Major U.S. banks eye stablecoin experiment as crypto regulations shift

By willowt // 2025-07-18

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Bank of America, Citigroup, Morgan Stanley and JPMorgan Chase are exploring stablecoin launches amid regulatory changes.
President Trump’s crypto-friendly policies and pending legislation aim to clarify rules for digital assets.
Legal uncertainty and low current client demand are slowing progress.
Bank-issued stablecoins could bridge traditional and digital finance.
Institutions seek to diversify payment systems and counter fintech rivals.

A seismic shift is underway in the U.S. banking sector as major institutions like Bank of America (BofA), Citigroup and JPMorgan Chase prepare to launch stablecoins—cryptocurrencies pegged to traditional currencies like the dollar—to compete in the evolving financial landscape. These moves coincide with President Donald Trump’s push to solidify the U.S. as a crypto-friendly economy, with Congress reportedly advancing bills to create clearer regulatory frameworks. While the banks emphasize prudent caution, citing the need for legal clarity and market demand, their exploration signals an irreversible integration of blockchain technology into mainstream finance. The outcome could redefine payment systems and financial services, balancing innovation with stringent oversight.

Why now? The regulatory overhaul paving the way for crypto adoption

The banks’ pivot reflects shifting political and regulatory winds. Trump, who famously dubbed himself the “crypto president,” has championed institutional crypto adoption, touting it as a driver of economic growth. Key legislation close to passage includes proposals that would:

Create a stablecoin issuance framework requiring reserves held in U.S. government bonds or cash.
Mandate independent audits and real-time user verification, aligning with proposals by the FDIC and SEC to classify stablecoins as securities, subject to banking-style regulations.

This evolution addresses past concerns tied to stablecoins like Tether (USDT) and USD Coin (USDC), which faced scrutiny over reserve transparency and links to market manipulation. “These efforts aim to prevent systemwide risks while fostering U.S. leadership in the digital asset economy,” said a Senate Banking Committee aide. The FDIC’s draft regulations, still under public review, would compel issuers to demonstrate “dollar-for-dollar” backing of reserves and undergo quarterly third-party audits—a hurdle BofA CEO Brian Moynihan acknowledged as critical: “You need certification the money’s there,” he told Reuters.

Bank strategies: A play for the future, but challenges remain

All of the big banks that plan to play are still ironing out the details. Bank of America: Moynihan emphasized collaboration with peers and fintechs, comparing stablecoin development to the rollout of payment platforms like Zelle. Yet he stressed the need for time: “We’re still figuring out how big or small this could be. Demand isn’t high yet.” Citigroup: CEO Jane Fraser framed stablecoins as a payment innovation mirroring Visa or SWIFT but blockchain-based. “This is a good opportunity for us to serve clients who want frictionless cross-border transfers,” she said, noting Citigroup’s “moving at the speed of trust.” Morgan Stanley: CFO Sharon Yeshaya acknowledged the bank’s tentative stance, stating stablecoin applications were in their infancy. “It’s too early to see how this will play in traditional banking versus crypto-focused competitors,” she said. JPMorgan Chase: CE Jamie Dimon, a former Bitcoin skeptic, hinted at stablecoin ambitions without specifics: “We’re part of where the future is going.” Analysts anticipate JPMorgan’s venture could leverage its JPM Coin, a closed-loop corporate stablecoin used internally since 2019.

The broader implications: A new era of hybrid finance

Bank-issued stablecoins could stabilize the cryptocurrency market by introducing institutional credibility. Unlike decentralized stablecoins, these would be backed by regulated institutions with access to Federal Reserve liquidity—a boon for users wary of crypto volatility. Yet hurdles persist. Legal ambiguity remains: Not all legislators agree on whether Fed reserves should back stablecoins or if they should avoid them entirely (Federal Reserve policy bars banks from directly holding crypto as deposits). Meanwhile, infrastructure challenges loom, as U.S. banks cobble together blockchain technologies like Ethereum or new platforms like Hyperledger. For consumers, the outcome could mean faster, cheaper cross-border payments—and new privacy concerns. Stablecoins require user identification, potentially altering how digital identities interact with finance.

A balancing act between innovation and oversight

As the U.S. banking giants stumble forward, their success hinges on nailing the nuance. They must straddle innovation and regulation to ensure stability, transparency and public trust—goals that could redefine trust in both crypto and traditional finance. The path ahead is fraught, but as Moynihan puts it: “We’re all moving in the same direction. It’s just a matter of pace.” For now, the wait continues—until Congress finalizes laws, banks ink partnerships and regulators set the rules of crypto’s new frontier. Follow for updates on this evolving story. Sources for this article include: Reuters.com Paris2018.com TBSnews.net