- Four big banks in the US are banding together to develop a new stablecoin.
- The project aims to help preserve their control over the payments sector amid the rising competition posed by crypto companies.
- The move also looks to capitalize on the opportunities offered by the pending GENIUS Act.
Several giant US banks have reportedly convened to talk about the possibility of launching a joint stablecoin venture. The move aims to prevent cryptocurrency companies from continuously siphoning a considerable chunk of their market share amid the rising competition in the fintech (financial technology) space.
The Rise of a New Stablecoin Alliance
According to the Wall Street Journal (WSJ), JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are discussing the possibility of forming a consortium to launch a new stablecoin project. The negotiations also include the payment solutions liked to these institutions, namely Early Warning Services, known for operating Zelle, and The Clearing House.
The source, citing “people familiar with the matter,” claimed the discussion is still in its early stages. Hence, the direction of the parties involved may be subject to change, and the members of the budding alliance may either be trimmed or expanded depending on the circumstances.
Nevertheless, WSJ stated that the group agreed to open their stablecoin’s utility to other financial institutions beyond their core team. In addition, the report raised the possibility that the group may tie up the brewing stablecoin project with similar ventures cooked up by regional banks.
It’s still unclear if the stablecoin will be available for retail use, as the report only hinted that the consortium may only tailor the project for institutional adoption.
Legislative Reinforcement
The proposed stablecoin project comes at a very opportune time, as the US Senate appears to be fast-tracking the passage of the GENIUS Act. The bipartisan legislation introduces guardrails for stablecoins to offer regulatory clarity for issuers and users of these digital assets maintaining a 1:1 peg to the US dollar.
For Bill Hagerty, a senator from Tennessee under the Republican Party, the GENIUS Act is essential for the evolution of US payment systems in the 21st century. It specifically guarantees that the US dollar will maintain its dominance in the world market.
The senator believes the bill’s passage into law will help protect consumers. Meanwhile, the American politician and businessman estimates that it will be crucial in driving an over $1 trillion additional demand for US treasuries.
