No One Left to Hide Behind 🔗

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Welcome to Advance Genie, the newsletter that helps operators in high-friction industries find smarter paths to capital.

A couple weeks ago, we covered three federal banking regulators proposing to ban "reputation risk" from bank supervision. The mechanism that pressured banks to drop legal businesses was being dismantled.

That left a gap. 

Even if your bank accepted you, the processor could still say no. Stripe could stop processing your payments. PayPal could freeze your funds. Visa or Mastercard could instruct their member banks to cut you off.

On March 26, the FTC closed that gap. 

The agency sent warning letters to the CEOs of PayPal, Stripe, Visa, and Mastercard, asserting that denying customers access to financial services based on political or religious views may violate Section 5 of the FTC Act.

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The Entire Chain

This is the first time the FTC has asserted anti-debanking enforcement authority over non-bank payment processors. 

The entire payment chain is now under scrutiny.

Chairman Andrew Ferguson's letters cite Trump's August 2025 executive order and reference specific incidents: Stripe's 2021 decision to stop processing payments for the Trump campaign website. PayPal's 2019 de-platforming of Infowars and Gab.

"It is inconsistent with American values to deny law-abiding individuals the ability to run their legitimate businesses and feed their families because they attracted the ire of rogue American officials, overzealous activists, or, more worryingly, foreign governments seeking to control public discourse."

The letters warn that deplatforming customers, denying access to financial products, or facilitating such conduct by other companies could lead to FTC investigation and enforcement.

That last phrase is the one that matters. 

The FTC isn't just telling processors not to debank. 

It's telling Visa and Mastercard to police their partner banks for debanking conduct. The card networks are being deputized as anti-debanking enforcers.

The same week, Alabama Governor Kay Ivey signed Executive Order No. 743 directing state-chartered banks not to deny services based on customers' beliefs, political views, or engagement in lawful activity.

Alabama is the first state to issue a governor's executive order specifically addressing debanking.

The anti-debanking front now runs from federal banking regulators (OCC, FDIC, Fed) to payment processors (FTC) to state-chartered banks (Alabama). Banks can no longer say "the regulator pressured us." 

Processors can no longer say "the bank decided." Networks can no longer say "it's our member institution's call."

From the top of the chain to the bottom. No one left to hide behind.

94% of Institutional Investors Are in Private Credit.

A 2025 Nuveen survey found 94% of institutional investors now allocate to private credit. Pension funds, sovereign wealth funds, endowments — it's about as close to unanimous as institutional finance gets. What they know: T. Rowe Price research shows a 10% private credit allocation has historically cut portfolio volatility and improved risk-adjusted returns. $592.8 billion deployed globally in 2024, up 78% from the year before. Accredited investors on Percent get direct access to private credit, starting at $500: · 16.72% current weighted average coupon rate · Terms as short as 3 months · Full borrower financials before you invest $1.82B funded. 0.58% lifetime charge-off rate. 97.33% of all principal returned or currently performing. New investors can receive up to $500 on their first investment.

Follow the institutional money.

^{Alternative investments are speculative. Past performance not indicative of future results. Terms apply.}

The Alternative Defined

While the debanking excuse gets dismantled, the alternative infrastructure just got its business model defined.

Draft language from the CLARITY Act leaked on March 24. The bill contains an explicit ban on passive yield on stablecoin balances and any structures "economically equivalent to interest." Activity-based rewards, like payments, transfers, and loyalty incentives, remain permitted.

The distinction: you can reward customers for doing things on your platform. You cannot pay them for parking money there.

Circle plunged 20% on March 24, its worst session since its June 2025 IPO. Coinbase dropped roughly 10%. Billions in market capitalization evaporated in hours.

This is the yield fight we've been tracking since the beginning of the year. 

Banks feared deposit flight if consumers could earn 4-5% on stablecoin balances versus 0.01% on savings accounts. The CLARITY Act resolves that fight decisively in the banks' favor. Stablecoins are payment instruments, not savings products.

Analysts called the selloff overdone. 

Bernstein maintained a $190 price target on Circle. Bitwise CIO Matt Hougan pointed out that most stablecoins already don't pay interest, yet adoption surged because of settlement and payments utility. USDC has $78 billion in circulation. Circle reported $2.7 billion in 2025 revenue (+64% YoY). Roughly 98% of AI-agent payments settle in USDC.

As PYMNTS wrote, regulation that narrows stablecoins to payment rails is "less about restriction and more about redistribution." It determines who captures value and under what conditions.

One complication though - David Sacks, the White House crypto czar who drove the GENIUS Act and brokered the yield compromise, confirmed his 130-day term expired on March 26. 

The administration will not appoint a replacement. The Senate Banking Committee markup is targeted for late April. The industry's most active executive-branch advocate just left during the final stretch.

For operators evaluating stablecoin payment infrastructure: the business model is now defined. Stablecoins are now payment tools. Build accordingly.

The Capital Squeeze

While the new infrastructure gets its rules defined, the old alternative capital pipeline keeps cracking.

More than $4.6 billion in investor capital is trapped behind withdrawal limits across private credit funds. 

Total redemption requests hit roughly $13 billion in Q1 2026. Funds cap withdrawals at 5% of net assets per quarter. Investors have accessed only about two-thirds of the cash they've sought.

Apollo and Ares this week became the latest firms to limit redemptions, joining BlackRock and Morgan Stanley. Ares Strategic Income Fund saw requests totaling 11.6% of net assets. BlackRock's $26 billion HPS fund received 9.3% requests, capped at 5%. Cliffwater's $33 billion flagship hit its quarterly cap at 7%.

These funds grew from $200 billion in assets in early 2022 to $500 billion by Q3 2025. 

The growth came from retail investors attracted by 9-10% yields. 

Now those investors want out, and the funds hold illiquid loans that can't be sold quickly without taking losses.

John Cocke, deputy CIO of credit at Corbin Capital Partners, warned of a feedback loop: limiting withdrawals makes it harder to attract new investors, which makes it harder to manage outflows. 

Private credit is a $1.8 trillion market. The secondary market that could absorb the selling totals roughly $200 billion.

Private credit funds are major providers of capital to fintech lenders, MCA companies, and alternative lending platforms - when the upstream supply tightens, the credit available to small businesses contracts with it.

What This All Means

Three forces are moving simultaneously.

The debanking excuse is being dismantled from top to bottom. Federal banking regulators proposed banning reputation risk. The FTC extended enforcement to processors and card networks. Alabama set a state-level template. The entire payment chain is now under scrutiny for politically or categorically motivated service denials.

The alternative infrastructure is getting its rules defined. Stablecoins are payment tools, not savings products. The SEC published a five-category token taxonomy. Mastercard paid $1.8 billion for stablecoin infrastructure. The regulatory ambiguity that gave financial institutions cover to refuse service is being replaced with specific frameworks.

And the old capital pipeline is under the most stress in a decade. $4.6 billion trapped. $13 billion in Q1 redemption requests. The first major MSO entering formal insolvency. Cannabis equity frozen. The capital that frontier operators relied on when banks wouldn't lend is contracting at the exact moment banking access is theoretically opening up.

The gap between those forces is where operators live right now. 

The new infrastructure is being built while the old pipeline is cracking.