Big Banks Can Find Safety in Numbers on a Stablecoin

Working together could shield them individually from the reputational risk of any coin they issue being used to fund crime or terror.

Banks are contemplating a role for themselves in stablecoins if pending US legislation helps take cryptocurrencies and their gateway products mainstream.

Companies owned by Bank of America Corp., Citigroup Inc., JPMorgan and Wells Fargo have discussed jointly issued coins, the Wall Street Journal reported on Monday, citing people familiar with the matter.

European lenders such as Banco Santander are also potentially interested in such projects, the report said.

It makes sense for banks to be involved in products that could compete directly with their own payment services and deposits. It’s also sensible for them to work together to shield them individually from the reputational risk of any coin they issue being used to fund crime or terror. They still need better rules and defenses around that possibility as well as confidence that the technology will be reliable.

The report comes as the US Congress is debating legislation that would create a framework for cryptocurrencies and stablecoins. The bipartisan bill, known as the "Responsible Financial Innovation Act," would give the Federal Reserve the authority to regulate stablecoins and other digital assets.

The bill is being led by Democratic Senator Mark Warner and Republican Senator Tim Scott. It would also create a new category of "high-quality" stablecoins that would be backed by two or more assets, such as US Treasury bonds and short-term commercial paper.

The House Financial Services Committee is also expected to vote this week on a bipartisan bill that would create a regulatory framework for stablecoins. The bill, which is being led by Democratic Chair Maxine Waters and Republican ranking member Patrick McHenry, would require stablecoin issuers to register with the Securities and Exchange Commission and the Commodities Futures Trading Commission.

The involvement of major banks could be a game changer for the stablecoin market. It could help to increase the liquidity and stability of stablecoins, as well as reduce the risk of fraud and abuse.

However, it is important to note that these discussions are still in the early stages and there is no guarantee that any joint stablecoin projects will be launched.

The integration of major banks in the exploration of a joint stablecoin initiative, as reported by the Wall Street Journal, marks a significant development in the cryptocurrency domain. This collaboration, if realized, could reshape the competitive landscape within the financial services sector.

As the US Congress deliberates legislation to introduce a framework for cryptocurrencies and stablecoins, paving the way for their integration into mainstream financial products and services, major banks are positioning themselves for this new era.

The report by the Journal indicates that executives at Bank of America, Citigroup, JPMorgan, and Wells Fargo have engaged in preliminary discussions regarding the joint issuance of a stablecoin. This initiative stems from the pressing need for a stablecoin to be backed by a large and trusted institution in order to gain widespread adoption among consumers and businesses.

Furthermore, the integration of major banks could be a game changer for the stablecoin market. It could help to increase the liquidity and stability of stablecoins, as well as reduce the risk of fraud and abuse.

However, it is important to note that these discussions are still in the early stages and there is no guarantee that any joint stablecoin projects will be launched.

The involvement of major banks in exploring the possibility of a joint stablecoin initiative, as reported by the Wall Street Journal, signals a significant shift in the cryptocurrency landscape. This collaboration could reshape the competitive landscape within the financial services sector and herald a new era of integrated financial technology.

As the US Congress deliberates legislation to introduce a framework for cryptocurrencies and stablecoins, paving the way for their integration into mainstream financial products and services, major banks are positioning themselves accordingly.

Executives at Bank of America, Citigroup, JPMorgan, and Wells Fargo have discussed the possibility of jointly issuing a stablecoin, according to the report by the Journal. The integration of major banks could be a game changer for the stablecoin market. It could help to increase the liquidity and stability of stablecoins, as well as reduce the risk of fraud and abuse.

However, it is important to note that these discussions are still in the early stages and there is no guarantee that any joint stablecoin projects will be launched.

The report by the Journal also notes that European lenders, such as Banco Santander, are interested in such projects.

This initiative is driven by the pressing need for a stablecoin to be backed by a large and trusted institution in order to gain widespread adoption among consumers and businesses. Any coin issued by the banks would also need better rules and defenses to prevent it being used to fund crime or terror.

The bipartisan bill, which is being led by Democratic Senator Mark Warner and Republican Senator Tim Scott, would give the Federal Reserve the authority to regulate stablecoins and other digital assets. It would also create a new category of “high-quality” stablecoins that would be backed by two or more assets, such as US Treasury bonds and short-term commercial paper.

The House Financial Services Committee is expected to vote this week on a bipartisan bill that would create a regulatory framework for stablecoins. The bill, which is being