US and EU banks are making significant progress in issuing stablecoins. Regulatory clarity and growing market demand are accelerating developments in this area and could lead to fundamental changes in the financial sector. The European Union’s Markets in Cryptoassets Regulation (MiCA) and interest in blockchain-based payment solutions are driving traditional banks to compete with crypto firms like Tether.
Many European banks are looking to establish themselves in the cryptocurrency market by issuing stablecoins. France-based Societe Generale – Forge is offering a euro-backed stablecoin to retail investors, while Frankfurt’s Oddo BHF SCA and London-based Revolut are also planning to launch euro stablecoins. Deutsche Bank is targeting a euro-backed stablecoin in 2025. SG-Forge CEO Jean-Marc Stenger said more banks will adopt bank-backed stablecoins. Visa Inc. is also working with global payment companies on a blockchain-based stablecoin solution, and Cuy Sheffield said they are in talks with banks in Hong Kong, Singapore and Brazil. These developments in Europe show that the stablecoin market is growing rapidly and how the traditional finance sector is adapting to it.
Awaiting US Regulatory Approval
Banks in the United States are awaiting regulatory approval to offer stablecoins. JPMorgan Chase is testing blockchain-based payment systems, while some banks are showing increasing interest in stablecoins. Currently only used for internal transfers, JPM Coin is not yet an open-link stablecoin in the market. However, stablecoins and tokenized deposits are expected to see greater acceptance in the future.
Uncertainties remain for U.S. banks. Questions such as what reserves they will be backed by and whether deposits will be covered by federal insurance are not yet clear. Experts say these uncertainties could lead to potential problems during financial crises.
MiCA Regulation is an Important Step in Europe
The MiCA regulation, which is a significant step for stablecoin issuers in Europe, will come into force on December 30, 2024. This regulation will create new opportunities for banks in Europe, and the proliferation of stablecoins could shape the European cryptocurrency market. In addition, central bank digital currencies could influence banks’ stablecoin strategies. State-backed digital currencies could compete with bank-backed stablecoins. Ripple’s RLUSD stablecoin, which was launched on December 16, 2024, has also rapidly gained popularity. The development of central bank digital currencies could change banks’ perspective on stablecoins.
As a result, European and US banks are making significant strides in issuing stablecoins, while central banks continue to focus on the development of digital currencies. Regulatory clarification and technological advances will continue to shape this sector.