Participating banks more than double from 10 to 21 in 10 months, drawing major US and European lenders
Japan's MUFG only Asian member; initiative targets cross-border payments and digital asset markets
Alliance plans to expand beyond dollar to euro and other G7 currencies, setting up direct rivalry with Tether
Twenty-one major global banks — including Goldman Sachs, Bank of America, Citigroup and Deutsche Bank — have joined forces to jointly issue a dollar-pegged stablecoin next year, bringing traditional finance into a market long dominated by crypto firms and intensifying competition over the "digital dollar."
The 21 financial institutions announced Tuesday (local time) in a joint statement that they plan to establish a separate legal entity in the second half of this year to handle stablecoin issuance, with a dollar-linked stablecoin set to launch in the first half of next year. The name of the new entity will be disclosed at a later date.
The project traces its origins to a consortium launched by 10 banks in October last year. In just 10 months, the number of participating institutions has more than doubled to 21, expanding the alliance into a coalition spanning the world's major financial centers.
Ten financial institutions from North America are involved, including Goldman Sachs, Bank of America and Citigroup. Eight European lenders have signed on, among them Deutsche Bank, UBS, Santander and BBVA. Japan's Mitsubishi UFJ Financial Group is the sole Asian participant, with one institution each from the Middle East and Africa also joining.
The consortium said it intends to comply with both the US stablecoin legislation known as the GENIUS Act and the EU's Markets in Crypto-Assets regulation, or MiCA.
The alliance will initially target cross-border remittances and digital asset payment markets through its dollar stablecoin. Its scope extends beyond wholesale interbank settlements to include the retail market serving institutional investors and individual consumers.
Starting with the dollar, the group plans to expand into other major currencies. The euro is the top priority, with the consortium also considering issuing stablecoins pegged to other G7 currencies down the line.
Traditional financial firms are moving quickly into the stablecoin space more broadly. Kvalbis, a 37-institution alliance that includes Spain's BBVA, is set to launch a euro-pegged stablecoin before the end of this year.
In the United States, the competitive landscape has grown more complex as the family of President Donald Trump has entered the crypto business. Trump's family-linked crypto firm World Liberty Financial already issues its own stablecoin.
Analysts say the pace of global banks' market entry has accelerated as the market rebounded after crypto prices began recovering in 2024, and as Trump has aggressively pursued pro-crypto policies.
Stablecoins are virtual assets designed to maintain a fixed value relative to fiat currencies such as the dollar. Their relatively low price volatility makes them useful not only for crypto trading but also for remittances and payments, drawing growing interest from the financial sector.
How quickly traditional banks can break into a market currently dominated by established crypto firms, however, remains an open question.
Tether holds an overwhelming lead in the global stablecoin market, with its circulation exceeding $180 billion. By contrast, the stablecoin launched last year by France's Société Générale has a circulation of only about $12.5 million, suggesting that actual demand for bank-issued stablecoins remains limited.
Wariness from central banks is another variable. European Central Bank President Christine Lagarde has warned that the widespread adoption of privately issued stablecoins could threaten central banks' ability to conduct monetary policy and maintain financial system stability.
Even so, observers note that the world's largest financial institutions have chosen to form a single alliance rather than issue stablecoins individually — a move that could shift the market's dynamics. If the banks can leverage their global payment networks, customer bases and regulatory expertise, the stablecoin market, long led by crypto firms, could enter a full-scale battle for dominance with traditional finance.
sjy@heraldcorp.com
