Core Viewpoint - Bank of America CEO Brian Moynihan expressed that while the bank can adapt to the rise of stablecoins, there are significant concerns regarding the potential movement of up to $6 trillion in deposits into stablecoins, which could negatively impact the broader banking system by reducing lending capacity and increasing borrowing costs [1][6][7] Group 1: Stablecoins and Banking System Impact - Moynihan highlighted that the shift of deposits into stablecoins could lead to a reduction in banks' lending capacity, as deposits are essential for funding loans [7] - The American Bankers Association (ABA) has echoed these concerns, urging lawmakers to address "dangerous loopholes" in stablecoin legislation that allow issuers to offer yield-like incentives, potentially diverting savings from traditional banks [5] - The GENIUS Act, aimed at establishing a federal framework for stablecoin issuers, has faced criticism from banks for not including stronger regulations to prevent stablecoins from acting as interest-bearing deposit substitutes [4] Group 2: Legislative Context and Industry Reactions - RBC Capital Markets analyst Gerard Cassidy raised questions about whether U.S. lawmakers would address a "looming loophole" that could allow stablecoin deposits to pay interest, which is currently restricted [3] - The Senate has been debating provisions to adjust this loophole in a crypto market structure bill, but progress has stalled following Coinbase's withdrawal of support [3] - There is a divide in the banking sector regarding the risks posed by stablecoins, with some institutions, like JPMorgan, downplaying the systemic risk associated with stablecoins drawing savings onto blockchains for higher yields [8]

Core Viewpoint - Community bank leaders are urging U.S. senators to address loopholes in stablecoin legislation, warning that trillions of dollars could leave traditional bank deposits, negatively impacting local lending [1][2][4] Group 1: Concerns from Community Bankers - The American Bankers Association's Community Bankers Council expressed concerns that stablecoin issuers are finding ways to offer yield-like incentives, which could divert savings from banks that rely on deposits for loans [2][4] - The ABA estimates that up to $6.6 trillion in bank deposits could be at risk if stablecoin practices continue, potentially harming small businesses and local economies [3][4] - The letter highlights that while the GENIUS Act introduced oversight for stablecoins, it does not fully prevent issuers from indirectly compensating users, which undermines the intent of the legislation [4] Group 2: JPMorgan's Perspective - JPMorgan has a different view, downplaying the systemic risk posed by stablecoins drawing savings onto blockchains for higher yields [5][6] - A JPMorgan spokesperson noted that the presence of various forms of money, including stablecoins, will coexist and serve complementary roles in the financial ecosystem [6] Group 3: Ongoing Industry Debate - The letter from community bankers is part of a long-standing effort by U.S. banking groups to limit the issuance of dollar-backed stablecoins, which are increasingly popular in the crypto economy [6][7] - Previous attempts by bank trade groups have included calls to restrict stablecoin issuance to regulated banks or to ban interest-bearing tokens altogether [7]

Core Insights - US lawmakers are considering changes to the GENIUS Act, influenced by banking groups urging Congress to restrict third-party rewards on stablecoins, amidst a stablecoin supply surpassing $316 billion, indicating significant reliance on dollar-pegged tokens for transactions and savings [1][2] Group 1: GENIUS Act Overview - The GENIUS Act establishes foundational regulations for stablecoins, requiring issuers to maintain real dollar reserves and adhere to strict oversight, functioning similarly to cash in a digital format without intermediary banks [3] - The act prohibits issuers from directly paying interest, although crypto platforms can still incentivize users through trading fees or lending returns, which banks are now seeking to limit [4] Group 2: Industry Reactions - Industry representatives argue that banks are motivated by competitive fears rather than genuine risks, emphasizing that the legislation aims to balance safety with innovation [5] - The Blockchain Association supports this perspective, asserting that there is no evidence to suggest that stablecoins undermine banks, and that rewards primarily benefit everyday users rather than large financial institutions [6] Group 3: Potential Implications - If Congress aligns with banking interests, stablecoins may become less attractive, resembling traditional checking accounts without the benefits, which could hinder adoption and negatively impact DeFi applications that depend on stablecoin liquidity [7]

Core Viewpoint - World Liberty Financial, co-founded by President Donald Trump, is applying for a national trust bank charter to expand its USD1 stablecoin operations [1][2]. Group 1: Company Developments - WLTC Holdings LLC has submitted a de novo application to the Office of the Comptroller of the Currency for establishing World Liberty Trust, a national trust bank focused on stablecoin services [2]. - World Liberty has raised funds through the sale of its WLFI token, which transitioned from a non-transferable governance token to a tradable asset [4]. - The USD1 stablecoin has a market capitalization of $3.4 billion, and if the charter is granted, it will enable World Liberty Trust to serve institutional clients and offer digital asset custody and stablecoin conversion services [4]. Group 2: Industry Context - The application for a bank charter by World Liberty is part of a broader trend among crypto firms seeking federal legitimacy while avoiding full regulatory obligations of national banks [3]. - Other crypto firms, including Coinbase, Ripple, Paxos, and BitGo, have also pursued bank charters, indicating a growing interest in regulatory frameworks for digital assets [3]. - The national trust charter aims to provide a federal framework for custody, reserve management, and fiduciary oversight, potentially enhancing institutional participation and consumer protections in the crypto space [5].

Core Viewpoint - World Liberty Financial, co-founded by President Donald Trump, is pursuing a US bank charter to enhance its USD1 stablecoin operations, reflecting a trend among crypto firms seeking federal legitimacy without full regulatory obligations [1][3]. Group 1: Company Developments - WLTC Holdings LLC has submitted a de novo application to the Office of the Comptroller of the Currency to establish World Liberty Trust, a national trust bank focused on stablecoin services [2]. - World Liberty has raised funds through its WLFI token, which transitioned from a non-transferable governance token to a tradable asset, and its USD1 stablecoin has a market capitalization of $3.4 billion [5]. Group 2: Industry Context - The application for a bank charter by World Liberty is part of a broader trend among crypto firms, which is raising concerns among traditional banks about the implications for financial supervision [3]. - Previous applications for bank charters in the crypto space include Coinbase Global Inc. and conditional approvals for firms like Ripple, Paxos, and BitGo by the OCC [4]. Group 3: Future Implications - If the charter is granted, World Liberty Trust will provide services to institutional clients, including crypto exchanges, and will facilitate digital asset custody and stablecoin conversion [6]. - The co-founder of World Liberty emphasized that a national trust charter would establish a federal framework for custody and reserve management, potentially enhancing institutional participation and consumer protections in regulated payment systems [7].

Core Viewpoint - Coinbase CEO Brian Armstrong predicts that US banks will eventually lobby for the ability to pay interest on stablecoins, reversing their current stance against it [1][2]. Group 1: Legislative Context - The GENIUS Act, signed in July 2025, prohibits stablecoin issuers from paying interest directly to holders, but allows intermediaries like exchanges to pass yield from Treasury reserves to users [3][4]. - Banking lobbyists are pushing to amend the GENIUS Act to close the loophole that allows non-bank platforms to offer competitive yields of approximately 4% to 5% on liquid cash equivalents [5]. Group 2: Industry Response - Armstrong criticizes the banking lobby's attempts to amend the law as a "red line" for the crypto industry, arguing that it reflects a contradiction in their safety concerns while maintaining a business model that pays depositors below-market rates [6]. - A coalition of 125 crypto companies, including Coinbase, has submitted a letter to the Senate Banking Committee opposing any revisions to the GENIUS Act, asserting that reopening the bill would undermine regulatory certainty [6].

Core Insights - A consortium of nine European banks is planning to launch a shared stablecoin by 2026, indicating a significant shift in the banking sector towards integrating stablecoins into their operations [1] - Major banks like JPMorgan and Société Générale are actively expanding their stablecoin offerings, reflecting a growing acceptance of stablecoins in traditional finance [1][2] Group 1: Regulatory Changes - Recent regulatory frameworks, such as MiCA in Europe and the GENIUS Act in the U.S., have established guidelines that align with existing banking regulations, facilitating banks' compliance with stablecoin operations [4] - The introduction of clear rules regarding reserves, redemption rights, and AML controls has removed compliance as a barrier for banks adopting stablecoins [4] Group 2: Shift in Use Cases - The use case for stablecoins has evolved from speculative trading to practical applications in payments, which has prompted banks to take stablecoins seriously [4][5] - In 2025, USDT processed $156 billion in transactions under $1,000, primarily for retail payments and remittances, demonstrating stablecoins' utility in everyday financial transactions [5] Group 3: Differentiation Among Stablecoins - The market often conflates stablecoins, but there are significant differences in their structures and risk profiles, such as USDC's reliance on cash and U.S. Treasuries versus USDT's broader reserve mix [6] - DAI employs over-collateralization with crypto assets, while algorithmic stablecoins like Ethena's USDe use derivatives to maintain their peg, highlighting the diverse approaches within the stablecoin market [7]

The International Monetary Fund on Thursday released a new global assessment of the stablecoin market, warning that fragmented regulatory frameworks across countries are now creating structural “roadblocks” that threaten financial stability, weaken oversight, and slow the development of cross-border payments. In its report titled “Understanding Stablecoins,” the IMF reviewed how major economies, including the United States, the United Kingdom, the European Union, and Japan, regulate stablecoins and found ...

Japan’s Sony Bank is reportedly readying the launch of a dollar-pegged stablecoin.By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions .Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.The bank is set to issue the coin as soon as fiscal year 2026, with Sony envisioning ...

Core Viewpoint - The Bank of England (BoE) is proposing new rules for stablecoin issuers, allowing them to invest up to 60% of their backing assets in short-term government debt, indicating a shift in its regulatory approach towards the stablecoin sector [1][3]. Group 1: Regulatory Changes - The BoE's new proposal suggests a softening stance compared to a previous 2023 proposal that required issuers to hold all assets with the bank, which would not earn interest [2]. - The BoE plans to oversee only stablecoins that are likely to be widely used for payments and has introduced a temporary regime for issuers previously regulated by the Financial Conduct Authority (FCA), allowing them to invest up to 95% of their backing assets initially [4]. - The BoE is considering offering central bank liquidity facilities to systemic stablecoin issuers during market stress, providing a safety net if they cannot sell their reserve assets in the private market [6]. Group 2: Industry Impact - The crypto industry has sharply criticized the BoE's earlier proposal, which mandated that 100% of assets be held with the bank, reflecting concerns over the impact of such regulations on the sector [2]. - The BoE has retained unpopular plans to introduce temporary caps on the value of stablecoins that individuals and businesses can hold, although larger businesses may be exempted if necessary [5]. - Stablecoins used for non-systemic purposes, such as trading crypto tokens, will fall outside the BoE's regulatory regime and will instead be overseen by the FCA [6].