Major U.S. Banks Explore a Joint Stablecoin Venture to Compete with Tether

JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are reportedly exploring a joint stablecoin venture to compete directly with the crypto industry's growing dominance in digital payments.

Major U.S. banks are reportedly discussing a joint stablecoin venture, aiming to compete in the digital payments space with a new offering.

According to a report by The Wall Street Journal, the initiative is still in the early stages of discussion. It involves JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Wells Fargo & Co, and other banking giants.

These discussions are also taking place through co-owned payment companies, including Early Warning Services LLC, which operates the Zelle network, and The Clearing House.

Those discussions hinge on forthcoming stablecoin legislation that could help form frameworks for banks and non-banks to issue stablecoins.

Stablecoins are digital currencies typically pegged to the U.S. dollar or other fiat currencies and, in recent years, are increasingly being backed by Treasurys.

While some see them as "destabilizing” to economic and fiscal policy, “individuals and businesses see a tremendous benefit,” Pedro Lapenta, head of research at Hashdex Asset Management, told Decrypt.

And the timing couldn't be more apt.

This week, the Senate moved forward with the GENIUS Act, a bipartisan bill that aims to regulate payment stablecoins by setting federal reserve standards, transparency, and issuer oversight.

If the act becomes law, stablecoins could "accelerate the adoption of digital assets" in general and strengthen "the investment case for Bitcoin and other crypto," Lapenta said.

But it isn't really about the investor. Banks see the changing regulatory landscape as a possible green light to begin exploring ways to challenge the dominance of Circle and Tether's stranglehold over the $245 billion stablecoin market.

Circle, a U.S.-regulated issuer, initially launched its USDC stablecoin in 2018 alongside Coinbase through the Centre Consortium, in a bid to offer an alternative to Tether's market-leading USDT, which debuted in 2014 on the Bitcoin-based Omni Layer.

Tether has maintained a dominant position in the stablecoin sector despite years of scrutiny over the transparency of its reserves.

Since 2022, the stablecoin issuer has released quarterly attestations, in a bid to assuage concerns. It now accounts for more than 60% of the market.

Circle, on the other hand, has sought to differentiate USDC by positioning it as a more compliant product, citing third-party attestations and closer regulatory engagement in the U.S.

But it, too, has had its own set of problems, including a temporary depegging of USDC in 2023 following the collapse of Silicon Valley Bank, stalled plans to go public via a SPAC deal in 2022, and declining market share.

The entry of major global financial firms may soon test the staying power of both incumbents and chip away at their dominance.

Hong Yea, co-founder and CEO of GRVT, a licensed on-chain exchange, told Decrypt crypto-native issuers still have a critical role to play as traditional finance builds new infrastructure.

“Crypto-native stablecoin issuers get an intrinsic grasp of how the blockchainized world functions,” Yea said. “Their years of experience, knowledge, and trials would be invaluable for the construction of institutional-grade stablecoin infrastructure.”

He likened the dynamic to traditional industries relying on digital consultants during early transformation efforts.

“The traditional financial world’s navigation into the on-chain economy could have some help too from the natives,” he said.

Yea added that if legacy players are to seriously engage with the stablecoin sector, crypto issuers must also step up their alignment with regulatory norms.

“I’d advocate for industry leaders to adopt a more proactive fashion with regulations and compliance,” he said. “Without hand-in-hand efforts from both sides, it’s going to be hard for the pie to grow as a whole.”

For now, the discussion among banks remains in its infancy and could change at any time, per the report.

Tether and Circle did not immediately respond to requests for comment.

सीमित समय के लिए, इस अनन्य इंटरव्यू में, Hashdex के रिसर्च हेड पेड्रो लापेंटा ने बताया कि बिटकॉइन की कीमत में गिरावट से इंटरव्यू में सबसे महत्वपूर्ण बात यह है कि यह आर्थिक और राजकोषीय नीति पर भी अत्यधिक दबाव डाल रहा है, जिससे और भी गिरावट आ सकती है।

"अगर हम इस परिप्रेक्ष्य में BTC की कीमत में गिरावट को देखते हैं, तो यह समझ में आता है कि ट्रेजरी बिलों की पैदावार में वृद्धि जारी है, और इस प्रकार, यह अपेक्षाकृत अधिक आकर्षक हो रहा है, जिससे बिटकॉ