Top US banks consider joint stablecoin to counter cryptocurrency

In a significant development reflecting the growing convergence of traditional finance and digital assets, several of the largest U.S. banks are reportedly in

preliminary discussions to launch a joint stablecoin. This initiative, which includes major players like JPMorgan Chase, Bank of America, Citigroup, and Wells

Fargo, aims to create a regulated alternative to existing cryptocurrencies and compete with the likes of Circle’s USDC and Tether’s USDT.

Why are banks considering a joint stablecoin?

Countering Competition: The primary motivation for the initiative is to compete with the rising influence of crypto-native stablecoins and fintech firms

in the payments space. Stablecoins offer the promise of faster, more efficient, and lower-cost transactions, especially for cross-border payments, which is an area where traditional banks have struggled to innovate.

Regulatory Clarity: The passage of the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act) has provided the first federal

regulatory framework for stablecoins. This legislation is a crucial catalyst, as it gives banks a clearer path for legal compliance and reduces the regulatory

risks associated with issuing digital assets.

Enhanced Payments: The proposed stablecoin would leverage blockchain technology to streamline financial transactions. It could facilitate real-time, 24/7

payments and on-chain settlements, which would be a significant improvement over traditional payment systems that can take days to settle.

Institutional Trust: By backing a stablecoin with the infrastructure and trust of major, regulated banks, the consortium aims to offer a product that is

perceived as more secure and reliable than many existing stablecoins. The banks involved are also exploring a model where all members would issue the same stablecoin but with segregated reserves, potentially expanding its use across the financial sector.

Strengthening the U.S. Dollar: This initiative is also a strategic move to reinforce the U.S. dollar’s role in the global financial system. The Trump

administration has pledged support for the crypto industry, viewing digital assets as a way to enhance banking infrastructure and strengthen the dollar’s international standing.

Existing Bank Stablecoins and Initiatives

This isn’t the first time banks have explored stablecoins. JPMorgan Chase, for example, already operates JPM Coin, a stablecoin-like token used for institutional payments, which now handles approximately $1 billion in daily transactions. However, JPM Coin is a “deposit token” used within a private, walled-garden system and is not a public stablecoin. The new consortium-backed stablecoin would be a step toward a more public and interoperable solution.

A separate consortium of smaller, FDIC-insured banks has already launched USDF, a bank-minted stablecoin operating on the public Provenance Blockchain. This effort shows that banks of all sizes are looking to get into the stablecoin space, but the new initiative by the top U.S. banks could provide a much larger-scale solution.

While the discussions are still in the early stages, the move signals a major shift in the banking industry’s approach to cryptocurrencies. Instead of viewing them as a threat, traditional financial institutions are now actively exploring ways to incorporate stablecoin technology to maintain relevance and innovate in a rapidly evolving market