WSJ: Large banks are exploring joint stablecoins to enter the crypto space

Source: Wall Street News; Translated by: Wuzhu, Golden Finance

Several of the largest U.S. banks are exploring whether to join forces to issue joint stablecoins, a move aimed at fending off increasingly fierce competition in the cryptocurrency industry.

So far, negotiations involved companies jointly owned by JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and other large commercial banks, according to people familiar with the matter. These companies include Early Warning Services, the operator of the peer-to-peer payment system Zelle, and the real- time payment network clearing house.

Discussions in the banking alliance are still in the early conceptual stage and are likely to change. Any final decision will depend on the fate of legislative actions around stablecoins and other factors, such as whether banks believe there is sufficient demand for stablecoins.

Banks have been preparing for the possibility that stablecoins will be widely adopted during Trump’s presidency, which could suck away deposits and transactions they process, especially if big tech companies or retailers join in. Banking is in a catch-up mode in the cryptocurrency sector after regulatory crackdowns two years ago.

Stablecoins act as digital dollars in the cryptocurrency market and are currently used to store cash or buy other tokens. They should maintain a one- to-one exchange rate with the US dollar or other government currencies and be backed by reserves of cash or cash-like assets (such as U.S. Treasury bonds).

Banks believe stablecoins have a chance to speed up more conventional transactions, such as cross-border payments that may take days to complete in traditional payment systems. Some people familiar with the matter said there are still some doubts about the security of stablecoins and the regulatory impact of getting involved in digital assets.

The possibility of traditional Wall Street giants joining forces to issue stablecoins marks the gradual closer between mainstream finance and crypto finance. Given that stablecoins are an efficient way to transfer funds, they have long been seen as a reasonable link to connect these two worlds.

Last month, the Wall Street Journal reported that several cryptocurrency companies were planning to apply for bank charters or licenses from regulators, thanks to a bill that would establish a regulatory framework for banks and non-bank institutions to issue stablecoins.

The Senate passed the procedural barrier called the GENIUS Act this week. According to a memorandum released Thursday by Paul Hastings, the latest version of the bill contains restrictions on the issuance of stablecoins by non-financial listed companies. But the bill does not completely ban non- financial listed companies from issuing stablecoins as bank lobbyists have sought.

In March this year, World Liberty Financial, a subsidiary of the Trump family, announced that it would launch a stablecoin. Trump also launched a meme coin and plans to host a dinner for its largest holders on Thursday.

Some people familiar with the matter said one of the bank alliance models currently discussed is to allow other banks to use stablecoins in addition to co-owners of clearing houses and early warning services.

According to people familiar with the matter, some regional banks and community banks are also considering whether to form an independent stablecoin alliance. Such an attempt will be more difficult for smaller banks.