Banks in the United States and Europe continue to make major strides in issuing stablecoins. These steps, supported by regulatory clarity and market demand, could lead to significant changes in the financial sector. The European Union’s Crypto-Asset Markets Directive (MiCA) and growing interest in blockchain-based payment solutions are pushing traditional banks to compete with crypto firms like Tether.
Banks in Europe Enter the Stablecoin Market
Many European banks want to take a share in the cryptocurrency market by issuing stablecoins. France-based Societe Generale – Forge has introduced the Euro-backed stablecoin to retail investors. Frankfurt’s Oddo BHF SCA and London-based Revolut are also planning to launch Euro stablecoins. Deutsche Bank, on the other hand, is targeting 2025 for a Euro-backed stablecoin. SG-Forge CEO Jean-Marc Stenger said “Yes,” indicating that more banks will adopt bank-backed stablecoins.
Visa Inc. is also working on a blockchain-based stablecoin solution with global payment companies. Visa’s crypto chief Cuy Sheffield stated that they are in talks with banks in Hong Kong, Singapore and Brazil. Developments in Europe show that the stablecoin market is growing rapidly and how the traditional financial sector will adapt.
Regulatory Approval Pending in the US
Banks in the United States are awaiting regulatory approval to offer stablecoins. While JPMorgan Chase is testing blockchain-based payment systems, some banks are increasing interest in stablecoins. JPMorgan currently only uses JPM Coin for internal transfers, but a stablecoin with an open link is not yet available. Stablecoins and tokenized deposits are expected to gain greater acceptance in the future.
However, there are some uncertainties for US banks. Questions such as what reserves will support stablecoins and whether deposits will be covered by federal insurance still remain to be answered. Experts state that these uncertainties may cause problems during financial crises.
The MiCA regulation was an important step for stablecoin issuers in Europe. This regulation, which will come into force on December 30, 2024, creates opportunities for banks in Europe. The proliferation of stablecoins is likely to shape the cryptocurrency market in Europe.
Digital Currency Studies of Central Banks
Digital currencies developed by central banks may also have an impact on banks’ stablecoin strategies. Government-backed digital currencies could compete with bank-backed stablecoins. Ripple launched on December 16, 2024 $2.2‘s RLUSD stablecoin has also rapidly gained popularity. The development of central bank digital currencies could change banks’ approach to stablecoins.
While banks in Europe and the USA are taking important steps in issuing stablecoins, central banks continue to work on digital currencies. Clarification of regulations and technological advances will continue to shape the industry.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
