Bank of America Plans Dollar-Pegged Stablecoin Amid Senate Regulatory Push

Bank of America, the second-largest lender in the United States, has announced its plans to issue a dollar-pegged stablecoin. The bank's CEO, Brian Moynihan, confirmed that the lender is working on an internal build for the stablecoin, which will be developed in collaboration with other industry participants. However, Moynihan emphasized that any progress in launching the stablecoin would be contingent on forthcoming federal rules. He also noted that the bank is prepared for potential demand, even though it remains uncertain at this point.

Moynihan referred to a bill that would create uniform requirements for reserve quality, redemptions, and disclosures, stating that it would help determine whether there is a viable business proposition for the stablecoin. This bill is currently being discussed by US lawmakers and is expected to provide a clear regulatory framework for the issuance of stablecoins.

Meanwhile, the Senate has advanced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which aims to establish a regulatory framework for stablecoins. The Senate voted 68-30 to invoke cloture on the bill, ending debate and starting a 30-hour countdown to a final vote that requires only a simple majority. Majority Leader John Thune launched the post-cloture clock immediately, while senators prepared to debate a substitute drafted by Senator Bill Hagerty. This substitute removes a proposed ban on in-kind redemptions and clarifies oversight of non-bank issuers, changes sought by Democrats after an earlier cloture attempt failed.

The GENIUS Act would require every payment stablecoin to maintain one-to-one backing with high-quality liquid assets, primarily short-dated US Treasuries or insured deposits, and to segregate reserves from operating funds. If the Senate adopts Senator Bill Hagerty’s amendment and passes the bill, the House could vote on the exact text without convening a conference committee, potentially accelerating enactment.

Bank of America's move to explore a dollar-pegged stablecoin signals its intention to keep pace with its peers in the financial industry. The bank is prepared to commit to the project once a clear regulatory perimeter exists, ensuring that it can navigate the complexities of the stablecoin market with confidence. The developments in the Senate further underscore the growing importance of stablecoins in the financial landscape and the need for a comprehensive regulatory framework to govern their issuance and use.