A blockchain can record a transfer before the businesses involved know what, legally, has happened to their money.
For Jai Massari, who helped design Libra’s legal architecture, that gap will shape digital payments. Her account of Libra offers a test for stablecoin regulation: can users predict what happens when a transaction, an institution or an entire network fails?
Libra’s unfinished lesson
Libra assembled engineers, financial institutions and corporate partners around a global payments network. Massari helped develop its rulebook, including the responsibilities and liabilities of participants. The engineers, she recalls, solved the problems put before them. Politics proved less tractable.
The project underestimated Facebook’s reputational baggage and distrust over its handling of personal data. Designing a lawful structure did not secure political acceptance. “It turns out that wasn’t nearly enough,” Massari says of the legal team’s original task.
Massari sees Libra’s reserve design, redemption mechanics and liquidity safeguards reflected in subsequent regulatory frameworks.
Different money, different economics
The choice between stablecoins and tokenized deposits starts with the user’s claim. A deposit recorded on a blockchain remains a claim on the issuing bank. Massari calls this “credit money,” because its value is tied to the bank’s creditworthiness.
Conventional banking makes deposits from different institutions work together through clearing, settlement and central bank money. Users rarely see that machinery when paying someone who banks elsewhere.
Regulated, reserve-backed stablecoins are designed for redemption supported by high-quality liquid assets. Massari calls the intended structure “non-credit money”; its reliability still depends on reserves and enforceable redemption rights.
The differences affect costs. Banks can fund lending with deposits; stablecoin issuers operate within narrower reserve constraints. Stablecoin payments also require funds to be available before a transfer. For Massari, the case strengthens where settlement speed matters more than funding costs, or where banking connections are weak. A payment between customers of the same bank may gain little from using a stablecoin.
Stablecoin regulation beyond the issuer
The next stage of stablecoin regulation must address the transaction as well as the institution that creates the token. Reserve requirements alone cannot tell a business when its obligation has been discharged, who bears a loss after an operational failure, or what happens when a participant enters insolvency.
The GENIUS Act and Europe’s MiCA establish rules for issuance. US implementation remains underway. Massari sees GENIUS as a solid foundation, but multiple federal and state supervisors must deliver consistent outcomes.
Payment networks need their own operating rules. Libra’s rulebook sought to specify how participants should interact and where responsibility would sit. Massari argues that mainstream use will require comparable arrangements, including controls against illicit finance.
A dollar token at the border
A stablecoin issued under one country’s rules may be technically transferable abroad without offering its holder the same rights or uses there.
Massari identifies mutual recognition of issuers as one prerequisite. An issuer needs a lawful route to serve users outside its home jurisdiction, including selling and redeeming tokens. Users also need certainty about the treatment of those tokens for payments, settlement and collateral, alongside accounting and tax rules.
The deeper challenge is economic interchangeability. Two tokens referencing the same currency do not become equivalent simply because both aim to trade at one dollar. Reserve composition, redemption conditions, capital and liquidity safeguards, and the treatment of holders in insolvency can produce materially different outcomes.
Without sufficient convergence, stablecoin regulation could reproduce the fragmentation that digital payments were meant to overcome. Additional conversion, clearing and settlement arrangements would then be needed to bridge the differences, weakening the case for simpler global transfers.
When the payer is an AI agent
Automated payments bring the question of authority into sharper focus. Before accepting an instruction from an AI agent, a counterparty needs to establish whose behalf it acts on and what it is permitted to do.
Massari sees existing agency and contract law as useful starting points. Verifiable digital credentials could help an agent demonstrate delegated authority and sign within an agreed mandate. The work includes defining limits, proving identity and assigning responsibility when an agent acts outside its instructions.
That leaves a concrete task for payment providers: turn an owner’s instructions into a mandate that another institution can verify and rely on.
Jai Massari Article on stablecoin myth busting](https://openbanker.beehiiv.com/p/stablecoinmythbusting))
Jai Massari Article on singleness of stablecoins](https://openbanker.beehiiv.com/p/stablecoinsingleness))
Jai Massari Atlantic Council article on global stablecoin regulation
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