ai Archives - Servant Financial

Our February article on Orbital AI tracked the migration of compute from terrestrial grids to Low Earth Orbit. We argued that when a physical bottleneck like energy meets a technological solution like Starship, a paradigm shift is inevitable. This month, we apply that same first-principles logic to the global financial system. This time, the bottleneck is in the settlement layer and the solution is stablecoins. The settlement layer is the foundational level of a financial system where the final, irrevocable transfer of value occurs.

For years, the cryptocurrency industry was dubbed the “Wild West”, a fragmented landscape of offshore exchanges with speculative volatility that hindered traditional investors from trusting the underlying technological shift. That era is drawing to a close. With the maturation of US Dollar (USD) stablecoins and the federal codification provided by the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS) Act, stablecoins have become the primary vehicle for exporting U.S. dollar dominance across the globe in the digital age.

The $300 Billion Digital Export

Stablecoins are no longer a fringe experiment. As of March 2026, the total stablecoin market capitalization has surged past $315 billion. However, market cap is the least interesting part of this innovative asset’s story. The true narrative is the velocity and volume at which a stablecoin networks are being utilized.

Stablecoins represent a familiar asset, the USD, technologically enhanced for the digital age. By utilizing blockchain technology as the settlement layer rather than a speculative asset, the USD can now be rapidly transacted 24/7/365 on enabling telecommunication infrastructure anywhere across the globe for less than a penny in transaction fees. We are witnessing the Transmission Control Protocol/Internet Protocol (TCP/IP) moment for money with a new settlement protocol that is fast, cheap, and invisible.

Circle and the New Treasury Guard

The most significant shift in the last 180 days has been balance sheet driven. Stablecoin issuers have become some of the leading purchasers and holders of U.S. Treasuries through their minting of stablecoins. Stablecoin issuers receive USD and electronically issue stablecoin tokens. USD received by the stablecoin issuer is used to purchase U.S. Treasuries to back the $1 net asset value (NAV) of the stablecoin much like a traditional money market fund. Circle Internet Group (NYSE: CRCL),the second largest stablecoin issuer by market capitalization with its USDC token behind Tether and its USDT, has become one of the largest U.S. Treasury holders, with roughly $66 Billion in notional value on their balance sheet.

This has been a calculated, strategic absorption of U.S. debt issuance that has been enabled in part by U.S. government policies. As traditional foreign buyers, like China and Japan, have moderated their appetite for U.S. paper, the stablecoin industry has stepped in as a permanent, programmatic buyer. This is effectively the strategic plan of the United States Treasury under Secretary Bessent: ensuring USD hegemony by turning worldwide digital transactions into a demand-sink for U.S. debt.

The Fidelity Stablecoin: TradFi Moves In

For years, traditional finance (known in the crypto world as TradFi) institutions viewed stablecoin companies as upstart competitors. That sentiment has seemingly undergone a total reversal. The launch of the Fidelity Digital Dollar (FIDD) marks the definitive crossing of the Rubicon.

Fidelity Digital Dollar ℠(FIDD) is not simply a competing stablecoin, Fidelity has built a vertically integrated financial stack within their brokerage, custodial, and investment platform. FIDD is issued by Fidelity Digital Assets, National Association, a federally chartered trust bank. FIDD is a 1:1 USD-backed stablecoin announced on January 28, 2026, designed for both institutional and retail investors. FIDD operates on the Ethereum network and is backed by cash and short-term U.S. Treasuries. FIDD brings with it Fidelity’s sterling reputation as a bank-grade fiduciary with institutional audits, and its legacy trust and institutional credibility to the digital dollar.

The goal for Fidelity, and the wave of institutions that will follow them, is to make sure their customers stablecoin usage is seamless and easy. With FIDD, customers/users can transact in digital dollars without ever needing to interact with the underlying blockchain infrastructure. Much like the average consumer doesn’t understand the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging system for bank wires or Automated Clearing Housing (ACH) batching for electronic funds transfers, the FIDD, USDC, or USDT stablecoin holder will simply enjoy the benefits of instant settlement without needing to manage a private key.

THE GENIUS Act: From Token to Legal Tender

The catalyst for this institutional ramp of stablecoin usage was the signing of the GENIUS Act. This legislation was the green light that hedge funds, investment management firms and corporate boardrooms across the country were waiting for.

The GENIUS Act achieved three critical objectives:

Legal Finality: It officially designates “Payment Stablecoins” as federally legalized payment instruments rather than unregulated securities.
1:1 Mandate: It mandated that all U.S. regulated issuers must back their token 1:1 with cash or short-term Treasuries. This effectively turned every stablecoin into a liquid buffer for the U.S. Treasury market. Circle’s USDC and Fidelity’s FIDD are subject to U.S. regulations and the 1:1 Mandate, but Tether’s USDT is not.
Bank-Grade Oversight: It provided a pathway for firms like Circle to operate with the same legal certainty as a traditional depository institutions.

By regulating the stablecoin industry, the U.S. government has ensured that the next generation of global trade and transactions happens under the watchful eye of U.S. regulators and in support of the USD as the global reserve currency.

The Efficiency Dividend: The Death of The Wait

In the TradFi world, “T+2” (two-day settlement) is the norm. When you sell a stock or send an international wire, your money sits in a digital purgatory for 48 to 72 hours. This is “trapped capital”, billions of dollars in aggregate that cannot be used, reinvested, or moved. Earning nothing while the transaction moves to the settlement layer.

Stablecoins collapse this latency to near zero.

Corporate Treasury or Hedge Fund: A multinational corporation or hedge fund can now move $500 million from a subsidiary in Tokyo to its headquarters in Chicago on a Sunday night at 2:00 AM, and have those funds settled and ready for investment when U.S. markets open that morning.
Consumer Retail: We are also seeing companies like Visa invest in this stablecoin architecture. Visa and a company called Bridge are developing stablecoin-linked cards that allow users to spend directly from their personal non-custodial crypto wallets like Metamask or Phantom.

The technology allows the merchant to get paid instantly via stablecoin settlement protocols, while the consumer enjoys the flexibility and convenience of using their digital-native wallet. This removes the costly 3% middleman transaction toll that has burdened global commerce for decades.

The Future of Global Trade

If you follow the logic of the GENIUS Act and the strategic stance of the U.S. government, the future of the financial system becomes much clearer. We are moving toward a global programmable USD and USD backed settlement layer for global trade and finance.

The next phase of this evolution will utilize smart contract integrated finance. Imagine a supply chain where a payment is automatically triggered the moment a shipping container hits a specific delivery port and the barcode or QR code is scanned. There is no invoicing, no bank wire to authorize, and no 3-day wait times. The stablecoin just flows through the digital contract the moment the conditions are met. Talk about working capital and investment efficiencies.

The strategic plan is to make USD the easiest, fastest, and most programmable currency in the world. This ensures that no other currency can compete for global reserve status for the foreseeable future.

Bottom Line for Servant Financial Clients

Our investment focus remains anchored in the underlying infrastructure of this transition, moving past the speculative token era and into an era defined by capturing the efficiency of the stablecoin settlement rails and network architecture. We anticipate that Circle’s market share will continue to outpace offshore competitors like Tether as transaction volume shifts towards regulated, institutional channels and the clarity and comfort of the GENIUS regulatory framework. Beyond mere volume, Circle’s status as a U.S.-based entity provides unique leverage and has effectively positioned the company as the preferred domestic partner for the U. S. government as it seeks to modernize domestic and international financial and monetary systems. We viewed CRCL as a higher risk, opportunistic strategy and only added it selectively to more risk tolerant models earlier this year – Core-Satellite Moderate and Core-Satellite Aggressive and similar bespoke client models. CRCL is up roughly 17% in price year-to-date through March 28, 2026 compared to an approximate (8%) decline for the S&P 500 index.

“Stablecoins represent a revolution in digital finance. The dollar now has an internet-native payment rail that is fast, frictionless, and free of middlemen.”

~ Secretary of the Treasury Scott Bessent.

Reminiscent of the 1984 Bonnie Tyler hit from Footloose, many US employers are crooning for working class heroes. “I need a worker, I’m holding out for a worker ‘til the end of 2023.” The U.S. labor force has been dwindling from food and beverage service to financial analysts since the COVID-19 pandemic began. While some have been quick to blame the shortage on several rounds of government relief money that idled some workers, a combination of factors is influencing this labor change. Millions of people were suddenly unemployed at the start of the pandemic and many industries assumed these people would return to work when normalcy resumed. However, almost 3 years after the start of the pandemic, these “missing” workers may never return to the labor force. This labor shortage could cause a secular shift in American businesses and labor markets.

COVID-19

Government and businesses’ responses to COVID-19 brought about a 50-year high in unemployment, peaking at 14.7% in April 2020. Service workers and business professionals found themselves suddenly without work and wages. The U.S. government came to the rescue, handing out $5 trillion in pandemic stimulus money with a large portion devoted directly to individuals in the form of stimulus checks and extended unemployment benefits. When evidence of a growing labor shortage emerged, many people pointed fingers at the U.S. government for providing so much monetary support and disincentivizing workers to return to the job market. However, the story isn’t that simple. Fears of contracting and spreading COVID and the existential risk of mortality created a widespread shift in lifestyle priorities and an increased desire for a better work-life balance. The result of these factors has been the rise of remote labor and gig workforces. A study done by the U.S. Chamber of Commerce found 91% of survey participants hoped they could continue to work remotely at least part of the time. Businesses have generally adapted to this desire and been accommodative. However, remote labor isn’t really a possibility for customer-facing service roles or manufacturing jobs for which labor activities are concentrated in a single location.

The U.S. Labor Department reported 10.5 million job openings in November 2022 with the labor participation rate at 62.3%, down from 63.3% in February 2020. Not only do service industries have their “Help Wanted” signs out but so do financial services and professional and business services. While workers are demanding more remote work, these professional industries are demanding people come back to work in their office buildings to collaborate with their colleagues. Workers have been less receptive to this return to the office mandate causing worker turnover rates to reach 57.3% in 2021, up from 45% just two years earlier. Businesses that have been able to accommodate their workforce’s desires for at least partial remote work are generally experiencing lower turnover and avoiding severe labor shortages.

No More Baby Boomers

Economists argue that this labor shortage was always on the demographic table. The labor participation rate has been on a downward trend since 2000 and some argue it is as simple as the laws of supply and demand. One of the largest generations in U.S. history, the Baby Boomer generation, is clocking out with no plans to punch back in. The median age of the Baby Boomer generation (born 1946-1964) turned 66 last year meaning many boomers are taking a refrain from Johnny Paycheck’s 1977 hit song, “Take This Job and Shove It” and checking into retirement. The next generation behind the boomers, Generation X, is about 5 million people short to fill the employment hole the boomers are leaving. The next generation able to take the Boomer’s place is the Millennials; however, it is still going to be several years before they enter the labor force. COVID-19 only intensified Boomers leaving the workforce as older generations were more susceptible to adverse outcomes from the virus. Boomers were also less likely to adapt to changes toward more remote work. This trend may have something to do with the adage of old dogs and new tricks.

Source: Statista

These trends in labor demographics are not likely to be resolved any time soon as the World Bank projects the number of people between the working ages of 15 and 65 is set to decline by 3% over the next decade. “Without sustained immigration or a focus on attracting workers on the sidelines of the labor force, these countries simply won’t have enough workers to fill long-term demand for years to come,” said the chief economist at Indeed. Historically, immigration and globalization have helped bridge the labor gap; however, during the pandemic we saw a reversal of both trends. Policy reform towards immigration will need to happen if the U.S. wants a sufficiently dynamic labor force in the years to come.

Is the End in Sight?

The question begs, how long will this domestic labor shortage last? While a body of evidence suggests this is a systematic change, other economists argue a potential shift into a recession could help lower demand for labor and bring the labor situation towards equilibrium. The shifting landscape of the U.S. economy toward a recession would likely reduce hiring levels as companies are forced to cut back on growth plans. While we may see an uptick in unemployment levels, it is doubtful it will reach the near 10% unemployment levels the Great Recession of 2008 brought. The looming recession and persistent inflation point to a normalization of the labor market in 2023; however, some companies are still going to need to make adjustments to their business models to compensate for the loss in workers.

Companies are beginning to readjust their hiring strategies and their job expectations to accommodate the current labor market conditions. Inflation has made it difficult for companies to keep pay scales in line with the cost-of-living increases. It is going to be increasingly important for companies to be proactive with their employment strategies and stay ahead of the trends in worker lifestyle demands if they want to retain good talent. Companies such as IBM (Ticker: IBM) predicted this shortage long ago and began outsourcing their talent to countries with growing populations such as India. They have been able to capitalize on lower market-based wages in these developing countries and cheaper input supplies.

Meanwhile, the technology sector is busily working on solutions to these labor shortages, like artificial intelligence and machine learning. The most recent market hero in this space is ChatGPT from the venture firm OpenAI. ChatGPT optimizes language models for dialogue. The ChatGPT model has been trained to interact with users in a conversational way. This format makes it possible for ChatGPT to answer follow-up questions, admit its mistakes, challenge incorrect premises, and reject inappropriate requests. Several in the Twittersphere claim that ChatGPT has passed portions of the Bar Exam, medical license exam, and MBA operations exam. Further, experts interviewed by UK’s Daily Mail believe ‘AI will take 20% of all jobs within five YEARS’ and explain how bots like ChatGPT will dominate the labor market. According to the article, Microsoft invested $10 billion in ChatGPT and said that the technology will change how people interact with computers.

From our standpoint, the best way for investors to express a purposeful view on the future emergence of artificial intelligence and machine learning is through the leading technology heros, like Microsoft and Apple, who have massive distribution capabilities through their existing software and hardware product suites and business relationships across sectors. We like iShares U.S. Technology ETF (IYW). This ETF provides exposure to the leading U.S. electronics, computer software and hardware, and IT companies. IYW’s boasts assets under management totalling $7.8 billion and a reasonable expense ratio of 0.39%. IYW has traded down 35% in 2022 and trades at an estimated 2023 price to earnings ratio of 23 times. The following summarizes IYW’s top holdings:

We recommend buying IYW on future weakness and sitting on the sidelines holding out for a hero ‘til the morning light. In other words, wait until the next recession and buy these tech heroes who are strong, fast, and fresh from the fight.

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Digital Finance Revolution