Major U.S. Banks Are Exploring Launching a Joint Stablecoin to Fend Off Crypto Competition

Financial heavyweights like JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC), have held discussion on the subject

Major U.S. banks are in the early stages of discussing the possibility of launching a joint stablecoin, as they seek to fend off competition from crypto firms, the Wall Street Journal reported on Wednesday.

The report adds that the talks are still preliminary and could change.

Among the financial institutions involved in the discussions are JPMorgan Chase & Co (NYSE:JPM), Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C), and Wells Fargo & Co (NYSE:WFC). Also engaging in the conversations are the payments ventures owned by these banking powerhouses, like Early Warning Services, which runs Zelle, and The Clearing House, which handles real-time payments.

Stablecoins are cryptocurrencies that are pegged to the value of another asset, like a fiat currency or commodity, and can settle transactions in a matter of seconds.

Banks see potential in them to improve their operations, with international remittances currently taking days through the traditional system.

One idea that has been floated in the consortium’s talks is a stablecoin model that would be open to other banks in addition to the core group. The report adds that regional banks have also been exploring similar avenues, according to sources familiar with the discussions.

This push from the banking industry comes as Washington edges closer to regulating the use of stablecoins.

Earlier this week, the Senate advanced the Guiding and Establishing National Innovation for U.S. Stablecoin, or GENIUS, Act, which is sponsored by Senator Bill Hagerty (R-Tenn). The legislation aims to create a regulatory framework for payment stablecoins.

“This legislation is a significant step forward in advancing responsible innovation in the financial services sector,” Hagerty said in a statement. “The legislation will establish, for the first time, a light-touch, pro-growth regulatory framework for payment stablecoins.”

In addition, the House Financial Services Committee is planning to vote on a bipartisan bill later this week that would create a new class of bank charter specifically for advanced technologies, like Web3 and artificial intelligence.

This move is driven by the increasing interest from crypto firms in securing bank charters.

Earlier this year, several institutions applied for charters, including cryptocurrency exchange Coinbase (NASDAQ:COIN) and the blockchain startup TRM Labs.

These applications come as several European banks have been venturing into the crypto space.

Earlier this month, Société Générale began offering a euro-denominated stablecoin called EURCV through its crypto arm, SG Forge. The service will allow institutional investors to invest in a fully-reserved and liquid EURcoin.

The French lender is now planning to launch a U.S. dollar stablecoin in the second half of the year, becoming the first major European bank to enter the fast-growing market for privately issued digital currencies.