Major U.S. Banks Plan Joint Stablecoin to Counter Crypto Competition

Major U.S. banks are considering the launch of a joint stablecoin to counter the growing competition from the crypto industry. Financial giants such as JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo have engaged in discussions on this matter, according to sources familiar with the situation. These talks are still in the early stages and are subject to change.

The consortium includes payments ventures owned by these banking powerhouses, such as Early Warning Services, which operates Zelle, and The Clearing House, which manages real-time payments. Stablecoins, which are cryptocurrencies pegged to the value of another asset like a fiat currency or commodity, can settle transactions in a matter of seconds. Banks see the potential in stablecoins to enhance their operations, particularly in international remittances, which currently take days through traditional systems.

One proposal discussed within the consortium is a stablecoin model that would be open to other banks beyond the core group. Regional banks have also explored similar initiatives, according to sources familiar with the discussions. This push comes as Washington moves closer to regulating the crypto industry. The Senate recently advanced the Guiding and Establishing National Innovation for U.S. Stablecoin Act, which aims to establish the first-ever pro-growth regulatory framework for payment stablecoins.

The improved regulatory environment has led crypto firms to seek bank charters, adding further pressure on traditional banks. Some of these large financial institutions have already taken steps in this direction. For instance, Société Générale launched a euro-denominated stablecoin, EURCV, in 2023 through its crypto arm SG Forge. It is reportedly now looking to launch a U.S. dollar stablecoin as well.

This development underscores the growing interest and investment in stablecoins by major financial institutions. The potential benefits of stablecoins, including faster transaction settlements and improved operational efficiency, make them an attractive option for banks looking to stay competitive in the evolving financial landscape. The move also highlights the increasing integration of cryptocurrencies into traditional banking systems, as banks seek to leverage the advantages of digital assets while mitigating the risks associated with volatility.