Bitcoin News Today: G7 Banks Challenge Tether's $179B Dominion with Regulated Stablecoins

A consortium of ten major global banks, including Bank of America, Citi, Deutsche Bank, Goldman Sachs, UBS, Santander, BNP Paribas, Barclays, MUFG, and Bank of America, has announced a collaborative initiative to explore the issuance of blockchain-based stablecoins pegged to G7 currencies. The project, announced in late 2025, aims to evaluate how public blockchains can host fully compliant, institutionally backed digital assets to enhance cross-border settlements, liquidity management, and market competition Banks Join Forces to Launch G7-Backed Digital Stablecoins^[1]. The initiative aligns with rising crypto adoption and political support for blockchain technology, including renewed interest from U.S. President Donald Trump's administration Banks Join Forces to Launch G7-Backed Digital Stablecoins^[1].

The banks' effort marks a significant shift in the stablecoin landscape, dominated by Tether (USDT), which controls $179 billion of the $310 billion in circulating stablecoin supply as of 2025 Banks Join Forces to Launch G7-Backed Digital Stablecoins^[1]. While Societe Generale's dollar-backed stablecoin has seen limited adoption ($30.6 million in circulation), the G7-backed project seeks to leverage institutional credibility and regulatory compliance to challenge existing market dynamics. The coalition emphasizes adherence to G7 regulatory frameworks, including the U.S. GENIUS Act, which mandates 1:1 reserve backing and prohibits interest-bearing stablecoins Banks explore launching a stablecoin linked to G7 currencies^[3].

The initiative faces challenges, including regulatory fragmentation across G7 jurisdictions and the risk of overlapping instruments if each bank issues its own version of a currency token. Critics highlight potential systemic risks, such as capital flight from emerging markets and the creation of a parallel monetary system that could undermine central bank authority. Standard Chartered estimates such shifts could drain up to $1 trillion from developing economies by 2028 Is The G7 Stablecoins Plan Actually Bullish For Crypto Markets?^[2]. Additionally, the project's success hinges on harmonizing legal and technical standards to ensure interoperability between G7 currencies Is The G7 Stablecoins Plan Actually Bullish For Crypto Markets?^[2].

The banks' dual approach-advocating for stablecoins while exploring Bitcoin and gold as reserve assets-reflects broader institutional hedging in digital finance. Deutsche Bank's research suggests global central banks may diversify into Bitcoin and gold by 2030, reducing U.S. dollar dependence. This duality underscores the evolving role of stablecoins as both a liquidity tool and a medium for value preservation, blurring traditional financial boundaries Banks Join Forces to Launch G7-Backed Digital Stablecoins^[1].

Regulatory clarity, particularly under the GENIUS Act and the EU's MiCA framework, has accelerated stablecoin adoption. The GENIUS Act, signed in July 2025, requires stablecoin issuers to maintain 1:1 reserves of high-quality assets and prohibits interest-bearing tokens Banks explore launching a stablecoin linked to G7 currencies^[3]. Meanwhile, MiCA's enforcement in the EU has delisted non-compliant tokens, creating opportunities for regulated stablecoins like Circle's EURC Stablecoin Regulation Around The World: 2025 Overview^[4]. These frameworks aim to mitigate risks while fostering innovation, though challenges remain in aligning cross-border regulations Stablecoin Regulation Around The World: 2025 Overview^[4].

The project's potential to redefine global finance is significant. If successful, the G7-backed stablecoins could streamline cross-border transactions, reduce reliance on SWIFT, and enable instant foreign exchange swaps. However, the initiative's impact will depend on balancing innovation with systemic stability, particularly as stablecoins grow in scale and complexity. Deutsche Bank's analysis notes that Bitcoin's declining volatility and institutional demand position it as a modern equivalent of gold, further complicating the interplay between traditional and digital assets Banks Join Forces to Launch G7-Backed Digital Stablecoins^[1].