TLDR;
- US banks unite to create stablecoin countering crypto’s growing threat to traditional finance
- Project led by Zelle and The Clearing House backed by JPMorgan and major banks
- GENIUS Act could legalize stablecoins triggering rapid adoption and regulatory clarity
- Crypto stablecoins offering yields pressure banks to compete or risk losing customer deposits
In a move aimed at preserving their dominance in the financial ecosystem, a coalition of major U.S. banks is working to launch a joint stablecoin project that would directly challenge the rise of private crypto-backed payment systems.
According to sources familiar with the matter, the proposed stablecoin is currently under development by a consortium including JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and other major institutions. The initiative is being coordinated through two financial networks: Early Warning Services, the operator of the Zelle peer-to-peer payment app, and The Clearing House, which facilitates instant payments between banks.
The move comes amid growing concern within the banking sector about the potential disruption posed by blockchain-based financial alternatives. Notably, Stablecoins gained traction as fast, low-cost tools for transferring money globally. With regulatory momentum building around digital asset legislation like the GENIUS Act, banks appear keen to stake their claim in the evolving landscape.
Strategic Counter to Crypto Expansion
The decision to explore a bank-backed stablecoin is driven by more than just technological competition. Sources say financial institutions fear a mass exodus of customer deposits if crypto-native stablecoins, especially those offering interest or incentives, become widespread under favorable regulations. These fears have intensified with tech companies and retail giants reportedly exploring their own digital currency initiatives.
Austin Campbell, a fintech consultant and professor at NYU, views the bank-led stablecoin as a defensive play.
“What you’re seeing is an attempt to preserve the traditional banking model,” he said. “Banks want lawmakers to shield them from innovation that threatens their ability to profit from customer deposits while offering minimal returns.”
Campbell also accused the banks of lobbying for regulations that would stifle competition, particularly from stablecoins that promise yields.
The Empire Lobbies Back
As I had predicted, I am hearing the bank lobby is panicking about stablecoins and specifically the ability to pay any form of rewards or interest.
So for my friends on the Democratic side, let me simplify what you are hearing:
The banks want you to…
— Austin Campbell (@CampbellJAustin) May 21, 2025
The Fight Over the GENIUS Act
At the heart of the regulatory debate is the GENIUS Act, a bipartisan bill that could legalize and standardize the issuance of stablecoins in the United States. The bill passed the Senate last week by a vote of 66-32 and is now headed to the House of Representatives. If enacted, the legislation would set clear rules for reserve backing, transparency, and oversight of stablecoin issuers.
On Thursady, Senator Cynthia Lummis, a vocal supporter of digital assets, praised the bill’s progress, stating, “Stablecoins aren’t the future, they’re the present.” adding that the U.S. needs to ensure they operate under sound rules while encouraging innovation. Notably, Lummis has previously proposed creating a national Bitcoin reserve to strengthen the U.S. monetary position.
Stablecoins aren’t the future, they’re the present.
Digital assets can facilitate payments 365 days of the year, without the extra costs.The GENIUS Act is a game-changer for everyone, from small businesses in Cheyenne, to major companies in New York City. pic.twitter.com/EVR0lQADpM
— Senator Cynthia Lummis (@SenLummis) May 22, 2025
David Sacks, who serves as a White House advisor on digital finance, said earlier this week that the GENIUS Act could unlock “trillions in demand for U.S. treasuries overnight” by making stablecoins a more attractive store of value.
Competing Models
Meanwhile, crypto firms are already rolling out innovative stablecoin models that reward holders with passive income. In February, the SEC approved the YLDS token from Figure Markets, offering a yield of 3.85% annually. More recently, Tether co-founder Reeve Collins unveiled the Pi Protocol, which allows users to mint the USP stablecoin in return for USI, a token that pays interest.
