As regulations become clearer, the market increasingly needs stablecoins, and banks in the US and Europe have started to actively issue stablecoins.
The EU has established a new agency specifically for the regulation of the crypto asset market, MiCA. Coupled with the current interest in blockchain payments, this has prompted traditional banks and established crypto companies like Tether Holdings to start competing for business.
Many European banks have already launched their own stablecoins, hoping to carve out a share of this market.
For example, France's SG-Forge has already allowed retail investors to purchase their euro stablecoin.
Oddo BHF in Frankfurt and Revolut in London are also considering issuing euro stablecoins.
Additionally, AllUnity, backed by Deutsche Bank, plans to launch their euro stablecoin in 2025.
Jean-Marc Stenger from SG-Forge said that more banks will follow suit in the future, which is true; they are currently talking to around ten banks to encourage them to use SG-Forge's technology to issue stablecoins.
Visa is also collaborating with banks like BBVA to use blockchain for stablecoins. Visa told Cuy Sheffield that they are currently in discussions with institutions in Hong Kong, Singapore, and Brazil.
In the US, banks are waiting for the regulators' nod to issue stablecoins; the regulatory environment is still under discussion, but banks like JPMorgan have already started testing blockchain payment systems.
JPM Coin from JPMorgan can only be used for transfers within its own ecosystem, which is different from stablecoins that anyone can use and withdraw at any time.
Naveen Mallela, head of JPMorgan's digital assets division, said that over the next three years, stablecoins and tokenized deposits will become increasingly popular. He also believes that stablecoins and tokenized deposits will be on equal footing in terms of payment methods in the future.
However, American banks still have some headaches, such as what reserves to use for stablecoins and whether these deposits can enjoy federal insurance, which is still unclear.
MiCA brings good news to European stablecoin issuers, as they finally have clear regulatory rules that will take effect by the end of 2024.
Circle's USDC stablecoin has already obtained MiCA approval and is now usable throughout Europe.
However, ether Holdings has not yet stated that it intends to apply for a license for a euro stablecoin, which may provide opportunities for banks and other competitors.
The European Central Bank is somewhat concerned about stablecoins; their research found that if everyone converts their deposits into stablecoins, the banks' liquidity may become insufficient.
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