Signals Inbox·September 2, 2026·Blockchain

Why are banks building a dollar stablecoin together?

Banks are building a shared dollar stablecoin because they want common digital cash they control before USDC, USDT or another private network becomes the default institutional dollar on-chain. The 21-bank structure gives the project distribution from day one, but coordination may be its biggest weakness.

Q1What did the banks actually commit to this time?

The new bank stablecoin project is now a real launch plan: 21 financial institutions are setting up a separate company to issue a U.S. dollar stablecoin, with the product expected to reach the market in the first half of 2027.

That is a much bigger commitment than the banks made in October 2025. Back then, ten institutions including Bank of America, Citi, Goldman Sachs, Deutsche Bank, Santander, UBS and MUFG said they were exploring a 1:1 reserve-backed form of digital money for public blockchains. There was no issuer, launch window or firm commitment to release anything.

The group now includes Bank of America, Capital One, Citi, Fidelity Investments, Goldman Sachs, PNC, Scotiabank, TD, Wells Fargo, WisdomTree and major banks across Europe, Japan, Africa and the Middle East. The first product will be denominated in dollars, with other G7 currencies planned later.

The consortium also says the stablecoin is being designed around the U.S. GENIUS Act and Europe's MiCA rules. That timing helps explain the 2027 launch: the banks can build the company while the new U.S. stablecoin regime moves from legislation into detailed operating rules.

From exploration to planned launch

Q2Why are 21 banks building the same dollar stablecoin?

The 21 institutions are building one shared dollar stablecoin because a digital currency becomes far more useful when customers of many banks can use the same money.

A Citi coin that only Citi customers comfortably accept has limited reach. The same problem would apply to proprietary coins from Santander, Wells Fargo or Deutsche Bank. Companies receiving money from different banks would still need conversions, liquidity arrangements or some common settlement layer between them.

One shared token can potentially travel across those boundaries. A company could fund it through one participating bank, send it to a supplier using another, use it to settle an on-chain asset and later redeem it through the network.

Other banks are reaching the same conclusion. Qivalis, the European consortium building a euro stablecoin, expanded from 12 banks to 37 institutions across 15 countries within a few months. In the United States, 39 state bankers associations recently created BankChain Alliance to develop common blockchain infrastructure that can support stablecoins, tokenized deposits and settlement.

Those projects are different, but the behavior is remarkably consistent. Banks these days are pooling infrastructure rather than assuming every institution needs its own blockchain money.

The economics also favor cooperation. Stablecoins rely heavily on distribution: users need places to acquire them, redeem them, hold them and spend them. Twenty-one large financial institutions give the new coin a distribution network before the first token even exists.

Q3Are stablecoins really big enough to scare banks today?

Stablecoins are already big enough for banks to take seriously, although they are still small beside ordinary bank deposits.

DefiLlama currently puts the total stablecoin market at roughly $305 billion. Tether's USDT accounts for about $183 billion and Circle's USDC about $74 billion. Together, those two products represent roughly 85% of the entire market.

That concentration is probably more important than the absolute size. Banks are looking at a digital-dollar market where two private issuers already control about five-sixths of the money.

The broader trend has also been fast. Visa calculated that stablecoin supply jumped from $186 billion at the end of 2024 to $274 billion at the end of 2025, growth of more than 50% in one year.

Compared with the banking system, however, $305 billion is still modest. The BIS recently compared stablecoins with roughly $8 trillion of U.S. bank deposits. Even allowing for differences in measurement, stablecoins are nowhere near replacing deposits today.

Banks therefore still have time. What they no longer have is a good reason to assume the category will remain a crypto niche.

Stablecoin market currently

Q4Are people actually paying with stablecoins, or mostly trading with them?

Most stablecoin activity still comes from trading and moving money around crypto markets, but real payments are finally growing fast enough to deserve attention.

The giant blockchain-volume numbers can be misleading. Visa has measured more than $10 trillion of adjusted annual stablecoin transactions, while raw industry estimates can run above $30 trillion. Exchange deposits, trading activity, treasury rebalancing and automated blockchain transactions account for a large chunk of that volume.

McKinsey and Artemis dug into the transactions that looked like actual payments. They estimated about $390 billion of stablecoin payments during 2025, only around 0.02% of global payments.

The interesting part is the direction. McKinsey found that actual stablecoin payments had more than doubled from 2024. B2B payments reached approximately $226 billion and grew 733% year over year, making business payments roughly 60% of the identified total.

Asia was particularly important. About $245 billion of stablecoin payments originated there, with Singapore, Hong Kong and Japan driving most of that activity.

So people are still using stablecoins far more heavily inside crypto than at the supermarket or to pay invoices. Yet B2B usage is now growing from a meaningful base, which is exactly the kind of customer activity large banks cannot easily dismiss.

Q5Are banks more worried about losing deposits than payment fees?

Banks have more at stake in stablecoins than payment fees because widespread stablecoin use could eventually pull money away from the deposits that help fund bank lending.

Deposits are unusually valuable funding for banks. Customers leave large amounts of cash in current, savings and corporate accounts, often at rates below what banks earn by lending the money or investing it.

A stablecoin changes where some of that cash sits. A customer can move $1 million out of a traditional deposit, receive $1 million of stablecoins and leave the issuer holding the reserve assets behind those tokens.

The Federal Reserve has been studying exactly this issue. A recent Fed analysis concluded that growing stablecoin adoption could change banks' funding mix, liquidity needs and cost of capital, depending on where issuers keep their reserves and how customers fund their stablecoin purchases.

Research from the New York Fed goes one step further. Using transaction-level data, researchers found that banks serving stablecoin issuers needed substantially larger reserve balances to handle the liquidity demands created by stablecoin flows. Their loan share of assets also fell relative to comparable banks.

That does not mean every stablecoin dollar automatically destroys one bank-deposit dollar. Some reserve money comes back into the banking system.

The uncomfortable part for banks is who controls the customer relationship. Money can remain somewhere inside the banking system while the customer starts interacting primarily with Circle, Tether, Coinbase or another digital-money platform.

A bank-led stablecoin gives banks a way to participate before that relationship migrates too far.

Q6Is the stablecoin business really that profitable?

Stablecoin issuance can be extremely profitable at scale because issuers earn returns on tens of billions of dollars of reserves while token holders normally receive little or none of that interest directly.

Circle's latest quarterly filing makes the model easy to see. USDC averaged roughly $76.5 billion in circulation during the quarter. Circle generated $701 million of revenue and reserve income, and 95% of that revenue came from reserve income.

Tether operates at an even larger scale. Its latest BDO-backed attestation reported around $184.6 billion of USDT issuance and $1.5 billion of net operating profit for the quarter.

Those are unusual economics for something that behaves, from the user's perspective, a lot like digital cash.

There is an important catch. Distribution takes a huge bite out of Circle's economics. Circle reported only $289 million of revenue after distribution costs in its latest quarter, implying roughly $412 million went toward distribution arrangements and related costs.

That gives the bank consortium a very obvious advantage. Bank of America, Citi, Wells Fargo, Santander and the other members already have millions of customers, corporate treasury relationships, compliance systems and fiat-payment connections.

For a stablecoin issuer, those relationships are expensive to reproduce. The consortium already owns them.

Q7Why don't the banks just let customers use USDC?

Banks can offer USDC to customers, but making Circle's stablecoin the default institutional digital dollar would hand Circle an increasingly important position between banks and their own clients.

Circle currently has more than $70 billion of USDC circulating across public blockchains. It has integrations with exchanges, fintech companies, wallets, institutional platforms and banks around the world. Each additional connection makes USDC easier for the next company to accept.

Circle's latest financial results also show how valuable those connections are. The company spends hundreds of millions of dollars per quarter on distribution arrangements because getting USDC onto major platforms and into customer accounts directly increases the amount of USDC people hold.

A bank can integrate USDC and make money from custody, conversion or other services. Circle still controls the currency being used, earns the reserve income before distribution costs and decides how the network develops.

That trade-off becomes more uncomfortable as USDC grows.

Supporting USDC where clients want it therefore makes sense today. Building a bank-controlled alternative at the same time also makes sense.

Q8Why does the bank stablecoin need public blockchains?

The bank consortium wants public-blockchain access because the useful part of a stablecoin is being able to move the same money between financial systems without building a new private connection every time.

The original announcement explicitly described the project as reserve-backed digital money available on public blockchains. The banks have not yet disclosed which networks the new stablecoin will support.

Public blockchains already host crypto exchanges, wallets, tokenized funds, lending platforms and other digital assets. Putting the bank coin there lets outside applications potentially interact with it without joining a proprietary banking ledger first.

Public does not have to mean anonymous. JPMorgan provides a useful example. Its JPM Coin deposit token is available on Base, a public Ethereum Layer 2, while access remains limited to eligible institutional clients and approved counterparties.

The consortium could use similar controls around wallets, minting and redemption while still benefiting from public infrastructure.

Blockchain choice will eventually become a practical test for the project. A bank stablecoin technically available on public networks but absent from the places where companies and financial applications already keep liquidity would have little advantage over another closed bank system.

Q9Why don't banks just stick with tokenized deposits?

Tokenized deposits already work well for some large banks, but they remain tied to the bank that issued them, while a shared stablecoin can circulate across a wider network.

A tokenized deposit is basically a normal bank deposit represented on programmable infrastructure. If JPMorgan issues one, the money remains a JPMorgan liability. That preserves the familiar deposit relationship and lets the bank keep the funding on its balance sheet.

The technology is already being used at serious scale. JPMorgan's Kinexys platform currently averages more than $7 billion of daily transaction volume across its blockchain businesses, and the bank is adding more currencies and tokenized assets.

The BIS is also pushing hard on tokenized deposits. Project Agorá brought together central banks and more than 40 regulated financial institutions and demonstrated multi-currency settlement using tokenized commercial-bank deposits and tokenized central-bank reserves.

A shared stablecoin solves a different problem. Companies would no longer need every recipient to participate in the same bank's deposit-token system. The asset itself could move between institutions and potentially into outside blockchain applications.

Banks are exploring both approaches at once. Tokenized deposits are attractive when the bank wants to keep money firmly inside its own balance sheet and client network. Stablecoins become more useful when portability matters more.

Tokenized deposits vs shared bank stablecoin

Q10Does JPMorgan staying out make the consortium weaker?

JPMorgan's absence makes the 21-member consortium less universal, but it also shows why banks still disagree about the best way to put dollars on-chain.

JPMorgan is conspicuously missing from the group despite operating one of the world's largest bank-led blockchain businesses. Its Kinexys network has now processed more than $4 trillion since launch and averages more than $7 billion a day.

JPMorgan also has JPM Coin, its dollar deposit token for institutional customers, running on Base. The bank has already built something many consortium members are still trying to create: live blockchain money with real corporate usage.

Recent reporting says JPMorgan has also discussed a possible stablecoin, although there is currently no announced product.

Its position is easy to understand. A proprietary deposit token lets JPMorgan keep the customer, deposit and infrastructure inside JPMorgan. Joining a shared stablecoin would mean giving up some control in exchange for a bigger common network.

The consortium is effectively betting that banks will eventually need a neutral asset that travels between institutions. JPMorgan currently has enough scale to keep pushing its own network as well.

Watching which model attracts more outside banks, asset managers and corporate treasurers will tell us much more than another blockchain pilot announcement.

Q11Why start with a dollar stablecoin if the banks are global?

The consortium is starting with dollars because the on-chain money market is overwhelmingly dollarized already.

The BIS estimates that around 98% of stablecoin value is denominated in U.S. dollars. Euro stablecoins remain tiny despite the euro being one of the world's main currencies; Bank of Ireland recently put their share of global stablecoin circulation at only about 0.2%.

The same dollar dominance exists outside crypto. The BIS's latest global foreign-exchange survey found that the dollar was on one side of 89.2% of FX transactions, while total FX trading reached $9.6 trillion a day.

A global stablecoin consortium therefore gets much more immediate utility from launching a dollar product. International companies already invoice, trade, borrow and hold reserves in dollars.

The euro is expected to come next. That also explains why Qivalis has become strategically important in Europe. Its 37 banks are trying to make sure an increasingly on-chain financial system does not simply reinforce dollar dominance.

Starting with dollars is therefore less about the nationality of the banks than about where the liquidity already is.

Q12Are cross-border payments the real reason banks want a stablecoin?

Cross-border payments are probably the clearest first market for the bank stablecoin because banks already move enormous amounts of corporate money internationally and still deal with plenty of friction doing it.

Fresh McKinsey data put global cross-border flows at roughly $190 trillion in 2025. Those transactions generated more than $290 billion of revenue for payment providers.

Even modest improvements can therefore be worth a lot of money.

Stablecoins offer 24/7 transfer, near-immediate blockchain settlement and the possibility of programming payment conditions directly into transactions. A multinational company could potentially move digital dollars outside banking hours without waiting for several correspondent banks to update separate ledgers.

The difficult parts do not magically disappear. Companies still need compliance checks, foreign-exchange conversion, local banking access and somewhere to redeem the money.

But the real-world stablecoin data point in the same direction. As seen above, McKinsey and Artemis found around $226 billion of B2B stablecoin payments in 2025, up more than sevenfold from the previous year.

That is tiny compared with $190 trillion of total cross-border flows, yet it is already large enough to show that companies are finding practical uses for digital dollars.

Cross-border payments give the consortium a much more realistic starting point than trying to convince ordinary consumers to abandon cards and bank accounts.

Q13Can a bank stablecoin actually take share from Tether and Circle?

A bank stablecoin can become a major institutional competitor, but breaking Tether and Circle's grip on crypto liquidity will be much harder.

USDT and USDC currently hold roughly 85% of the whole stablecoin market. They already trade across many blockchains, exchanges, wallets and applications.

That creates a simple network effect. Companies accept USDC because other companies already accept USDC. Exchanges hold deep USDT liquidity because traders already use USDT. New integrations strengthen the products that already have the integrations.

Big brands alone have struggled to break through. PayPal launched PYUSD with a giant consumer-payments network behind it, yet PYUSD remains only a small fraction of the market.

The bank consortium has a better chance if it starts where banks already have unusual leverage: corporate treasury, regulated institutional payments, settlement between financial firms and tokenized assets.

A large company that already keeps cash at Citi, Santander or Bank of America needs much less persuasion to use a regulated digital dollar offered through those relationships.

That could produce a big stablecoin without ever making it the preferred currency of crypto traders.

For now, we would expect the bank coin to compete more directly with USDC for institutional usage than with USDT for offshore crypto trading.

Q14Could 21 banks make the stablecoin too slow to compete?

The biggest internal risk for the bank stablecoin is coordination: 21 large institutions can give the token instant reach, but they can also turn basic product decisions into negotiations.

The banks will have to agree on reserve management, supported blockchains, customer access, compliance controls, redemption, commercial terms and how the economics are divided.

We can already see that membership is fluid. Barclays and BNP Paribas were part of the ten-bank exploration announced in 2025 but are absent from the current 21-member group. BNP Paribas is meanwhile involved with Qivalis in Europe.

Banks pursuing several strategies at once is not alarming. It does show that the industry has not converged on one model.

Creating a separate company should help. Qivalis has taken the same route rather than asking dozens of banks to run its euro stablecoin collectively through a loose committee.

The test will be whether that new company can actually behave like an operating payments business. Circle can make product decisions inside one organization. A bank consortium that takes months to agree on every network or integration will lose much of the advantage created by its enormous distribution.

So the 21-bank structure is simultaneously the project's best asset and the part most likely to slow it down.

Q15What would make companies actually use the bank stablecoin?

Companies will use the bank stablecoin if it makes moving and using corporate cash noticeably easier than today's bank accounts or existing stablecoins.

The first thing we would watch is conversion. A Citi customer should be able to move dollars into the stablecoin easily, send the tokens to a counterparty using another member bank and redeem them without turning the transaction into a multi-step crypto workflow.

Then comes liquidity. The token needs to work with custodians, tokenized funds, trading venues and other financial infrastructure that companies already use.

Pricing will matter too. A blockchain transfer costing pennies means little if FX spreads, custody, compliance and conversion make the full transaction more expensive than a normal bank payment.

The strongest version goes beyond payments. A company could receive the stablecoin, use the same dollars to buy a tokenized money-market fund, post collateral, settle another asset and later pay a supplier without constantly moving the cash back into traditional accounts.

That is where stablecoins start becoming genuinely different from faster bank transfers.

If the consortium delivers only quicker international payments between participating banks, the product may still be useful. If the same dollar becomes usable across a wider on-chain financial system, the opportunity becomes much bigger.

Q16So why are banks building a dollar stablecoin together?

Banks are building a shared dollar stablecoin because they can now see a credible path toward digital dollars becoming a real financial layer, and they want banks to own a meaningful part of that layer before private stablecoin networks become too deeply entrenched.

Today's numbers do not show stablecoins taking over banking. The category is around $305 billion, while bank deposits remain measured in trillions. Actual stablecoin payments are also far smaller than the huge transaction figures often quoted by the crypto industry.

The direction is harder to ignore. Business stablecoin payments are growing rapidly. Circle and Tether have shown how profitable large reserve-backed currencies can become. Public blockchains are starting to host real institutional assets. U.S. regulation is creating a formal route for regulated issuers. Banks themselves are now deploying tokenized money at billions of dollars of daily volume.

As seen above, the consortium has also grown from ten exploratory banks to 21 institutions preparing an actual launch. Qivalis has expanded even faster in Europe, while U.S. regional banks are building shared blockchain infrastructure through BankChain Alliance. Too many separate parts of the banking industry are moving in the same direction for this to look like another isolated crypto experiment.

The defensive motivation is real. If companies eventually hold more of their working cash as USDC or another private stablecoin, banks risk losing some combination of deposits, reserve income, payment activity and direct control over the customer relationship.

Building a shared coin gives them another option.

Doing it together is the part that makes the strategy interesting. A digital dollar issued only by Citi would always look like Citi's money to every competing bank. A dollar token backed by infrastructure shared across Bank of America, Wells Fargo, Goldman Sachs, Santander, Deutsche Bank, UBS and other major institutions has a better chance of feeling neutral enough for rivals to use.

So the strongest answer today is that banks are trying to create common digital cash before somebody else's stablecoin becomes the common digital cash.

They are still early enough that the outcome is open. But they no longer look willing to leave that outcome to Circle and Tether.