, which is designing tokenized settlement properties to be used in wholesale financial markets.
Barclays has also been involved in the UK Regulated Liability Network pilot, a joint initiative with 11 other financial institutions that utilizes tokenized deposits on a shared ledger, thereby enhancing payment efficiency.
