Dear Readers,
As we close the second quarter of 2025, the fintech ecosystem is showing clear signs of resurgence, marked by accelerating strategic moves by mature startups, a renewed appetite for public markets, and a fast-evolving regulatory environment across the U.S., EU, and MENA. The industry is no longer waiting for the next macro tailwind, it’s building the foundations for the next decade of growth. This letter offers our view on five dominant narratives shaping the current landscape: the reinvention of fintechs as banks, the M&A wave reshaping growth strategies, a sweeping global regulatory push, the reopening of the IPO window, and the rapid institutionalization of stablecoins and tokenized assets.
BANKING IS COOL AGAIN
After years of challenging the incumbents, fintechs are now becoming them, or at least deeply embedding themselves into the regulated banking infrastructure. Banking licenses, master accounts, and trust charters (in the U.S.) are back in vogue. The trend isn’t just symbolic; it marks a clear strategic shift where fintech startups are embracing regulatory clarity and balance-sheet capabilities to expand their business models and reinforce long-term defensibility.
Klarna’s transformation from a BNPL platform into a fully fledged digital bank is emblematic of this shift. In Q2, Klarna launched a U.S. debit card in partnership with Visa and even entered mobile services via AT&T’s network, echoing Revolut’s multi-product, super-app ambitions. Revolut itself finally secured a UK banking license this quarter, opening the door to insured deposits and credit products.
The U.S. saw a parallel surge in banking ambition. Circle applied to open a national trust bank, First National Digital Currency Bank, N.A., to solidify its stablecoin infrastructure under direct federal oversight. Ripple took it further, filing for a full national bank charter to directly access the Federal Reserve system. Erebor, a new entrant backed by tech heavyweights like Peter Thiel and Palmer Luckey, is launching a digital bank focused on early-stage tech and defense sectors, aiming to fill the void left by Silicon Valley Bank. We note that this trend is occurring in the U.S., showing a more open stance to banking innovation from U.S. regulators. It remains to be seen if EU regulators will follow suit or remain conservative and be left behind.
These moves are not mere regulatory posturing. They reflect a structural evolution: mature fintechs are integrating into the banking system to expand product offerings and position themselves at the core of next-generation financial infrastructure.
M&A ACTIVITY: FROM OPTIONAL TO STRATEGIC
The second quarter also brought a surge in M&A activity, offering a different path to growth. Global deal value reached $1.89 trillion, up 30% YoY, with fintech contributing strongly.
Acquisitions are no longer defensive plays. Instead, mature fintechs are leveraging M&A to rapidly acquire talent, licenses, customer bases, and new capabilities , from AI-driven compliance to cross-border payments infrastructure.
Stripe’s acquisition of Bridge in Q1 set the tone, and in Q2, Revolut revealed it is actively scouting M&A opportunities with a newly formed corporate development team. Meanwhile, incumbents like Mastercard and PayPal are acquiring to stay ahead of embedded finance trends and fend off disintermediation.
Ripple is also on an acquisition path to build its global fintech infrastructure as either a bank, a payment network, or both.
The landscape is clear: M&A is now a necessary lever, for scale, for defensibility, and for relevance.
REGULATORY FRENZY: BUILDING GUARDRAILS FOR GROWTH
Regulators have stepped into high gear. Q2 2025 brought a wave of concrete legislative actions across key fintech jurisdictions.
In the U.S., the GENIUS Act , the first full federal stablecoin bill , passed the Senate in June. It sets reserve requirements, licensing obligations, and supervisory expectations for USD-pegged stablecoins. A House vote is expected in July, where it’s paired with the Digital Asset CLARITY Act.
In Europe, MiCA’s impact is no longer theoretical. Though passed in 2023, its Titles III and IV , governing asset-referenced and e-money tokens, came into force in mid-2024. This quarter, we’ve seen a surge in startups and incumbents securing MiCA-compliant licenses, with many more queuing through year-end. The pan-EU passport is becoming a key accelerant for crypto and payments firms scaling across the continent.
In MENA, the UAE enacted its Payment Token Services Regulation in June, creating one of the most forward-leaning stablecoin regimes globally. Dubai’s VARA launched version 2.0 of its crypto rulebook in May, while Saudi Arabia implemented real-time disclosure reforms for e-wallets and cards.
Rather than stifling innovation, this regulatory alignment is helping unlock it. Each jurisdiction is laying the foundation to ensure they’re ready for the next fintech growth wave, specifically around tokenization, digital assets and stablecoins.
THE IPO WINDOW: OPEN FOR BUSINESS
After a multi-year drought, fintech companies are once again tapping public markets. Q2 saw three meaningful IPOs, signaling a return of investor confidence in the sector:
- Chime listed on Nasdaq in June, raising $864 million at a valuation of $11.6 billion. With a strong consumer banking brand, its debut was seen as a bellwether for neobank IPOs.
- Circle, issuer of USDC, completed its long-awaited IPO in May, raising $1.2 billion. With regulatory clarity emerging, Circle is now armed with fresh capital to expand USDC use cases and build tokenized financial services.
- eToro also went public in May, delivering a successful Nasdaq listing and validating its global hybrid brokerage model.
These offerings were not only well-received, they were oversubscribed, and more fintechs are queuing for 2025 debuts, including Klarna, Ramp, and others. The re-opening of the IPO window is a milestone for the industry and for liquidity-minded investors alike.
STABLECOINS AND TOKENIZATION: FROM PROMISE TO TRACTION
What began as a fringe concept is now a cornerstone of the fintech economy: stablecoins and tokenized deposits are gaining real-world adoption at scale, driven by regulatory clarity, institutional backing, and growing utility in payments and treasury management.
In Q2 alone, the total stablecoin market cap crossed $250 billion, with Circle’s USDC accounting for over $35 billion of that. USDC’s usage surged across cross-border settlements, on-chain payroll, and embedded finance use cases, many of them powered by API platforms like Stripe and Coinbase Cloud.
Circle’s IPO was a pivotal moment in this evolution. Its public listing validated stablecoins as a core fintech infrastructure layer, not just a crypto-native tool. Circle also applied for a national trust bank charter in parallel, signaling its intent to sit at the regulated core of tokenized finance.
Ripple joined the fray by launching RLUSD, a new stablecoin designed for enterprise use cases, and applied for a U.S. national bank license to access Fed payment rails directly. In parallel, startups like Superstate and Ondo Finance continued rolling out tokenized T-bills, while JPMorgan’s Onyx and Franklin Templeton scaled institutional tokenization pilots across the EU and Middle East.
All of this is being propelled by a wave of supportive regulation, which we already noted above. The GENIUS Act defines the parameters for U.S.-based stablecoin issuance. MiCA provides a harmonized EU framework. And in the UAE, stablecoins are now formally regulated under the Central Bank’s newly active licensing regime.
The message is clear: stablecoins and tokenized assets are no longer speculative abstractions. They are regulated, institutional-grade instruments, and their adoption is accelerating across every major geography.
CONCLUSION
The fintech narrative in Q2 2025 is no longer a tale of speculation or survival. It’s one of reinvention, convergence, and acceleration. Fintechs are becoming banks. M&A is a core growth engine. Regulators are rolling out the rails. The IPO markets are open. And stablecoins, once niche, are becoming foundational.
These developments are affirmations of our long-term views and investments to date in fintech infrastructure around capital markets and asset management. Regulatory certainty will accelerate the trends we back. The IPO windfall will ease liquidity pressure and facilitate fund investments and new startups, as well as M&A activity.
The second part of 2025 will prove to be exciting indeed.
Onward!
