Major US Banks Explore Collaboration on New Crypto Stablecoin

Major US banks, including JPMorgan and Bank of America, are in talks to create a joint crypto stablecoin. The Senate recently advanced the GENIUS Act to regulate stablecoins, amid rising demand in the market. This move could alter the traditional banking landscape and raise questions on conflicts of interest for officials involved in crypto.

Major US banks are reportedly in preliminary discussions aimed at developing a joint crypto stablecoin. This initiative, as reported by The Wall Street Journal on May 22, involves powerhouses like JPMorgan, Bank of America, Citigroup, and Wells Fargo, who are contemplating issuing a stablecoin together. This could change the landscape of digital currencies if it comes to fruition.

Other entities potentially involved? Look no further than Early Warning Services, the parent of Zelle, and the Clearing House payment network. The talks are still relatively nascent, meaning any decisions hinge on various factors—including the regulatory environment and the actual demand for stablecoins. A spokesperson for JPMorgan declined to comment, while inquiries to Bank of America, Citigroup, and Wells Fargo were left unanswered.

On May 20, a significant step was taken when the US Senate voted 66-32 to advance a bill aimed at regulating stablecoins known as the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. This proposed legislation outlines a framework for stablecoin collateralization, placing an emphasis on compliance with anti-money laundering practices. Next, it’s headed for debate on the Senate floor.

In a sign of optimism, White House crypto czar David Sacks expressed that he expects the bill to pass, likely garnering bipartisan support. Still, complications arise with high-ranking Democrats aiming to include an amendment that would prevent President Trump and other officials from benefitting financially from stablecoins. Given Trump’s recent launch of the crypto platform World Liberty Financial and its USD1 stablecoin, concerns about conflicts of interest are swirling.

The demand for stablecoins has been skyrocketing, with more institutions looking to integrate them into their operations. The total market cap has surged to $245 billion from $205 billion this year, which is quite the leap. Additionally, yield-bearing stablecoins are making a splash, now comprising 4.5% of the market, with a circulating supply sitting at $11 billion.

According to Austin Campbell, a professor at New York University and founder of Zero Knowledge Consulting, banks may be feeling a bit frantic over the rise of stablecoins, which could challenge traditional banking models. Simultaneously, tech giant Meta is also considering how stablecoin payments might fit into its platforms. The narrative around crypto seems to be evolving rapidly—once a challenger to traditional finance, it’s now becoming more like it in this stablecoin fray.

In summary, major US banks are taking tentative steps toward a joint crypto stablecoin, reflecting a shift in the financial landscape. With the Senate advancing the GENIUS Act, this legislative effort could significantly impact stablecoin regulation, amid growing demand in the market. The conversations highlight a broader concern within the banking industry about stablecoins’ disruptive potential. As these events unfold, both institutional interest and regulatory frameworks are likely to shape the future of digital currencies.

Original Source: cointelegraph.com