American banks and financial institutions are increasingly considering issuing stablecoins and other blockchain-based payment instruments. Who is promoting them and why?
Major US banks, including JPMorgan, Bank of America, Citigroup, and Wells Fargo, are discussing the possibility of issuing a joint stablecoin. This was reported by The Wall Street Journal, citing sources familiar with the negotiations.
The project is in its early stages, but according to the publication, Zelle and Clearing House, instant payment services owned by these banks, are participating in the discussions. It is expected that the stablecoin will be backed by dollar assets and can be used both within the banking system and by other market participants.
Wall Street sees the launch of a stablecoin as a way to maintain its competitive position amid the rise of the crypto industry, especially given the support the industry has received from the Trump administration, the WSJ writes.
The business model of most stablecoins is to purchase US government bonds as collateral for the issuance of tokens. Issuers receive interest income for holding these securities, with the ability to access liquidity at any time if stablecoin holders demand redemption of the issued crypto assets.
For example, according to its first quarter 2025 report, Tether's reserves to back its USDT stablecoin include about $120 billion in US Treasury bonds. The company claims that it has already surpassed Germany in terms of investments in US government debt.
It is precisely the demand for US government bonds from stablecoin issuers that may be driving the administration's interest in promoting them and creating a regulatory framework. As noted by analysts at the largest crypto exchange Binance, approximately one-third of US government debt is held in bonds by foreign investors. And if even a portion of these investors decide not to refinance their capital in these debt securities, all markets could experience stress.
Experts also noted that in 2025, a record number of treasury bonds are expected to be sold, reaching $31 trillion when refinancing is taken into account. Binance believes that this situation will require close attention from investors due to its potential impact on all trading markets, including cryptocurrencies.
Sell debts
Amid concerns about US government debt refinancing, White House officials have already openly stated that they expect to attract “trillions of dollars in demand” through stablecoins.
David Sacks, appointed by Donald Trump as “czar” for cryptocurrencies and artificial intelligence, said in an interview with CNBC that the approval of the stablecoin bill could dramatically increase demand for US Treasury bonds. According to him, “if you give legal certainty, it will unlock trillions of dollars of demand almost instantly.”
This refers to the GENIUS (Guiding and Establishing National Innovation for U.S. Stablecoins Act) bill, which establishes rules for stablecoins. This week, it passed a key vote in the Senate, and the White House is counting on the document's final adoption.
Sacks called stablecoins “a new payment system for the US economy,” emphasizing that their peg to the dollar helps strengthen the position of the US currency in the digital sphere.
Alternative to CBDC
In the past, the US Federal Reserve System (Fed), the country's main monetary regulator, considered issuing a national digital currency (CBDC). However, during his election campaign, Trump openly opposed the launch of a CBDC. Upon taking office, he almost immediately signed an executive order on “strengthening US leadership in digital finance.” In addition to exploring the creation of a national reserve that includes cryptocurrencies, the order prohibits federal agencies from developing, issuing, or promoting CBDCs.
Instead of CBDCs, the order outlines priorities for the development of US dollar-backed stablecoins: “Promoting and protecting the independence of the US dollar, including by facilitating the development and growth of legitimate and lawful dollar-backed stablecoins around the world.”
Trump's initiative was supported by Federal Reserve (Fed) Chairman Jerome Powell, who said in February 2025 that as long as he remains in office, the Fed will not develop its own digital currency, referring to CBDC.
Powell's statement was in stark contrast to what the Fed had been doing in recent years. For example, as early as August 2024, US federal reserve banks were developing and discussing possible options for a CBDC.
Competition
The cryptocurrency market, or at least the blockchain technology underlying it, is penetrating deeper and deeper into the financial fabric of the modern system, and stablecoins are not the only use case in the banking sector.
For example, some banks are promoting “tokenized deposits” on the blockchain, according to Barrons, citing unnamed sources. This is essentially a competing form of stablecoins.
Their approach is that these crypto assets are created by banks specifically for their customers, while stablecoins are created by non-bank organizations and can be used by anyone at any time.
In the first half of last year, the concept was already put into practice when Mastercard, in collaboration with Standard Chartered, Mox, and Libeara, facilitated a transaction involving tokenized carbon credits and tokenized deposits, as reported on the Mastercard blog.
Outside the US, there are also arguments that their stablecoin policy is detrimental to banks. Thus, the strategy of promoting cryptocurrencies in the form of stable coins is not universal.
“This US strategy reduces the role of banks: they lose commissions and customers. That is why we need a digital euro,” said ECB board member Piero Cipollone.