Big banks are working on payment stablecoins | PaymentsSource

Stablecoins have gotten a lot of attention in recent months, pushing financial institutions to consider how to respond to the trend.

The result has been a rush of news of banks kicking the tires on bank-issued stablecoins — developing their own coins, joining a consortium or some combination. Banks are also considering stablecoin alternatives that promise the same benefits of stablecoins, such as faster processing, supporting distributed finance and managing currency fluctuations, but with less perceived risk.

Stablecoins, which are supposed to be backed by reserves such as U.S. dollars, are considered the form of cryptocurrency most likely to support payments and other traditional financial services. The number of stablecoins in circulation has increased in recent years, and that growth is expected to accelerate.

The expected passage of the GENIUS Act, which is designed to regulate stablecoins in the U.S., is spurring banks to action in the stablecoin market, a space that fintechs such as Tether and Circle currently dominate.

“For a bank or credit union, having a strategy in place is important to define which role, if any, to take, be it issuance, custody, distribution, orchestration, acceptance, etc., as well as to understand how competitors, fintechs or clients adopting stablecoins could pose a threat,” Christophe Uzureau, vice president and analyst at Gartner, told American Banker.

Here’s a sample of banks that have announced stablecoins, are reportedly working on stablecoins or are developing products similar to stablecoins.