A New Era of Regulated Stablecoins
In July 2025, the United States enacted its first comprehensive stablecoin law – the Guiding and Establishing National Innovation for U.S. Stablecoins Act, aptly nicknamed the GENIUS Act. This law creates clear rules for issuing USD-pegged stablecoins, which are crypto tokens designed to hold a 1:1 value with the dollar. It requires issuers to hold 100% reserve backing in liquid assets (cash or Treasuries) and undergo oversight, addressing past concerns about opaque reserves. Crucially, GENIUS Act limits who can issue: only a “permitted payment stablecoin issuer” – such as a bank or a licensed nonbank – may legally issue U.S. stablecoins. Now that the legal uncertainty is gone, there’s a race brewing to launch the first fully regulated, mainstream stablecoin. Will it be traditional banks stepping in to reclaim the turf from crypto startups? Could Big Tech companies leverage their user bases to issue branded digital dollars? Or perhaps large merchants (like retail and e-commerce giants) will create stablecoins to streamline payments and cut fees? Each has motive and means, but the GENIUS Act’s details favor some players over others.
Banks: The Incumbents with an Edge
U.S. banks have largely watched the stablecoin boom from the sidelines so far. The $120+ billion stablecoin market (as of 2025) has been dominated by crypto-native firms like Tether and Circle. But with federal law in place, banks now have the regulatory green light to issue their own. Under GENIUS, any insured depository institution (i.e. bank) can issue stablecoins via a subsidiary once they get approval from their regulator. This is a straightforward path for a JPMorgan, Bank of America, or any smaller bank to create a token redeemable 1:1 for deposits. In fact, JPMorgan already pioneered an internal stablecoin (JPM Coin) in 2019 for institutional use, though it’s not public or traded. We may soon see banks launch more general-purpose tokens for corporate or even retail clients, now that reserve and disclosure rules are set. Banks’ advantages: they have the trust factor, existing customer relationships, and plenty of dollar liquidity to back a coin. A major bank coin might quickly be used for settling trades, interbank payments, or corporate treasury transfers, taking market share from current stablecoins like USDC.
However, banks also have hesitations. Stablecoins could draw deposits out of traditional accounts (customers might convert cash to tokens), which banks fear might cannibalize their deposit base. Yet some banks will figure it’s better they issue the token and keep those reserves in-house than lose customers to outside stablecoins. We might first see consortium efforts – for example, multiple regional banks banding together on a common stablecoin to ensure interoperability (a model similar to the earlier USDF consortium of banks exploring deposit-backed tokens). Banks will also enjoy one regulatory perk: stablecoin float can be invested in Treasuries, and per the U.S. Treasury Secretary, this “win-win-win” could even lower government borrowing costs as stablecoin reserves soak up T-bills. This interest income potential (currently reaped by nonbank issuers) will attract banks. So, it’s quite plausible a U.S. bank (or group of banks) issues a federally supervised stablecoin by 2026, becoming the first out of the gate under the new law.
“For merchants like Amazon or Walmart, the pain point is clear: traditional card payments come with 2–3% processing fees which add up fast on high volume transactions. Adopting a regulated stablecoin can help reduce those fees and speed up settlements.”
— Nikita Sherbina, Co-Founder & CEO, AIScreen, in comments to Industry Examiner
