US Wall Street, Stablecoin joint issuance discussions…Signal for 'Combination' of traditional finance and cryptocurrency

Wall Street begins cryptocurrency business in earnest (Source: CNN)

As news emerged that major US banks are discussing issuing stablecoins together, the boundary between traditional finance and cryptocurrency is rapidly collapsing. As the ‘GENIUS Act’, which specifies stablecoin regulation, faces a formal vote in the US Senate soon, the related industry is keenly aware of the possibility of market reorganization due to institutional integration.

According to major foreign media such as Wall Street Journal (WSJ) and CoinMarketCap on the 26th, major Wall Street banks such as JP Morgan, Bank of America, Citigroup, and Wells Fargo are known to be discussing joint stablecoin issuance with Early Warning Services, which operates Zelle, and the Clearing House. Although discussions are in the early stages, it reflects a willingness to respond proactively to the rapidly changing market environment after the bill’s passage.

The GENIUS Act is the first legislative attempt to recognize stablecoins within the institutional financial system, stipulating a 1:1 asset backing, anti-money laundering (AML) obligations, and a joint federal-state supervision system. In the US Senate, the discussion closure motion on the bill recently passed with bipartisan support, leaving only the formal vote.

In the market, this bill is seen not simply as a strengthening of regulations but as a signal of institutionalization by integrating stablecoins into financial infrastructure. Indeed, as expectations for the bill’s passage increased, Bitcoin surpassed 110,000 dollars, reaching an all-time high, and more than 1.9 billion dollars flowed into Bitcoin spot ETFs.

Stablecoins are rapidly expanding their scope of use beyond purchasing cryptocurrency or storing cash on exchanges, to cross-border remittances or payment methods. Particularly, the point that international remittances are fast and cheap through digital forms of dollars (USDC, USDT, etc.) instead of physical dollars is drawing attention from financial institutions and the fintech industry.

The reason why major Wall Street banks are considering joint issuance is clear. As stablecoins spread, the possibility of banks’ deposit base and payment fee income being eroded is increasing. Particularly, if big techs or retailers like Meta, Amazon, Walmart issue their own stablecoins and adopt them as payment methods, there is growing concern that serious disruptions could occur in the existing financial order.

The Trump administration sees stablecoins as a strategic means to expand demand for US Treasury bonds and is driving regulatory clarification, which is also offering new opportunities for major banks. If self-issued stablecoins are secured by US Treasury bonds, banks can secure a stable asset management means and not fall behind in the digital finance competition.

The stablecoin project ‘Libra’, pursued by Meta (then Facebook) two years ago, was thwarted by regulatory backlash, but this time it is different in that the traditional financial sector itself is pursuing stablecoin issuance within the institutional framework. The fact that it is a joint issuance model of banks, rather than being led by a single company, also creates a structure that disperses risk.

WSJ assessed, “This discussion is a move to turn back the past few years when Wall Street was pushed out of the cryptocurrency industry and regain the initiative in the digital asset-based payment market,” and “It is a clear signal that the distance between traditional finance and cryptocurrency is getting closer.”