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- Major global banks unite to explore a blockchain-based G7 stablecoin backed 1:1 with fiat reserves.
- Move follows the GENIUS Act, fueling competition between banks and fintechs in digital money innovation.
Ten of the world’s largest financial institutions have joined forces to study a potential stablecoin product tied to G7 currencies. The participants include Bank of America, Citi, Goldman Sachs, Deutsche Bank, Barclays, UBS, BNP Paribas, Banco Santander, MUFG Bank, and TD Bank Group.
According to a statement released by BNP Paribas on Friday, the project will focus on a “1:1 reserve-backed form of digital money” designed to operate on a blockchain. The coin would be pegged to the currencies of US, Canada, France, Germany, Italy, Japan, and the UK. The banks added,
The objective of the initiative is to explore whether a new industry-wide offering could bring the benefits of digital assets and enhance competition across the market, while ensuring full compliance with regulatory requirements and best practice risk management.
Stablecoin Adoption Surges Amid Regulatory Clarity
This project comes at a time when banks and corporations are exploring how to connect blockchain technology with traditional finance. Stablecoins, usually pegged to fiat currencies like the dollar or euro, have become a major topic in discussions about the future of payment systems. The idea promises instant settlement and lower transaction costs.
As reported by CNF, President Donald Trump signed the GENIUS Act in July, setting clear rules for issuing and trading stablecoins across the United States. The law aims to bring digital dollar assets into the broader financial system while ensuring transparency and consumer protection for both issuers and investors.
Many in the crypto industry backed the law, but some banks raised concerns that loopholes could allow interest-bearing stablecoins. They warned this might pull money out of banks and shake financial stability.
$1 Trillion in Deposits – Stablecoins’ Next Frontier
Analysts at Standard Chartered estimated that banks in developing economies could move up to one trillion dollars in deposits into stablecoins over the next three years. They believe competitive yields and faster transaction speeds will make it a more attractive option than traditional bank accounts.
Tushar Jain, co-founder of Multicoin Capital, said he expects depositors to move their funds into higher-yield stablecoins following the passage of the GENIUS Act. He believes the new law will push bank customers to shift traditional deposits into digital assets, reflecting a broader view that stablecoins can compete directly with traditional financial products.
Dante Disparte, Chief Strategy Officer at Circle, shared a different view. He said the bill’s language is designed to stop big tech firms and banks from dominating the stablecoin space. His comments highlight an effort to create fair competition between fintech innovators and established financial institutions.
While, major banks are entering a rapidly expanding market dominated by Tether’s USDT, which holds a market cap of over $178 billion. Other leading stablecoins include USDC, DAI, Ethena’s USDe, PayPal USD, and USD1, issued by World Liberty Financial.
