Obstacles to Adoption

Still, cryptocurrencies are used by less than 2% of households for payments and transfers, according to a Federal Reserve report.  The market for stablecoin use is expected to grow with the enabling legislation. Circle Internet Group Inc. reports that transaction volume in its USDC stablecoin grew 680% year-over-year in the third quarter of 2025. 

To find out why stablecoins aren’t seeing faster adoption in the retail payment system, I spoke with Charles Calomiris, a professor emeritus from Columbia University, and a leader in the field of financial economics, who recently joined the Institute. He sees at least two obstacles. 

Calomiris points to how entrenched banks are in the payment system and the political economy of regulation. “It is not just the big banks,’’ he said. “There is more company at the table.’’ 

It is not in the interest of Congress, Calomiris says, to create a lot of competition for banks from non-banks. Banks are in congressional districts and, through mechanisms like the Community Reinvestment Act, loan to low-income households and businesses. Nor is it in the interest of banks to embrace a technology that could cut the $236 billion in credit card and debit swipe fees financial intermediaries extracted in 2024. Finally, regulators take a negative view of anything that causes deposits to migrate away from banks. 

So, there are a lot of regulatory, political, and industry incentives to maintain the current payment system, even though there is a strong case for cutting fees.  

A second reason Calomiris points to is that stablecoins haven’t achieved broad network effects as a payment instrument, meaning they aren’t easily used by millions of people. Large-scale retailers such as Amazon.com Inc. or Wal-Mart Inc. haven’t adopted them yet. 

Consumers must deposit money into something that is not a bank, and for many digital wallets aren’t easy to understand or trust.  

The takeaway from blockchain’s slow progress as a payment rail is that critical infrastructure, and the giant incumbents who operate it – from power companies, to railroads and banks – are going to be enmeshed in regulation, engaged in political deal-making, and hard to unseat as long as they are doing their job. Disrupters need to offer  tangible  advantages to get consumers and businesses to switch. Switching costs must be low, and regulators need to be convinced that the technology is safe and reliable. 

The AI Imperative 

AI is operating in some regulated arenas, but it isn’t challenging a single system or incumbent. It is challenging just about every incumbent in every industry.  Switching costs are low, and the models are intuitive to use. Corporations are rapidly adopting, and there could be a valuation penalty if they don’t. Alphabet Inc., the parent of Google, said it had 8 million company user-based subscriptions for Gemini in its fourth-quarter earnings call on Feb. 4 versus over 2 million in the third quarter. 

Finally, the Trump administration has a decidedly hands off approach to AI regulation, saying in an executive order that it seeks a “minimally burdensome’’ approach. 

Navtej Dhillon, the former deputy director of the White House National Economic Council under former President Joe Biden, notes that AI has a national security imperative that is guiding our policies. If the U.S. doesn’t dominate this technology, China will. 

AI “is a defining feature of our pre-eminence,’’ Dhillon tells me in an interview. Having zero rules around AI doesn’t seem tenable either given its broad impact on the economy and society, he says. “Regulating while winning the AI race is going to be an important balancing act.’’  

AI is moving fast for three at least three reasons. It is emerging as a general purpose technology that can be used in a variety of ways across multiple industries. It has a national security and competitive imperative, and the technology and its uses are evolving rapidly making it hard to regulate.  Companies that don’t have an AI strategy now will be seen as lagging.  

From June to December last year, the Andersen Institute produced some 50 editorial works, with several focused on these topics. Some links are provided in the text above, but I would also point you to our interview with Heath Tarbert, the president of Circle; Fabio Natalucci’s work the financial structures growing up around artificial intelligence; a podcast we did with William Shobe on data center demands on Virginia’s power grid; and a report I did on the way the stock market’s AI trade is influencing company valuations.  

Below you will find our work since the last newsletter. 

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The Arc Blog

US H-1B Tax Could Help Competing Nations Grab More Talent

10/31/25 – The U.S. is one of the most innovative countries in the world, and its productivity growth has outpaced that of other developed economies. This could change thanks to new policies designed to reduce high-skilled immigration into the United States.

Stablecoins Bring the Promise of Better Payments and the Risks of Financial Leverage

11/06/25 – The GENIUS Act has introduced a regulatory framework for U.S. dollar (USD) payment stablecoins. Their future might hinge on whether they become mainstream digital money for low-cost payments or tools for a growing universe of risky leveraged finance.

The Stock Market is Overshooting AI’s Negative Impact on Jobs

12/08/25 – The artificial intelligence industry’s leaders talk about a utopian future where machines take up so many human tasks that white-collar workers are replaced by the millions, a theme partly responsible for an exit from staffing and office-property shares this year.

Google vs. The Nvidia Stack in the Competition to Win the AI Race

12/23/2025 – The artificial intelligence ecosystem is a multi-trillion-dollar gamble not only for the companies that are building it, but also for nations seeking new competitive advantages and network power in a world of geo-economic fragmentation.

Rate Caps Will Result in Credit Rationing for High-Risk Borrowers

01/23/26 – President Donald Trump wants to cap credit card interest rates at 10 percent – about half the current average of 22 percent – reigniting the longstanding debate over whether rate caps protect consumers or harm them by restricting credit access.

Venezuela Can Dollarize Because Informally It Already Has

01/28/26 – Venezuela has suffered catastrophic economic decline and hyperinflation in recent years. A first step in restoring order would be to stabilize prices by linking the currency to the dollar.

Rearmament Is An Opportunity to Strengthen Europe’s Financial Markets

02/17/26 – The U.S. threat to “take over” Greenland captured something unsettling about the current phase of American power: An increasingly transactional approach to security, territory, and alliances. It also crystallized a reality that has been building for years: The U.S. is no longer prepared to guarantee security unconditionally and for free.

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Notes & Insights

Tariff Debates are as Old as America

10/17/2025 – What history clearly teaches us is that the appeal of tariff policies in the U.S. as a means to achieve economic and political goals ebbs and flows, with powerful consequences that take time to unfold.

Tariff Impacts and Mitigation Strategies: What Corporate Executives Are Saying

12/11/2025 – We use Palantir Foundry to deploy large language model (LLM) earnings call transcript analysis to “survey” S&P 500 corporate executives on the impact of tariffs on business outcomes and on tariff impact mitigation strategies.

Tracking Tariff Revenues

12/19/25 – Tariff revenues have increased substantially this year despite a decline in the value of imports. The revenue increase has been driven by a jump in effective tariff rates accompanied by significant expansion in the tariff base across many countries.

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Market Roundup

Roundup December 2025: The Most Important Market Charts to Watch in 2026

12/22/25 – Financial markets are entering 2026 with a level of calm that belies the scale of structural shifts underway in the global economy. Market-based volatility remains compressed across asset classes despite the high degree of uncertainty stemming from two major paradigm shifts, namely the global resurgence of trade protectionism and the rapid acceleration of AI technologies.

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Global Rewire Podcast

Stablecoin Infrastructure with Heath Tarbert

11/13/25 – We explore the implications of the GENIUS Act, the role of stablecoins in the global economy, and the future of digital currencies. This discussion sheds light on the challenges and opportunities in the world of blockchain and digital assets to better understand how these innovations are reshaping the financial ecosystem.

AI, Inflation, & The Fed with Jim Bullard

11/25/25 – Craig and Fabio sit down with James Bullard, former President of the St. Louis Fed and current Dean of the Mitch Daniels School of Business at Purdue University. They explore the complexities of global economic shifts, the role of AI in productivity growth, and the challenges of monetary policy in today’s volatile market.

Iron Ore & Green Electrons with Guy Debelle

12/08/25 – Former Deputy Governor of the Reserve Bank of Australia joins Craig and Fabio to discuss stablecoins & cross border payment systems, green energy transitions, and the geoeconomic balance down under.

Navigating the AI Bubble with Fabio Natalucci

12/15/25 – Andersen Institute CEO Fabio Natalucci talks with Editor in Chief Craig Torres about the peculiar financing structures forming in support of AI CapEx and the broader implications for financial stability.

The Strange Calm in Markets with Richard Berner

01/07/26 – In this episode of the Global Rewire podcast, we take a deep dive into the current state of financial markets, exploring why volatility remains low despite global uncertainties. NYU Stern’s Richard Berner and Andersen Institute CEO Fabio Natalucci discuss structural and technical factors influencing market behavior, the role of central banks, and the impact of retail trading.

Rebuilding Resilience with James Aitken

01/14/26 – Craig and Fabio are joined by James Aitken, founder of Aitken Advisors, to discuss the evolving landscape of global finance and investment strategies amidst significant geopolitical and economic changes. James covers the implications of U.S. policies on global trade, the challenges facing the European Union, Japan’s economic situation, and the potential risks associated with the AI boom and financial engineering.

Powering the Future with Bill Shobe

01/26/26 – We delve into the intricacies of Data Center Alley in Virginia, a pivotal hub for global data computation. Bill Shobe, a professor emeritus in Public Policy from University of Virginia, sheds light on the economic and environmental impacts of data centers. 

Federal Reserve Regionalism with Kathryn Judge

01/27/26 – We examine the complexities of Federal Reserve Regionalism with Kathryn Judge from Columbia University Law School. Discover the historical roots and modern challenges of Fed regionalism, the balance between decentralization and centralization, and the ongoing debate over the Fed’s independence and accountability. 

The Dollarization Question with Francisco Zalles

02/03/2026 – Craig Torres and Fabio Natalucci sit down with Francisco Zalles, an expert on dollarization and financial stability, to explore how Ecuador’s radical move to dollarize its economy has shaped its resilience, institutional drift, and economic growth. They discuss the nuances of monetary policy, the role of institutions, and the evolving landscape of global finance in a fragmented world.

Sovereign Debt with Lupin Rahman

02/10/26 – Lupin Raman, a leading expert on sovereign debt and author of The Sovereign Debt Investor joins us to explore the latest trends in bond yields across major economies, the impact of geopolitical shifts, the role of US and European markets, and the outlook for emerging markets. 

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External Publications

Digital Finance in a Geopolitically Fragmented World

1/22/26 – A future where global finance runs on-chain with stablecoins as the medium of exchange may be closer than we imagined a few months back. Following the recent passage of the GENIUS Act, major international organizations have started to focus on the promises of tokenization.