Major US Banks Are Working on a Joint Stablecoin Initiative

Some of the largest banks in the United States, including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo, are reportedly working on a joint stablecoin initiative

Several of the biggest U.S. banks are joining forces to create their own stablecoin, according to a report by the Wall Street Journal.

The report claims that major institutions are making a move into the crypto sphere with a joint venture to develop a stablecoin.

This move would see established financial institutions compete directly with crypto-native players in the rapidly growing segment of the digital asset market.

The initiative is still in its early stages, with no final decisions yet made, and could ultimately be abandoned, the Journal said.

However, the report notes that the banks involved are considering tying the stablecoin to the dollar and aiming for it to be widely used for payments.

The move comes as Congress is preparing to pass legislation this year to regulate stablecoins and other digital assets. A bipartisan bill is currently pending in the House Financial Services Committee.

The banks involved in the initiative are reportedly JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo.

This new development was also confirmed by Sam Kazemian, founder of Frax Finance, who stated that the conversations between major banks might have advanced beyond speculation.

Highlighting the broader implications, Kazemian pointed out the significant role of stablecoins in providing dollar-backed liquidity within the crypto market.

He added that these tokens are facilitating cross-border and emerging-market traders' access to dollar-denominated assets.

The growing utility of these tokens, combined with increasing legislative attention in the U.S., makes them a priority for financial institutions seeking to remain competitive.

Greg Waisman, Chief Operating Officer at Mercuryo, commented on the potential impact of this move.

“The prospect of a consortium of leading U.S. banks entering the cryptocurrency market with a joint stablecoin demonstrates how crypto-native products may now be driving the evolution of financial markets,” Waisman stated.

He further highlighted the role of stablecoins in the digital token space.

“Stablecoins are a valuable source of liquidity in the digital token space, supporting a variety of different projects and protocols. They are also used by traders to hedge against the volatility of cryptocurrencies and by users in emerging economies to gain access to dollar-denominated assets.”

This initiative could have broader implications for the global financial landscape as traditional institutions adapt to the evolving cryptocurrency ecosystem.

Two giants, Tether’s USDT and Circle’s USDC, currently hold the majority share of the stablecoin market, which is valued at $245.9 billion. Together, they control 87% of the market. However, the entry of major banks could pose a challenge to this dominance, especially considering their vast financial infrastructure and regulatory influence.

Paolo Ardoino, CEO of Tether, responded to the news with a brief yet pointed message on social media.

“Welcome player 2.”

His remark suggests confidence in Tether’s position as the market leader, implying that traditional institutions are only now catching up to what crypto-native firms have built over the past decade.

Tether’s USDT remains the most traded stablecoin globally, with a market cap above $150 billion. Its usage spans cross-border payments, remittances, and digital commerce, especially in regions with limited access to the U.S. dollar.

Meanwhile, BitMEX co-founder Arthur Hayes took a more critical view, suggesting that the banks’ stablecoin initiative could spell trouble for Circle.

“Bye bye Circle. Thanks for playing,” Hayes stated.

Hayes’ comment implies that Circle might struggle with these institutions’ new layer of competition.

This comes as Circle is exploring strategic options, including a potential public listing or acquisition by firms like Coinbase or Ripple.