Wall Street Giants Plot Stablecoin to Challenge Tether’s Dominance

Key Insights

• JPMorgan, Citi, Bank of America discuss joint stablecoin project.
• U.S. Senate advances GENIUS Act to regulate stablecoins.
• Stablecoin market cap rises 20% to $245B since January.

JPMorgan, Citi, and Wells Fargo explore a joint stablecoin as U.S. regulation advances and stablecoin demand spikes. Yield-bearing tokens and tech giants add to the race.

U.S. Banks Discuss Stablecoin Alliance

Major American banks have reportedly begun early discussions to launch a joint crypto stablecoin aimed at competing with dominant players like Tether and Circle.

According to a report by The Wall Street Journal on May 22, companies affiliated with JPMorgan, Bank of America, Citigroup, and Wells Fargo are exploring the creation of a unified digital asset. The talks are still preliminary, with no binding decision yet, and depend heavily on future regulatory clarity.

These institutions are also connected to Early Warning Services—the operator of Zelle—and the payment network Clearing House. Both are potential infrastructure partners in the proposed stablecoin issuance.

Reuters earlier reported that the banks intend to develop a “wholesale stablecoin” framework to facilitate interbank transfers and settlements. The move would mark the first collaborative digital currency effort by leading U.S. banks.

A JPMorgan spokesperson declined to comment on the initiative. Requests for comment to Bank of America, Citi, and Wells Fargo received no immediate responses.

Stablecoin Market Expands Amid Legislative Movement

The discussions among banks coincide with rising legislative attention on stablecoins. On May 20, the U.S. Senate voted 66-32 to advance the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. The bill outlines rules for collateralization and compliance with Anti-Money Laundering regulations.

White House crypto adviser David Sacks expressed optimism about the bill’s prospects, saying it would likely receive bipartisan support. However, some high-ranking Democrats have proposed amendments to block current and former U.S. officials—including President Donald Trump—from profiting from stablecoin-related ventures.

Trump’s family recently launched World Liberty Financial, which issued a stablecoin named USD1 in March. Critics argue the GENIUS Act could benefit Trump’s crypto interests if left unchanged.

Amid this legislative flux, stablecoin demand has surged. The total market cap of stablecoins has climbed to $245 billion, up from $205 billion at the start of the year—a 20% rise.

Yield-Bearing Tokens Threaten Legacy Models

While banks gear up to enter the space, newer stablecoin models are already reshaping the competitive landscape.

Yield-bearing stablecoins—tokens that pay interest to holders—now account for over 6% of the stablecoin market, according to JPMorgan. Issuers like Spark Protocol and Figure Markets redistribute interest income to users, transforming stablecoins from mere transfer tools into savings-like products.

The market cap of these yield-bearing instruments has grown to $13 billion, more than tripling since late 2024. Analysts at JPMorgan suggest that if this trajectory continues, they could capture up to half of the total market.

Austin Campbell, a professor at New York University and founder of Zero Knowledge Consulting, said the shift has alarmed traditional banks. “The U.S. banking lobby is panicking,” he noted, warning that stablecoins threaten the legacy model of fractional-reserve banking.

Meta Eyes Stablecoin Integration as Momentum Builds

In parallel with banks and decentralized players, big tech firms are eyeing stablecoins. Meta Platforms, formerly Facebook, is reportedly exploring stablecoin-based payment integration across its social and messaging platforms. The move marks a renewed push into the digital currency space after its earlier Diem project collapsed under regulatory scrutiny.

The surge of interest from banks, tech firms, and decentralized platforms underlines the growing strategic importance of stablecoins in global finance.

Whether the proposed U.S. bank stablecoin will materialize remains to be seen. Regulatory headwinds, competition from yield-bearing tokens, and political entanglements could all slow the project.

But the trajectory is clear: stablecoins are no longer niche. They are becoming a battleground for influence across Wall Street, Washington, and Silicon Valley.

Disclaimer

The information in this article is for informational purposes only. It should not be considered financial advice. Cryptocurrency investments are highly volatile. They carry significant risks. Always conduct your own research before making any investment decisions.