Banks Explore Launching Stablecoins Pegged to G7 Currencies

A group of banks is exploring the launch of stablecoins focused on some of the world’s largest fiat currencies, including the US dollar, euro and Japanese yen.

According to a statement released Friday by BNP Paribas, banks including Bank of America, Goldman Sachs, Deutsche Bank and Citi said they had launched a project to explore “the issuance of a form of 1:1 reserve-backed digital currency that provides a stable payments asset available on public blockchains” linked to the currencies of the Group of Seven (G7) countries: the United States, the Canada, the United Kingdom, France, Germany, Italy and Japan.

“The aim of the initiative is to explore whether a new industry-wide offering could deliver the benefits of digital assets and increase competition in the market, while ensuring full compliance with regulatory requirements and best risk management practices,” the banks said.

The statement did not suggest a timeline for the project, which would likely face competition from Tether’s USDt (USDT), the largest stablecoin by market capitalization.

Among US banks, their efforts would likely be aided by the recent passage of the GENIUS Act, a bill aimed at regulating payment stablecoins, signed into law by US President Donald Trump in July. Although already law, GENIUS is not expected to take effect for 15 months, or 120 days after the U.S. Treasury and Federal Reserve finalize regulations around the bill.

Related: Stablecoins will force ‘everyone’ to share yield: Stripe CEO

Concerns, fallout from the GENIUS law

Although crypto advocates have largely welcomed the passage of the U.S. stablecoin bill, many banks have called on lawmakers and regulators to close loopholes in the law that would allow interest-bearing stablecoins, saying they would threaten financial stability.

Multicoin Capital co-founder and managing partner Tushar Jain said on Saturday that he expected bank customers to shift their bank deposits to higher-yielding stablecoins due to the new law, making tech companies more competitive with financial institutions. However, Dante Disparte, Circle’s chief strategy officer, suggested that the bill’s language ensures that tech companies and banks do not dominate the stablecoin market.