Top US Banks to Issue their own Stablecoin

Executive Summary

  1. As a former Banker running payments for 2 of the largest US banks I have a perspective on how this will play out. I may be wrong, but it is an informed perspective.
  2. As outlined 2 weeks ago banks in the EU are planning their own stablecoins.
  3. The GENIUS ACT forces stablecoin issuers to obtain bank licenses, thus this morning’s WSJ report that Bank of America, Wells Fargo and Chase are now in the mix is only logical
  4. As outlined in Stablecoin predictions, this will not impact cards as they retain their role in the last mile and banks protect the card model. 
  5. As outlined in Power of Bank Networks, Payments are where the power of banking is unlocked. The major US banks are payment hubs that connect to all networks, from TCH, RTP, Swift, Card, …etc.  These banks are leaders in innovation and in managing operations that consistently clear trillions of dollars PER DAY. 
  6. The stablecoin settlement model is much simpler than an RTP network where each participating party has to register as a sender or receiver of payments. Senders must have settlement funds which restrict their ability to clear payments. In a Stablecoin model, originators only have to have valid stablecoins to transact, and can also create programmable rules around them (see Programmable Money)
  7. The business drivers are remittance, cross border, B2B, and the prospect of growing the global deposit base as international consumers and businesses buy stablecoins. Italy’s finance minister is quoted as saying USD stablecoin adoption (ie dollarization) represents a greater threat to the EU than Tarriffs. 
  8. In my view this is a 3 yr effort. Banks don’t move quickly in isolation, and even more slowly in consortium. I do think that this will first move with commercial use cases and remittances, with banks as stablecoin issuers. Within retail consumer UCs, P2P and Zelle are the area that would be impacted first.  
  9. US Banks should consider the slippery slope of Stablecoin. Once issued, their transfer can’t be restricted, and will operate without friction. Every movement of money becomes instant. This is why I don’t think we will see consumer interfaces within US bank domains in near term. Priority 1 is creating the stablecoin issuing platform and legal structure. Priority 2 is focusing on UCs like cross border and B2B. 

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us

Banks Launch “Wallet” (again)

Short Blog

Per the WSJ Article this AM, US banks have launched a new wallet (again). For frequent readers of my blog, very little new news. Also, I’m just wrapping up a 15-page part 4 “Innovation in Networks” that will be out very soon. 

Quick Summary

  • TCH Banks have been contemplating a mobile wallet and a new network for 13 yrs (I have over 20 blogs on topic, see overview here). 
  • Today we gain clarity that Banks gave up on their latest Authentify Wallet launch and jumped on board a “white label” SRC wallet led by Visa (See 23Jan2023 WSJ). I outlined this in my SRC blog (Sept 2022) and TCH RTP Update.  
  • Inital pitch for this wallet was not well received by big retailers at Money 2020. It entailed a liability shift if wallet was offered and all COF were tokenized (see blog)
  • The wallet is not owned by EWS, but a new payment network led by James Anderson. The ownership of this new network is the same at EWS (see blog ). Lets call this wallet EWS SRC to shorten the name. 
  • Competitor is Apple.. the banks want to own the mobile payment experience. Google is working with the TCH banks and is also working with FedNow (long blog coming on this one). It is likely that Apple is not involved in any of these activities, yet Google is working to pilot both FedNow and TCH RTP to leverage their India UPI success.
  • Now that the largest TCH banks have jumped on board SRC, the TCH RTP effort focus has shifted to commercial flows and bill payment.
  • i provided a detailed strategic discussion on the reasoning behind this move in Part 2 – The Power of Bank Networks.

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us