US Banks Weigh Issuing Stablecoins as They Move to Defend Deposits

US banks are accelerating plans to enter the stablecoin market as they seek to protect their deposit base and payments businesses from a push by nonbank companies into finance.

The Wall Street Journal reported on Aug. 26 that JPMorgan Chase has recently held internal discussions about potentially launching its own stablecoin. The bank has not yet moved into product development. JPMorgan says it has no current plan to issue one, but is leaving the option open depending on client demand and regulatory changes.

Large banks are also discussing a joint issuance model. More than a dozen financial firms, including Bank of America, Wells Fargo and Santander, are reviewing a plan to pursue a global stablecoin business together. One proposal calls for starting with a dollar-backed coin for corporate banking before expanding to major currencies including the euro.

Regional and midsize banks are pursuing a separate response. The Bankchain Alliance, which includes state bankers associations from 39 US states, recently unveiled plans for a blockchain platform operated directly by banks. The platform would include about 3,000 banks, target a launch in the first half of 2027, and support cash management, supply-chain finance, tokenized deposits and stablecoin functions.

Banks' shift in stance has been driven in part by nonbank entrants. Crypto firms such as Tether and Circle had long dominated the stablecoin market, but traditional finance and technology companies including Visa, BlackRock, Google and DoorDash are now reviewing or advancing related businesses. Anchorage Digital is also working on more than 12 stablecoin projects, some of which are reportedly being led by banks or bank consortiums.

Banks have so far preferred tokenized deposits over stablecoins. Tokenized deposits convert traditional bank deposits into blockchain-based digital tokens, making them relatively easier to fit within existing credit, accounting and regulatory frameworks. Banks also see value in the fact that deposits remain within the banking system.

Stablecoins, by contrast, can be used across multiple public blockchains including Ethereum and Solana, giving them broader utility. Banks are increasingly concerned that if nonbank companies expand payments and remittance services on that foundation, lenders' core revenue streams and customer relationships could come under pressure.

Banks are particularly wary that deposit outflows could accelerate if stablecoin holders receive interest or other rewards. In debate surrounding the CLARITY Act, a US crypto market-structure bill, banks have argued that such payments should be restricted, putting them at odds with the crypto industry.

Competition is also intensifying as crypto firms push into banking. World Liberty Financial, which is linked to the family of President Donald Trump, recently received preliminary conditional approval from the Office of the Comptroller of the Currency to establish a bank. If it receives final approval, it would be able through World Liberty Trust to issue, redeem and custody USD1, a dollar-pegged stablecoin valued at about $4 billion.

Jonathan Gould, the comptroller of the currency, said at a blockchain symposium in Jackson Hole, Wyoming, that it has become common for business plans submitted to the OCC to include payment stablecoins.