A group of banks is in the process of exploring the launch of stablecoins focused on some of the world’s biggest fiat currencies, including the US dollar, euro and Japanese yen.
According to a Friday statement from BNP Paribas, banks including Bank of America, Goldman Sachs, Deutsche Bank and Citi said that they had launched a project to explore the “issuance of a 1:1 reserve-backed form of digital money that provides a stable payment asset available on public blockchains” linked to currencies from the Group of Seven (G7) countries: the United States, Canada, the United Kingdom, France, Germany, Italy and Japan.
“The objective of the initiative is to explore whether a new industry-wide offering could bring the benefits of digital assets and enhance competition across the market, while ensuring full compliance with regulatory requirements and best practice risk management,” said the banks.
The statement did not suggest a timeline for the project, which would likely face competition from Tether’s USDt (USDT), the largest stablecoin by market capitalization.
Among US banks, their efforts would likely be facilitated by the recent passage of the GENIUS Act, a bill to regulate payment stablecoins, signed into law by US President Donald Trump in July. Though already law, GENIUS is not expected to take effect for another 15 months, or 120 days after the US Treasury and Federal Reserve finalize regulations around the bill.
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Concerns, fallout from the GENIUS Act
Though crypto advocates have largely praised the passage of the US stablecoin bill, many banks have called for lawmakers and regulators to address loopholes in the law that would allow interest-bearing stablecoins, claiming they would threaten financial stability.
Multicoin Capital’s co-founder and managing partner, Tushar Jain, said on Saturday that he expected bank customers to move their bank deposits into higher-yield stablecoins as a result of the new law, making tech companies more competitive with financial institutions. However, Circle Chief Strategy Officer Dante Disparte suggested that the language of the bill ensures that tech companies and banks don’t dominate the stablecoin market.
In addition to Tether’s USDT, with a market capitalization of more than $178 billion at the time of writing, the largest stablecoins included the US dollar-pegged USDC (USDC), Dai (DAI), Ethena USDe (USDE), PayPal USD (PYUSD), and USD1, the coin launched by the Trump family-backed crypto company World Liberty Financial.
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