Major US banks, including JPMorgan, Bank of America, Citigroup, and Wells Fargo, are reportedly in early talks about launching a joint stablecoin, according to the Wall Street Journal on May 22.

The discussions involve co-owned entities like The Clearing House and Early Warning Services LLC, which operates Zelle.

The project’s progress depends on the outcome of US stablecoin legislation.

The Senate is advancing the Guiding and Establishing National Innovation for US Stablecoins Act, or the GENIUS Act. This legislation would require stablecoins to be fully backed by US dollars or similar liquid assets.

It also mandates annual audits for issuers with over US$50 billion in market capitalization and includes guidelines for foreign issuers.

🔗 Source: The Block

🧠 Food for thought

1️⃣ Banking’s collaborative defense against fintech disruption

Major banks’ exploration of a joint stablecoin venture represents a strategic response to potential disintermediation in payments, following established patterns of industry collaboration.

This consortium approach mirrors the banking industry’s previous collaborative efforts like Zelle, which was created to counter Venmo and other peer-to-peer payment services 1.

The timing is significant as stablecoin transaction volumes have surged to $710 billion monthly, up from $521 billion the previous year, indicating rapidly growing demand for these digital alternatives to traditional banking services 1.

With unique stablecoin addresses reaching 35 million (a 50% year-over-year increase), banks face increasing pressure to enter this space or risk losing transaction volume and customer relationships to non-bank competitors 1.

The collaborative approach allows these institutions to share development costs and regulatory burden while creating network effects that would be difficult for any single bank to achieve independently.

2️⃣ Regulatory clarity driving institutional stablecoin adoption

The banks’ timing reveals how regulatory certainty is catalyzing institutional involvement in digital assets, with the GENIUS Act creating the framework necessary for traditional finance to embrace stablecoins.

With the Senate’s 66-32 vote advancing the GENIUS Act, banks now have visibility into the likely regulatory requirements, including reserve backing and audit obligations that would govern stablecoin issuance 2.

Recent JPMorgan developments