The same seat, a different promise
Two funders can occupy an identical position in a structure and behave nothing alike, because what sits behind them is not the same.
Most comparisons of funding sources compare the wrong thing. They set bank senior lending against fund capital and attribute the difference in behaviour to the character of the funder, when the two also sit in different places in the capital stack. The risk is different; the attitude needs to shift. Position and liability move together, so it is impossible to say which is doing the work except anecdotally and during the lengthy intercreditor negotiations
Hold the position constant and the picture sharpens. Traditional institutional LP capital and now stablecoin-sponsored capital occupy the identical seat: fund-level risk capital, unsecured, first loss behind whatever leverage sits above it and looking at the same retention buffer. Same seniority, same security, same loss position. What differs is only what the funder itself owes to its own investors, and how quickly those investors can call it.
Read the terms, not the headline
The launch of a USD 400 million sponsor-funded lending vehicle this month, targeting USD 3 billion from third parties and deploying into short-duration receivables across more than sixty countries, was covered almost everywhere as a crypto story. As ever, the details and the DD are in the token terms.
The common assumption, including in the first version of our own analysis (open to correction by those more well versed), is that a stablecoin liability is redeemable at par on demand.
Par holds. On demand does not.
Under the terms as updated on 26 February 2026, redemption requires a minimum of USD 100,000, carries a fee of the greater of USD 1,000 or 0.1%, is available only to verified direct customers, and may be suspended at the issuer’s discretion under paragraphs 6 and 9. Balances are not segregated and are reflected only in the issuer’s own books under paragraph 11.17. Prohibited Person provisions exclude US, Canadian and Singaporean persons entirely.
This suggests the promise is simultaneously one of the most generous in the market and potentially the most revocable. That combination is unusual, and it is the reason this funder cannot be analysed as though it were an LP with a lock-up. If the assets are truly tokenised then perhaps on a redemption drawdown the assets sit in a side pocket and self-liquidate, but with instantaneous clearing of crypto a 180 day repayment is a life time.
What makes each funder leave
For term-committed institutional capital, the triggers are legible and slow.
End of fund life. Allocation rebalancing. In semi-liquid wrappers, a spike in redemption requests, buffered by caps. The category conventions are published rather than inferred: the UK LTAF requires a minimum 90-day notice period and dealing no more frequently than monthly under COLL 15. ELTIF 2.0 calibrates redemption size to notice and frequency under the 2024 regulatory technical standards. US interval funds and non-traded business development companies operate quarterly repurchase of between 5 and 25% of net asset value under Rule 23c-3, with filings typically stating that 5% is what will be offered. Our terms for professional investors, upon request, are competitive and in-line with our liquidation and amortisation forecasts.
Those caps are not theoretical. Non-traded BDC redemption requests averaged 4.8% of net asset value in the fourth quarter of 2025 against 1.6% in the third, and five funds met tenders above the 5% cap. Net Interest made the case in March that the conventional 5% quarterly limit is where private credit pushes out its funding duration, and that the limit is now being truly tested as investor confidence and volatility create a change in flow, and never mind the forward curve.
For stablecoin-sponsored capital, the trigger list is different in category completely. A run on the token, a crisis of confidence in the ledger, collateral, mechanics, compute or fidelity. A full sponsor or LP liquidity event. A discretionary suspension. Regulatory action in one of the jurisdictions the sponsor operates across. Many reasons, all of them unique to the nature of the sponsor.
Not one of those has anything to do with the performance of the underlying receivables or assets, and that is the entire point. A facility funded this way can be withdrawn while every obligor in the pool is paying on time. An analogy could be drawn to LP redemptions on BDCs, but there is an open challenge on underlying facility performance and asset value, so this is not fully analogous.
The size question, with the numbers rather than the adjective
Capacity is where the argument usually stops at a raised eyebrow, so it is worth doing the arithmetic in public.
Realistically allocable capacity for the vehicle in question is between USD 0.4 billion, which is the committed sponsor co-investment, and USD 3 billion, which is a fundraising objective rather than capital in hand. Against that, a 5% allocation from US life insurance assets of USD 9.3 trillion is roughly USD 465 billion. A 1% allocation from global pension assets of USD 68.3 trillion is roughly USD 683 billion. The gap runs from about 155 times to about 1,160 times. But this is scratching the surface on what will undoubtedly become a larger source of liabilities for funds going forward.
For a sense of the distance still to travel, the Kansas City Fed calculated in August 2025 that simply to match the roughly USD 450 billion of Treasuries held by US private pension funds, the stablecoin market would need to reach at least USD 900 billion, an increase of nearly 260%. Treasuries are the liquid, easy allocation. Illiquid asset-backed facilities are the hard one.
The case on the other side
Have to argue against myself as well as the comments are disabled on the website for obvious reasons.
- Growth and a rising tide is a great reason to look to these investors. The stablecoin pool roughly doubled in two years, from around USD 161.5 billion in mid-2024 to around USD 315 billion in mid-2026. Pension assets grew about 10% in 2025. A persistent gap of that size compounds and cannot be ignored.
- Freedom from constraint is the normal reason. Regulators have not changed their approach yet, so a stablecoin sponsor faces no risk-based capital charge, no Solvency II spread requirement, no matching adjustment eligibility test and no fiduciary allocation limit. In principle a far higher share of its capital can chase credit yield than any insurer or pension fund could allocate.
- Sponsor capacity is growing, as reported operating profit of roughly USD 1.5 billion in a single quarter means co-investment can be topped up from retained earnings without raising a dollar externally.
Each has a rebuttal, of course. The growth compounds off a base two to three orders of magnitude smaller. The freedom from constraint is exactly what makes the liability runnable, and a runnable liability is the wrong thing to put in the first-loss seat. And the same sponsor’s excess reserve fell from USD 8.23 billion to USD 4.11 billion in a single quarter, so the capacity is real but thin and volatile. Oh and, transparency.
What is yet to be disclosed
No waterfall has been published, whether sponsor capital ranks contractually ahead of third-party capital is unknown. No domicile, administrator, depositary or auditor has been named. No minimum ticket, fee terms, redemption conditions or timetable have been stated. For an evergreen vehicle, the redemption terms are not a detail. They are the product.
The question worth asking of any funder is therefore not what it costs. It is what its own investors were promised, and how fast they can enforce it. Two funders in the same seat, with the same security and the same loss position, will behave nothing alike if one of them has to answer an immediate demand the other does not.
D3T Capital LTD is an Appointed Representative of Capricorn Fund Managers Limited, which is authorised and regulated by the Financial Conduct Authority. D3T Capital LTD is incorporated in England and the registered office is at Unit 17 Orbital 25 Business Park, Dwight Road, Watford, WD18 9DA, United Kingdom.
The investment products and services of D3T Capital LTD are only available to professional clients and eligible counterparties. They are not available to retail clients.
This article is general market commentary. It does not constitute an offer, invitation or inducement to invest in any product or service, it is not investment research, and it is not directed at retail clients. References to third-party vehicles are drawn from publicly available announcements and published terms at the date of publication. No view is expressed on any named party as a counterparty and no finding of any kind is alleged against any person or entity.
