Major U.S. banks like JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are reportedly cooking up a joint stablecoin project to challenge crypto’s growing grip on digital payments.
These banking giants are chatting through their shared payment ventures, such as Early Warning Services and the Clearing House, according to the Wall Street Journal. The buzz centers around new stablecoin laws that could set the stage for banks and non-banks alike to issue these dollar-pegged digital coins.
Stablecoins, think digital dollars often backed by Treasuries, have stirred debate. Some say they rattle economic stability, but Pedro Lapenta, head of research at Hashdex Asset Management, said, “Individuals and businesses see a tremendous benefit.”
Perfect timing, too, as the Senate is pushing the GENIUS Act, a bipartisan bill aiming to regulate stablecoins with federal reserve standards, transparency, and issuer oversight. If it passes, stablecoins could supercharge digital asset adoption and even boost Bitcoin’s investment appeal, Lapenta adds.
But let’s be honest, it’s not really about helping investors. Banks see this as a golden ticket to muscle in on Circle and Tether, the current champs of the $245 billion stablecoin market.
Crypto Veterans Say Banks Need a Little Help to Play the Game
Circle launched USDC in 2018, trying to outshine Tether’s USDT, which has ruled since 2014 despite transparency drama. Tether still holds over 60% of the market and has been rolling out quarterly reserve attestations since 2022 to ease worries.
Circle prides itself on being the “more compliant” option, but hasn’t had a smooth ride either. USDC briefly lost its dollar peg in 2023 after Silicon Valley Bank’s collapse, plus it stumbled on going public and saw market share slip.
Now, with big financial players sniffing around, the crypto incumbents could face some serious competition.
Hong Yea, CEO of GRVT, a licensed on-chain exchange, says crypto-native issuers still bring essential know-how. “
Their years of experience would be invaluable for building institutional-grade stablecoin infrastructure,” he says.
He compares this to old-school industries hiring digital consultants during their tech makeovers. But for banks to play nice in crypto’s sandbox, Yea stresses the need for better regulatory teamwork.
“Without hand-in-hand efforts, the pie won’t grow as a whole,” he warns.
For now, banks are just testing the waters, and plans could shift. Tether and Circle haven’t responded to comment requests yet.
Kristian Koch
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