The Wall Street Journal reported that the country’s biggest commercial banks have begun early discussions to develop a stablecoin jointly-issued. This is an attempt to defend their dominance within the payments ecosphere as the adoption of cryptocurrency and the regulatory support grows under Trump.
Discussions involve major players in the banking industry, including JPMorgan Chase and Bank of America. They also include Citigroup, Wells Fargo as well as entities that they own, like Early Warning Services, operator of Zelle, a peer-to-peer payment app, or The Clearing House which operates a real time payments network.
WSJ reported that, according to sources familiar with the issue, these companies are considering collaborating on a unified token digital which could be used by all member institutions, and possibly beyond.
This concept is still in its early stages and subject to changes.
The people involved in the project said that a final choice would depend on several factors. These include whether or not there was enough demand from consumers and businesses for a stablecoin issued by a bank, as well as how new regulations shape the regulatory environment.
The GENIUS Act encourages crypto companies to apply for banking chart
Stablecoins, or digital currency, are designed to be pegged at one-to-1 with national currencies like the US Dollar.
These are used primarily in the crypto sector for facilitating trades or storing value.
Banks are increasingly seeing them as an effective tool to speed up financial processes, such as cross-border payment, that can otherwise take several days with the current infrastructure.
As the Trump Administration appears to be accelerating its support of stablecoins, the potential action by banks is a welcome development.
The Wall Street Journal published a report last month that several crypto native firms were preparing to submit applications for bank charters. This was due to the momentum surrounding GENIUS Act.
This bill is intended to create a federal framework to issue stablecoins, which will allow both qualified banks and nonbanks.
The Senate passed the procedural hurdle for the Senate bill on Thursday.
In a recent memo, Paul Hastings law firm noted that the draft included limitations on stablecoins issued by public nonfinancial companies in an attempt to appease lobbyists from banks. However, it did not go as far as a total ban.
Before tech giants arrive, big banks are looking for a digital advantage.
If they don’t move fast, banking leaders are worried that deposits and payments could go to tech giants or crypto-native companies.
Trump-aligned organizations, like World Liberty Financial of the Trump Family, have recently released their own stablecoin signaling a growth in private digital currencies initiatives.
In this context, the banks can see an opportunity to assert their dominance.
Stablecoins backed by banks could be a more reliable and faster alternative to domestic or cross-border payment.
Sources said that the proposed model could allow banks who are not owners to utilize the stablecoin. This would potentially increase adoption.
A separate attempt by smaller banks, to create their stablecoins has faced significant operational and strategic challenges.
The report Major US banks consider joint stablecoins to combat crypto-threat: may be updated as new information unfolds
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