JPMorgan, Bank of America, and Other Major U.S. Banks Explore Joint Stablecoin Launch to Compete in Crypto Market

On May 23, 2025, a report from The Wall Street Journal revealed that several of the United States’ largest financial institutions, including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo, are in preliminary discussions to launch a joint stablecoin. This move aims to counter escalating competition from the cryptocurrency industry, particularly as stablecoins gain traction in global payments and financial systems. The talks involve key players in the banking sector, such as The Clearing House, a real-time payments network, and Early Warning Services, the operator of the Zelle payment system, signaling a potential shift in how traditional banks engage with digital assets.

Stablecoins, cryptocurrencies designed to maintain a stable value by being pegged to assets like the U.S. dollar, have emerged as a cornerstone of the crypto economy. The global stablecoin market, valued at around $245.93 billion as of press time on May 23, 2025, is dominated by major players like Tether (USDT) at $153.11 billion and Circle’s USDC at $60.85 billion, according to DefiLama. As early as 2023, when the total market capitalization of stablecoins was between $130-140 billion, stablecoin transactions reached $28 trillion, surpassing the combined annual transaction volumes of Mastercard and Visa, according to a Deutsche Bank report. This surge underscores their growing utility in cross-border payments, decentralized finance (DeFi), and merchant settlements, areas where traditional banking systems often face inefficiencies like high costs and delays.

The discussions among these banking giants come at a pivotal moment for the U.S. crypto industry, as the Senate advances the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. On May 20, 2025, the bill cleared a key cloture vote with bipartisan support, 66-32, and is undergoing final amendments in the Senate before being sent to the House for a vote. The legislation mandates that issuers maintain asset reserves, adhere to anti-money laundering rules, and prioritize coin holders for repayment in case of bankruptcy. This regulatory clarity is seen as a critical factor in the banks’ deliberations, with the outcome of the stablecoin venture hinging on the final shape of the legislation.

A Strategic Response to Crypto Competition

The banks’ interest in a joint stablecoin reflects a broader shift in the financial sector’s approach to digital assets. Historically, major U.S. banks have been cautious about cryptocurrencies, with figures like JPMorgan CEO Jamie Dimon famously calling Bitcoin “worthless” in 2021. However, recent developments show a pivot. A Fireblocks survey published on May 15, 2025, found that 90% of respondent institutional players, including traditional banks, are either using or exploring stablecoins for cross-border payments and liquidity optimization.

The proposed stablecoin consortium could leverage existing infrastructure like The Clearing House and Early Warning Services to create a scalable, bank-backed digital currency. One model under discussion would allow other banks to use the stablecoin, potentially broadening its adoption across the financial sector. This approach mirrors earlier attempts by banks to innovate in payments, such as the creation of Zelle to compete with fintech platforms like Venmo. By entering the stablecoin space, banks aim to reclaim market share in cross-border and digital payments, where stablecoins like Tether (USDT) and USD Coin (USDC) currently dominate. Tether alone controls over 60% of the stablecoin market, backed by institutions like Cantor Fitzgerald.

Regulatory and Ethical Considerations

Key provisions in the GENIUS Act are creating favorable regulatory conditions for U.S. financial giants to jointly issue a stablecoin.

According to crypto journalist Eleanor Terrett, a critical clause in the revised GENIUS Act imposes strict restrictions on non-financial tech companies like Meta, Amazon, Google, and Microsoft from issuing stablecoins. This aims to prevent tech companies from dominating the market and keep stablecoin issuance within the traditional financial system. If the bill passes, this clause will reduce competitors for financial giants issuing stablecoins, significantly enhancing their competitive advantage.

Additionally, Eleanor Terrett revealed that the GENIUS Act explicitly prohibits issuers from claiming their stablecoins are insured by the Federal Deposit Insurance Corporation (FDIC) or backed by U.S. government credit. While not targeting any specific entity, this provision means that USD1, the stablecoin issued by the Trump family-backed DeFi project WLFI, cannot leverage U.S. government credit endorsement. Furthermore, during ongoing Senate amendments to the GENIUS Act, Democratic lawmakers are planning to introduce clauses to prevent the Trump family from profiting through USD1 issuance. If these clauses pass, they will significantly limit USD1’s competitive edge, objectively creating a more favorable competitive environment for traditional financial institutions issuing stablecoins.

Broader Industry Trends and Outlook

The banks’ stablecoin initiative is part of a larger trend of traditional finance embracing blockchain technology. Non-crypto companies like Meta and Visa are also exploring stablecoin applications. Meta is reportedly in talks to use stablecoins for payouts to content creators on Instagram, while Visa has invested in the stablecoin payments network BVNK.

In Europe, banks have already begun issuing stablecoins, with most stablecoin supplies now fiat-backed, reducing reliance on riskier algorithmic models. In the U.S., smaller institutions like Custodia Bank and Vantage Bank have partnered to issue a fiat-backed “stablecoin” for use in the U.S., UK, and Europe, signaling growing acceptance across the banking spectrum.

If traditional financial institutions successfully launch a joint stablecoin, it could reshape the stablecoin competitive landscape, offering a regulated alternative to existing stablecoins while leveraging the trust and infrastructure of major financial institutions. As discussions progress, the financial world watches closely. A bank-backed stablecoin could bridge traditional finance and crypto, but it will require careful execution to balance innovation, security, and regulatory compliance.