Stablecoins and the Future of Corporate Identity
Corporate digital identity protocols bring risks and costs, but should become part of stablecoin infrastructure.
As stablecoins enter mainstream payments and finance, the conversation is going to shift from ‘what do these things do’ and ‘how do we make money from this’ to serious questions about design, scalability, and security.
Today the stablecoin world has a market capitalization close to $300 billion, dominated by the Tether/Circle duopoly but with banks, corporations, and fintechs launching credible projects. Underneath these are identity layers that are patchy, proprietary, and fragile.
There is a possible fix: embedding vLEI, the verifiable Legal Entity Identifier, which is a globally recognized, cryptographically verifiable corporate identity that can travel with payments and documents across chains and jurisdictions. Embedding vLEI into stablecoin infrastructure would not solve every problem in cross‑border finance, but it would hardwire a common notion of ‘who is who’ into programmable money itself, which is precisely what the next phase of digital finance needs.
But wait! Blockchain transactions are supposed to be anonymous! We can’t be tagging hashes with people’s names!
True, but read on. If blockchain rails are to become major conduits for cross-border payments, there isn’t going to be a role for the sort of anonymity favored by, say, your friendly local North Korean cyber criminal. We are going to move to an institutional world where privacy still counts but credentials are required. Cryptographic techniques like zero-knowledge proofs may well be the means of matching credentials, but there still needs to be an identity underneath.
From post‑crisis LEI to programmable vLEI
The LEI was born out of the last crisis, in 2008. After the chaos of the Lehman Brothers collapse, which nearly brought down all of Wall Street, regulators realized that even large banks could not clearly map their own counterparties across borders and legal entities. The G20 and Financial Stability Board pushed for a non‑proprietary global identifier for legal entities, resulting in the LEI, governed by GLEIF, the Global Legal Entity Identifier Foundation, and standardized as ISO 17442.
LEIs are now embedded in a wide array of reporting frameworks – from Dodd‑Frank and European Market Infrastructure Regulation to derivatives trade repositories – and are widely used to identify banks, funds, and corporations in traditional finance.
What do industry professionals have to say? Check out our video interviews with Joshua Kroeker, CEO of trade-finance fintech Mitigram, on “Digital IDs in Trade Finance”; and digital-economy lawyer Urszula McCormack of King & Wood Mallesons, on “Cross-Border Identity: Making it Work”.
vLEI extends this idea into the digital world. It binds a legal entity’s LEI to a verifiable credential compliant with World Wide Web Consortium and ISO standards, anchored in widely recognized cryptographic protocols, and can carry role‑based attestations: not just ‘this company exists’, but ‘this individual is the CFO and can sign for the company’.
In other words, LEI tells you who the company is; vLEI tells you who may act on its behalf in a machine‑verifiable way.
(JDB can hear the crypto maxis: “Gaah, an international conspiracy of bureaucrats!” Just...read the whole article, okay?)
Critically, vLEI is:
Global and regulator‑backed (rooted in the post‑GFC G20 and Financial Stability Board framework, via GLEIF).
Open and non‑proprietary, unlike many private identity schemes.
Focused on organizations and their authorized agents, not individuals’ personal identities.
It is not a credit score, a full KYC file, or a substitute for anti-money-laundering risk assessment. It is a high‑assurance corporate ‘business card’ designed for automation.
Why stablecoins need verifiable corporate identity
Stablecoins and tokenized deposits are often described as ‘money as software.’ The real unlock is programmability: each unit of value can carry logic about where it can move, under what conditions, and how it should be reported. If that logic cannot anchor to a trustworthy notion of counterparties, it risks either over‑collecting personal data or relying on opaque, siloed KYC systems.
There are other reasons for stablecoin issuers to consider making vLEI a native component of their infrastructure.
Financial inclusion: MSMEs are the backbone of trade, but their data is scattered across invoices, ERP systems, marketplaces, and government portals. Platforms often assign numbers to merchants ad hoc because they cannot reliably tell which company is which across borders. LEI/vLEI gives a portable anchor for those merchants, turning locally meaningful IDs into something legible globally.
Enhancing trust: invoices and bills of lading carry key information (buyer, seller, amounts, goods) but are notoriously ambiguous and prone to fraud and tax evasion. Linking those documents to a vLEI‑identified issuer makes them machine‑checkable and reduces the need for bilateral, bespoke data matching.
Programmable compliance: if each unit of currency is a native unit of software, regulation can be embedded into tokens via smart contracts and credentials. vLEI gives regulators and rails operators a standard corporate credential to reference in on-chain rules – for example, only allowing certain corporate wallets to hold specific classes of stablecoins, or triggering reporting when a vLEI‑tagged entity transacts above thresholds.
Fighting fraud: cases of multi‑million‑dollar fraud via AI‑generated video calls show that human-in-the-loop checks are not enough. vLEI‑backed signing and authorization – where both the organization and the role of the signer are verified cryptographically – would be far harder to spoof than a video conference.
If stablecoins become the default cross‑border medium, leaving corporate identity off‑chain replicates today’s frictions and vulnerabilities. Embedding vLEI into the stack would allow wallets, contracts, and protocols to reason about organizations directly.
Where in the stablecoin stack?
If we recognize the benefits of putting vLEI in the stablecoin stack, then the question is where: at the coin level, the wallet level, or the blockchain layer? The answer may depend on the activity.
Corporate wallets could be bound to one or more vLEI credentials, indicating the legal entity and roles of controllers. This enables verifiable “KYB‑ed” (Know Your Business) wallets without doxxing the underlying human to every counterparty. And policy rules such as ‘this wallet is a vLEI‑verified corporate treasurer account’ can be encoded in access control.
Stablecoin smart contracts and key infrastructure contracts (bridges, custodians, oracles) can themselves be vLEI‑identified, allowing anyone to verify that a specific contract is in fact issued by Circle, a bank, or a regulated entity, rather than a spoof.
Tokens might carry references or commitments to vLEI‑verified issuers and proof‑of‑reserves attestations, enabling on‑chain verification of ‘what’ (the instrument and backing) and ‘who’ (the responsible legal entity).
In all cases, vLEI acts as a cryptographic pointer to off‑chain legal reality without forcing all legal data on‑chain. Combined with privacy‑preserving techniques like your ZKs, it can enable attested corporate status and authorization while keeping sensitive data shielded from general view.
Corporate identity as market structure
Identity is as much about market structure as about credentials. In the physical world, a business card is a social tool; in the digital world, it’s about determining whether we trust the pipe. Today, large firms can tap APIs into government registers, but small firms cannot. Platforms such as Ant Group have addressed this by providing smaller companies – all the ‘ants’ – with eKYC and eKYB services, particularly in emerging markets that lack robust corporate registries.
That has worked for the non-blockchain world of e-commerce and payments. We will need some other tool for on-chain payments. Instead of another intermediary, we could embed vLEI into stablecoin software.
This would give SMEs gain a portable corporate identity they can carry from bank to fintech to marketplace, rather than re‑onboarding from scratch each time. They can choose to share behavioral data (cashflow, inventory, invoice performance) that is anchored to their vLEI, enabling credit without forcing them into a single platform’s walled garden. Agentic AI systems that will increasingly negotiate, invoice, and pay on behalf of firms can rely on vLEI credentials to decide which agents and counterparties to trust.
The question then is which corporate credentials? It’s an important question because we are talking about hard-wiring these into the new infrastructure for cross-border digital trade. This article has been arguing vLEI, backed by GLEIF (ie, the G20), is a plausible candidate. But it has shortcomings that deserve careful discussion.
Limits to vLEI
To avoid over‑reach, it is important to be clear on what vLEI is not:
Not a universal digital identity for people: national systems like Aadhaar, SingPass, or Hong Kong’s iAM Smart identify individuals and anchor them into domestic digital public infrastructure. vLEI concerns organizations and their authorized representatives.
Not a full risk profile: vLEI does not encode transaction histories, balance sheets, or credit ratings. Many SME financing problems stem from lack of trusted behavioral data, not just lack of an identifier.
Not a real‑time source of truth: LEI data is updated periodically; it is not a streaming feed of corporate events. It’s an annual batch of information.
For on‑chain use, this means vLEI has limits. It should be treated as a high‑assurance identity anchor, not a standalone AML/KYC solution. It’s one credential among many, to be combined with attestations about credit, ESG, sanctions screening, and other attributes. It can identify who can sign and deploy a contract, but it’s not a comprehensive determinant of counterparty risk.
Regulatory and infrastructure gaps
Putting vLEI at the heart of stablecoin infrastructure also surfaces a set of gaps that policymakers and technologists will have to confront.
The first is the simple math of a protocol that isn’t used very much. Only a fraction of the world’s companies have LEIs – 3 to 4 million, reckon GLEIF officials, versus around 50 million active businesses (and perhaps over a hundred million if cross‑border trade were more accessible). Adoption is concentrated in regulated financial sectors; MSMEs in emerging markets are largely outside the system.
Adoption is difficult. Beyond the obvious need for governments to market the idea, there are costs to using vLEI, and not just for the stablecoin issuers. For example, business registries may need to auto‑issue LEIs (and associated vLEIs) as part of incorporation or licensing, rather than expecting firms to apply and pay separately. Governments may need to enable subsidies or bulk discounts for fees and renewals of vLEI by small businesses or in poorer countries.
Another challenge to adoption is legal recognition. Digital identity writ large is a legal gray area. Despite the G20 imprimatur, many jurisdictions haven’t confirmed they’d recognize a vLEI-based signature the same as a traditional company chop or a board resolution. Without such explicit recognition at the judicial or policy level, vLEIs on-chain will remain a proof of concept. A good start would be with multinational bodies, such as the Financial Action Task Force, which could embed vLEI and similar credentials into its AML guidance.
Regulators are also going to hesitate before approving rules around enhancing privacy if it’s just based on buzzwords and hype. They will need assurances about audit designs and a means for them to have supervisory access, under strict legal terms. But this isn’t a dealbreaker: Tether already cooperates with law enforcement.
The biggest force of resistance probably isn’t lethargy or governments: it’s legacy players who have invested decades into core banking and enterprise-resource planning systems. The reason this is such a challenge isn’t because of the need to merely switch vendors (already a painful ask). But legacy banking and payments systems are designed to keep information in. Now they are being asked to allow information to leave.
This isn’t unique to stablecoins – the entire concept of open finance is built on getting banks to share customer data (with consent) to third parties. But it’s fair to note that even if crypto rails are prepared to consume vLEI, connecting them to legacy systems will be costly and face resistance from incumbent COOs, CTOs, and vendors. This isn’t a reason to ditch the idea of embedding digital identity into the payment rails of the future – it’s just a warning that such things take time, and ultimately legacy institutions only move when their customers demand it.
Systemic risks
OK, all you privacy-loving, bureaucrat-conspiracy paranoiacs, you’ve been patient with this article and now is your time to shine! Because a standardized digital identity tying individual officers to a company is indeed a potential risk.
A dependency on LEI/vLEI for everything could become a new single point of failure: a global identity system that begins decentralized but then centralizes as reliance grows. This is partly a governance question (how GLEIF and local issuers are overseen) and partly an architectural one (how vLEI coexists with other digital-identity schemes).
Given the way the bitcoin ‘revolution’ has morphed into a bank-friendly shift of infrastructure, this is a reasonable concern. The point to moving more of the financial system on-chain is not to help big banks and tech oligarchs find new ways to lord it over us. The point is to create new, dynamic forms of competition rooted in data sovereignty and flexibility. Handing over the keys to a handful of faceless gnomes of standards is perhaps a bad idea.
But there are ways to build around this. First, embedding vLEI is a way to design stablecoins for interoperability. This makes identity a common anchor among multiple identity systems (national mDocs used for passports, for example), not as the only credential.
Second, avoiding hard requirements for vLEI where that would lock out SMEs in jurisdictions that have not yet integrated LEI into their business registries.
Third, combining vLEI with ZK proofs and selective disclosure, so that a wallet can prove it is controlled by a vLEi-verified bank customer (for example), without revealing which customer – or that a protocol can confirm that a counterparty is a vLEI-verified exporter in a given jurisdiction, without them having to expose all their corporate data.
The risk of standing still
There are therefore a lot of reasons why embedding a digital identity into stablecoins, despite its many benefits, will be difficult, uneven, and contested. But if the industry has doubts about vLEI, it should not have doubts about the metadata layer of identity.
The trends point to the benefits of building this now for cross-border business, while blockchain finance is still in flux.
FATF is pushing jurisdictions toward simplified digital onboarding for individuals and SMEs. Central banks are experimenting with cross‑border payment projects like BIS Nexus and wholesale CBDCs, where stablecoins and tokenized deposits are natural complements. National digital public infrastructures – from Singapore’s SingPass to Thailand’s digital ID to Hong Kong’s iAM Smart and forthcoming CorpID – are maturing, but remain largely domestic.
Embedding vLEI into stablecoin and broader on‑chain payment infrastructure now would set a coherent, open standard for corporate identity before proprietary solutions fill the void.
vLEI will not by itself make cross‑border payments cheap, instant, or fair. But without a shared, verifiable language for ‘who is this company and who can act for it?’ the promise of programmable, on‑chain value will be constrained by the weakest links in today’s fragmented identity infrastructure. Blockchain is becoming the new infrastructure of financial services. Credentials, not anonymity, can unlock trust at a new, breathtaking scale.
Thank you. I don't know about AI and ZK Proofs, but it's something I'll keep asking people who are good at this stuff.
This article comes at the perfect time; your vLEI insight is briliant, making me wonder how AI will intersect with ZKPs for secure personal identities.