TLDR:
- Major American banks like JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are engaged in preliminary discussions for founding a consortium to launch a joint stablecoin
The Wall Street Journal reports that JPMorgan Chase and other large U.S. banks, such as Bank of America, Citigroup, and Wells Fargo, along with their co-owned payment companies The Clearing House and Early Warning Services LLC, are weighing a partnership for issuing a joint stablecoin. The negotiations are preliminary, and no firm signings have been made. But if adopted, this would be among the largest partnerships conventional banks have made in an attempt to capitalize on the blockchain technology.
The stablecoin initiative is not just for those banks that initiated it, but for making its use available for other U.S. banks in the financial sector as well. Successful execution would pave the way for a “national digital payment network” that will facilitate faster, clearer, and more secure interbank settlement through blockchain technology. Individuals familiar with the situation have explained that smaller and local banks lack the technology infrastructure, financial resources, and legislative clout for creating a stablecoin coalition themselves. Thus, this move by the “heavyweights” is not just a shift for the crypto space but an effort at shaping and dominating the stablecoin realm in U.S. banking circles as well.
The fate of this stablecoin bank group rests partly upon the future of the GENIUS Act, which is under intense discussion in the U.S. Senate following a 66-to-32 Senate vote for its passage. The Guiding and Establishing National Innovation for U.S. Stablecoins Act mandates that stablecoins are completely backed up by the U.S. dollar or an equivalent liquid asset, like government bonds. Stablecoin issuers whose market capitalization is $50 billion or higher will be audited, registered, and strictly regulated under anti-money laundering statutes from time to time.
Despite support from some senators and the crypto community, there is controversy surrounding the GENIUS Act as well. A few Democratic senators called for clarification about the role of President Trump in the DeFi project World Liberty Financial and its efforts toward creating a USD1 stablecoin. This further layer of oversight adds another level of complexity for regulation. some controversy. A group of Democratic senators has requested clarification on the ties between President Trump and the DeFi project World Liberty Financial, which is developing the USD1 stablecoin. This scrutiny adds another layer of complexity to the regulatory landscape.
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