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Payment strategy has changed, with top executives in US banks calling it out. Executives of JPMorgan, Citigroup, and Bank of America have acknowledged that stablecoins, which were previously dismissed as an experimental tool, are becoming an increasing threat to established banking activities. Such remarks align with legislative trends, particularly the development of the GENIUS Act in Congress.
Digital units known as stablecoins, backed by either cash or Treasury assets, store fiat currencies like the US dollar. Unlike non-stable coins (such as Bitcoin), stablecoins have a stable value, which makes their implementation as a form of digital payment much quicker and more consistent.
These attributes are more alluring to businesses, particularly for 24/7 cross-border transactions, which were hitherto reliant on traditional banking processes.
JPMorgan Chairman and CEO Jamie Dimon expressed concern about fintech firms encroaching on traditional banking. He noted their efforts to enter payment and reward platforms, and banks must protect their interests in these systems.
Citigroup CEO Jane Fraser announced that Citi is developing services utilizing blockchain technology, including deposit tokens and a proprietary stablecoin. She emphasized the importance of maintaining reserves and facilitating a seamless transition between digital and fiat currencies.
Speaking on the matter, Brian Moynihan, the CEO of Bank of America, has admitted that the actual demand within the client base for services related to stablecoins is minimal; yet, the institution needs to be prepared. The provisions required to defend the bank's position in the payments market before clients decide to search for alternative service providers.
The new House of Representatives bill, the GENIUS Act, is an important milestone towards the formal regulation of stablecoins. The status of the GENIUS Act advanced since House Republicans removed a temporary blockade that had been preventing its progress. Proponents claim that the bill will promote the development of dollar-peso tokens under tighter regulatory oversight. Previously, former President Donald Trump gave his approval to the measure.
CoinGecko lists the existing market size of stablecoins at about 265 billion. According to Citigroup, that figure could reach $3.7 trillion by 2030. To this effect, companies such as Circle have already rolled out incentives, including 4.1% interest on balances and extended payment options worldwide, which facilitate the use of stablecoins. US banks are making tactical decisions to implement stablecoins as a means of remaining competitive as the regulatory environment evolves.
