Major Banks Form Stablecoin Consortium After Trump Endorsement

The announcement on Friday revealed an unprecedented collaboration among traditional financial heavyweights including Bank of America, Citi, Deutsche Bank, Goldman Sachs, UBS, Santander, Barclays, BNP Paribas, MUFG, and TD Bank Group. Their stated objective is to assess whether a cooperative industry offering could enhance competition in the stablecoin market while ensuring regulatory compliance. This coordinated effort comes at a pivotal moment, following former US President Donald Trump’s public endorsement of the cryptocurrency sector, which has reignited discussions about integrating blockchain technology into mainstream financial systems.

The consortium faces a formidable challenge in competing with established players, particularly Tether (USDT), which currently dominates the stablecoin landscape with approximately $179 billion in circulation. The scale of Tether’s dominance becomes even more apparent when considering that France’s Societe Generale, despite being the first major bank to issue a dollar-backed stablecoin through its digital asset subsidiary, has achieved only $30.6 million in circulation. This stark contrast highlights both the opportunity and the significant hurdles facing traditional financial institutions as they enter the digital asset space.

Beyond the consortium, multiple parallel initiatives are emerging across the banking sector. A separate group of nine European banks, including prominent names like ING and UniCredit, is developing a euro-denominated stablecoin. Meanwhile, Citi has taken a strategic position by investing in BVNK, a company focused on stablecoin infrastructure. Although Citi hasn’t disclosed the investment amount, BVNK co-founder Chris Harmse confirmed in a CNBC interview that the company’s valuation has surpassed $750 million in its latest funding round.

The timing of these developments coincides with increasing regulatory clarity in the United States, particularly through the passage of the GENIUS Act. This legislative progress has prompted major US banks to strategically position themselves within the crypto ecosystem. Citi’s CEO Jane Fraser has indicated that the bank is not only contemplating issuing its own stablecoin but also exploring custodian services for digital assets. This dual approach reflects the comprehensive strategy banks are adopting toward digital asset integration.

JPMorgan Chase has already launched its own stablecoin-like token, JPMD, demonstrating that the race to establish bank-backed digital currencies is well underway. The involvement of institutions like Bank of New York Mellon, which is exploring tokenized deposits, and HSBC, which has already rolled out a tokenized deposit service, indicates a broader industry shift toward leveraging blockchain technology for traditional financial operations.

Banks are increasingly investigating how blockchain technology—originally developed to support Bitcoin—can reduce transaction costs and enhance processing speeds across various financial operations. This exploration extends beyond stablecoins to include the concept of tokenization, which involves creating digital tokens that represent traditional assets such as deposits. The move represents a fundamental shift in how traditional financial institutions view and utilize distributed ledger technology.

The consortium’s focus on G7 currencies suggests a deliberate strategy to create stablecoins with strong regulatory backing and established monetary policy support. This approach contrasts with existing stablecoin offerings and could potentially address concerns about reserve transparency and regulatory oversight that have sometimes surrounded earlier entrants to the market. The involvement of major global banks from multiple jurisdictions indicates a coordinated effort to establish standards and best practices for bank-issued digital currencies.

As traditional financial institutions continue their digital asset exploration, the landscape of global finance appears poised for significant transformation. The convergence of regulatory clarity, political support, and institutional investment suggests that 2024 may mark a turning point in the integration of blockchain technology into mainstream financial systems. The success of these initiatives will depend not only on technological implementation but also on achieving widespread adoption and maintaining regulatory compliance in an increasingly complex global financial environment.