This Federal Proposal Might Increase Decentralized finance TVL Tenfold to Exceed $1 Trillion in 15 Months

When Decentralized finance TVL surpassed $1Bn in 2020, even Arthur Hayes, the co-founder of BitMEX, felt compelled to join the celebration. And with good reason. It marked a significant achievement for a crypto sector that was still making its initial strides in a finance landscape resistant to innovations that upset the conventional systems.

Fast forward five years, and not only is Wall Street starting to embrace crypto, but the President of the United States envisions a future dominated by crypto and smart contracts. Donald Trump is backing World Financial Liberty, and several of his meme coins are currently being traded on leading exchanges like Binance.

Although compliance plays an essential role in explaining the recent surge, establishing a solid bridge between traditional finance (TradFi) and decentralized finance (Decentralized finance) will create significant opportunities, particularly for stablecoin issuers. Tether, Paxos, and Circle are already emerging as major players, generating hundreds of billions of USD-backed tokens across Solana, ETH, and various other blockchains, including Tron.

(Source: Coingecko)

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Skinny Master Accounts For Stablecoin Issuers?

Positive advancements were made yesterday that could revolutionize opportunities for stablecoin issuers. At the inaugural Payments Innovation Conference, which took place on October 21, Governor Waller, a member of the Federal Reserve board, suggested the creation of skinny master accounts for fintech entities, including stablecoin providers.

BIG UPDATE from the @federalreserve Payments Innovation Conference this morning.

Governor Chris Waller disclosed that the central bank is proposing a novel form of limited-access master account (or what he terms a “skinny master account”) for ALL legally recognized institutions to… https://t.co/lZh0I0Tj3a pic.twitter.com/Wg7ygjpvJj

— Eleanor Terrett (@EleanorTerrett) October 21, 2025

Currently, stablecoin issuers like Circle and Tether are reliant on third-party banks regulated by the Federal Reserve, which have access to master accounts. Through these banks, stablecoin issuers can launch stablecoins derived from cash entrusted by customers.

Nonetheless, this dependency presents a challenge: it creates unnecessary friction. Costs escalate as banks impose fees for each transaction. Moreover, settlement delays can turn processes that should take seconds into those that take days.

In addition, if the sponsoring bank faces insolvency, the stablecoin issuer has to navigate counterparty risks. For example, in March 2023, USDC temporarily lost its peg due to Silicon Valley Bank’s (SVB) bankruptcy.

Dependence on a third-party bank hampers innovation and delays wider acceptance. Thus, Governor Waller’s advocacy for a skinny master account tailored for fintechs, including stablecoin issuers, is a progressive step forward.

While it will have limited access for qualified and unconventional institutions, it provides direct access to the Federal Reserve’s core payment infrastructure, facilitating essential services like fund transfers and reserve holdings.

This shift means streamlined and cost-effective operations for stablecoin issuers. Most crucially, Circle and leading stablecoin issuers in the United States will experience better liquidity and stability since they can safeguard their reserves more securely with the Fed, thus reducing risks of bank runs and counterparty issues, as witnessed during the SVB incident.

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Will Decentralized finance TVL Hit $1T in 2026?

As of October 22, the total value locked in all Decentralized finance protocols stands at nearly $149Bn.

Ethereum remains the dominant force in DeFi, but substantial funds are also locked in Solana, Binance Smart Chain (BSC), and various automated agreement platforms that facilitate some of the best cryptos to buy.

(Source: DefiLlama)

Depending on how swiftly stablecoin issuers can access these skinny master accounts, DeFi could potentially experience rapid growth in the next few years, possibly exceeding the $1T threshold by the close of 2026.

This expansion will be directly driven by an influx of stablecoins into the wider Decentralized finance ecosystems.

With decreased costs and more efficient processing, not only will USD stablecoins rise significantly, but crossing the $1T mark during this period, but global and institutional engagement will also see a significant surge.

In this scenario, platforms like Uniswap, Ripple, or Custodia gaining access to Federal Reserve infrastructure, even without full banking rights, reduces barriers for regulated Decentralized finance and accelerates the movement of potential trillions from TradFi to crypto systems.

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