A cohort of banks is presently examining the potential to establish stablecoins associated with predominant fiat currencies like the US dollar, euro, and Japanese yen.
In a statement issued, BNP Paribas noted that institutions such as Bank of America, Goldman Sachs, Deutsche Bank, and Citi have initiated a collaboration to investigate the potential for a “1:1 reserve-backed form of digital money that provides a stable payment asset available on public blockchains” correlated with currencies from the Group of Seven (G7) nations: the United States, Canada, the United Kingdom, France, Germany, Italy, and Japan.
Quote: “The objective of the initiative is to explore whether a new industry-wide offering could bring the benefits of digital assets and enhance competition across the market, while ensuring full compliance with regulatory requirements and best practice risk management,” mentioned the consortium of banks.
The announcement did not indicate a timetable for the project, which may face rivals such as Tether’s USDT, the most substantial stablecoin by market cap.
In the US, their endeavors would likely be supported by the recent passing of the GENIUS Act, a legislation aimed at regulating payment stablecoins, signed into law by US President Donald Trump in July. Although it is now law, GENIUS is not expected to be implemented for another 15 months or 120 days after the US Treasury and Federal Reserve finalize regulations surrounding the bill.
Among supportive voices, there are concerns regarding potential loopholes in the legislation that could permit interest-bearing stablecoins, which some argue could pose risks to financial stability. Tushar Jain expected that bank clientele may shift their deposits to higher-yield stablecoins, thereby increasing competitiveness among tech firms and banks. Conversely, Dante Disparte remarked that the language within the bill is structured to ensure neither tech firms nor banks monopolize the stablecoin sector.
Additionally, notable stablecoins, aside from Tether’s USDT, which boasts a market capitalization over $178 billion, include the US dollar-pegged USDC, Dai, Ethena USDe, PayPal USD, and USD1, introduced by the Trump family-backed crypto venture World Liberty Financial.
