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    Banks Consider Introducing Stablecoins Tied to G7 Currencies

    Ethan CarterBy No Comments3 Mins Read
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    A consortium of banks is currently investigating the potential launch of stablecoins tied to major global fiat currencies, including the US dollar, euro, and Japanese yen.

    In a statement released on Friday, BNP Paribas disclosed that prominent banks such as Bank of America, Goldman Sachs, Deutsche Bank, and Citi announced their initiative to explore the creation of a “1:1 reserve-backed form of digital money that offers a stable payment asset on public blockchains,” aligned with currencies from the Group of Seven (G7) nations: the United States, Canada, the United Kingdom, France, Germany, Italy, and Japan.

     “The goal of this initiative is to assess whether a new industry-standard offering could leverage the advantages of digital assets and foster competition while ensuring adherence to regulatory requirements and optimal risk management practices,” stated the banks.

    No timeline for the project was provided, and it is expected to encounter competition from Tether’s USDt (USDT), which is currently the largest stablecoin by market capitalization.

    In the US, these banking efforts may be supported by the recent enactment of the GENIUS Act, a piece of legislation aimed at regulating payment stablecoins, which was signed into law by US President Donald Trump in July. Although the law is in effect, GENIUS is not anticipated to take effect for another 15 months, or 120 days after the US Treasury and Federal Reserve finalize its regulations.

    Related: Stablecoins will force ‘everyone’ to share yield: Stripe CEO

    Concerns, fallout from the GENIUS Act

    While advocates of cryptocurrency have generally welcomed the passing of the US stablecoin bill, numerous banks have urged lawmakers and regulators to address perceived loopholes in the legislation that could facilitate the emergence of interest-bearing stablecoins, which they believe may threaten financial stability.

    Tushar Jain, co-founder and managing partner of Multicoin Capital, noted on Saturday his expectation that bank customers would migrate their deposits to higher-yield stablecoins due to the new law, potentially increasing competition between tech firms and financial institutions. Nevertheless, Circle Chief Strategy Officer Dante Disparte remarked that the bill’s wording aims to prevent both tech companies and banks from monopolizing the stablecoin market.