America’s largest banks—including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo—are reportedly in early talks about launching a joint stablecoin to challenge the crypto sector, according to the Wall Street Journal on May 22, citing sources familiar with the matter.
The discussions involve bank-owned payment networks such as Early Warning Services (operator of Zelle) and the Clearing House, aiming to create a stablecoin backed by traditional financial institutions.
While still in the conceptual phase, the project’s progress depends heavily on forthcoming stablecoin legislation and market demand, the report noted.
Banks Seeking to Keep Pace
This news follows recent advances in US stablecoin legislation, including the passage of the GENIUS Act by the Senate on May 20, which paves the way for further congressional debate.
US banks are increasingly concerned that stablecoins, potentially accelerated by former President Trump’s endorsement and emerging DeFi platforms, could disrupt their traditional deposit and payment businesses, especially if large tech companies expand into this space.
In response, these financial giants are aiming to catch up, viewing stablecoins as a tool to expedite payments such as cross-border transactions that currently face delays.
The Wall Street Journal highlighted that a Wall Street-led stablecoin could signal closer integration between traditional finance and the crypto world.
Challenges Ahead for Banks and Crypto Stablecoins
Industry experts, like BitMEX founder Arthur Hayes, speculate this joint bank initiative could threaten existing crypto stablecoin issuers like Circle. However, widespread adoption may be limited as users would likely need US bank accounts to participate, imposing regulatory restrictions.
Currently, the crypto stablecoin market stands at approximately $248 billion, about 7% of the total crypto market, with liquidity recently hitting a record $220 billion, per CryptoPotato.
US Treasury research projects the stablecoin market could expand over eightfold, reaching nearly $2 trillion by 2028.
