A group of major world banks is working on a new stablecoin tied to G7 currencies. The plan is one of the biggest endeavors that traditional financial institutions have conducted to delve into blockchain-based assets.
Top Global Banks Turn To Blockchain Amid Trump-Era Crypto Revival
Bank of America, Citi, Deutsche Bank, Goldman Sachs, UBS, Barclays, BNP Paribas, MUFG, TD Bank and Santander are among the participating banks, per a Reuters report. The plan is to develop digital tokens that are fully pegged to major world currencies like the U.S. dollar, euro, yen and the pound.
This initiative follows an increase in demand for stablecoins. It is also part of an effort by traditional banks to find new roles in a financial environment that is now favorable to cryptocurrencies.
The banks said they want to examine whether blockchain-based assets could enhance competition and improve efficiency in global payments. They also emphasized that the effort will comply fully with regulations and best risk management practices. The move aligns with recent policy developments in the U.S., such as the CFTC stablecoin collateral initiative for derivatives.
Trading digital assets has come back into the limelight due to the pro-crypto policies of president Donald Trump. Financial institutions are now eager to integrate blockchain into structured systems following their former wary position about this technology. The action of these leading banks indicates their confidence that stablecoins can exist equally with fiat.
Tether’s Dominance of the Stablecoin Market Faces New Competition
Tether currently controls approximately one-third of the stablecoin market. It owns approximately $179 billion of all available stablecoins, according to data from CoinGecko.
The proposed bank-issued stablecoins can now become a regulated alternative with transparent reserves and institutional oversight. This could change how money moves in crypto and become more appealing to traditional investors.
The joint project also follows a similar move by nine European banks, including ING and UniCredit, which recently announced plans to launch a euro-backed stablecoin.
France’s Société Générale earlier this year became the first major bank to issue a dollar-backed token. Although adoption remains small with only about $30 million in circulation.
Bank-Backed Stablecoins Could End Circle and Tether’s Dominance
Cardano founder Charles Hoskinson reacted to the announcement of the stablecoins launch by these bank giants. According to him, the move would finally result in breaking the monopoly Circle and Tether hold over the sector.
A similar trend is already visible at the state level, with North Dakota set to issue its stablecoin, following Wyoming’s footsteps. This further highlights the expanding competition in the stablecoin landscape.
A successful launch of the G7-pegged stablecoin would make it the first multi-currency network by financial institutions. This asset would enable easy payment settlements across borders and interoperability of various financial systems worldwide.
It could also allow the completion of international trades at a quicker pace and reduce exposure to unstable cryptocurrencies. However, no launch date or technological structure has been disclosed by the banks involved yet.
Source: https://coingape.com/bank-of-america-others-explore-g7-pegged-stablecoins/
