- Stablecoins are attracting financial institutions due to clearer regulations from the US and European Union.
- Another group of European banks, including ING and UniCredit, is planning a euro-backed stablecoin.
Global banks have joined forces to explore issuing digital money on public blockchains in a shift in how traditional finance approaches blockchain technology.
According to Bloomberg report, a consortium including Goldman Sachs, Deutsche Bank, Bank of America, and Santander is investigating whether stablecoins pegged to G7 currencies could offer a new form of payment asset with benefits in speed and cost.
The group, which includes other banking giants such as BNP Paribas, Citigroup, MUFG, TD Bank, and UBS, aims to issue a stablecoin backed 1:1 by reserves of real-world currencies.
This digital money would reportedly be available on public blockchains, allowing for potentially faster and more competitive payment options. According to the banks, this initiative also ensures full regulatory compliance and risk management standards.
The coalition is actively engaging with regulators to assess if this approach could improve competition while delivering the advantages of digital assets. This comes as blockchain technology gains more traction in payments, with stablecoins becoming a key area of interest.
See Related: Big U.S. Banks Are Exploring A Joint Stablecoin In Early Talks: Report
A Complex Balance Of Stablecoins And Regulation
Stablecoins, cryptocurrencies tied to traditional assets such as the US dollar, have increasingly attracted attention outside crypto trading, especially among financial institutions. Regulatory clarity from the US and European Union has encouraged banks to explore these digital assets seriously.
Governments and regulators, however, remain cautious. Authorities warn that stablecoins might redirect funds outside traditional banking systems, potentially affecting financial stability and policy control. For example, the Bank of England governor has cautioned UK banks about issuing their own stablecoins, while the European Central Bank has flagged risks to monetary stability from privately issued tokens.
The renewed interest in stablecoins coincides with increased cryptocurrency prices and the endorsement of the sector by influential figures, including US President Donald Trump. Despite this, stablecoins largely serve crypto markets, with only a small fraction used for actual payments of goods or services.
Tether dominates the stablecoin market with more than $400 billion in circulation. A separate coalition of nine European banks, including ING and UniCredit, plans to launch a euro-backed stablecoin through a new entity.
