Major banks and fintech firms worldwide are racing to create their own stablecoins, hoping to tap into a massive cross-border payments market they believe will soon be transformed by digital currencies.
In February, Bank of America hinted at plans to release its own stablecoin, aligning with big payment players like Standard Chartered, PayPal, Revolut and Stripe, all aiming to challenge the dominance of crypto giants Tether and Circle in the sector.
The excitement stems from a growing belief among global regulators that stablecoins, which maintain a steady value of one dollar per coin, might soon play a bigger role in mainstream finance.
The change in attitude, a sharp contrast to the backlash against Meta’s Libra stablecoin six years ago, has gained momentum thanks to former U.S. President Donald Trump’s strong support for digital currencies.
“It’s about people selling shovels in the stablecoin gold rush,” said Simon Taylor, co-founder of fintech consultancy 11:FS, comparing the trend to FOMO, or fear of missing out.
“The other thing that’s driven it is there’s real volume,” he said. “Founders want to get a piece of it because they know they’re going to get stablecoin regulation, and so it’s all of those things coming together.”
While stablecoins have mostly been used to move funds between various cryptocurrencies, their use is rising in developing nations as a banking alternative for payments, especially in industries like commodities, farming and shipping.
These digital coins serve as a private form of electronic money, tied mostly to the U.S. dollar, allowing businesses and individuals to quickly and cheaply access strong currencies without relying on traditional banks.
Globally, around $210 billion in stablecoins are in circulation, with Tether, based in El Salvador, issuing about $142 billion, and Circle, from the U.S., issuing $57 billion, known as USDT and USDC.
Companies like Elon Musk’s SpaceX use them to bring money back from Starlink satellite sales in places like Argentina and Nigeria, while ScaleAI lets its overseas workers opt for payment in digital coins.
Last month, transaction totals hit $710 billion, up from $521 billion a year earlier, while the number of unique stablecoin users grew to 35 million, a 50 percent jump, according to Visa’s data.
Big banks are feeling bolder about entering the field as clearer rules take shape. In the U.S., lawmakers are discussing bills in Congress to set stablecoin guidelines, boosting confidence for banks, firms and everyday users.
“If they make that legal, we will go into that business,” commented Brian Moynihan, chief executive of Bank of America, on the Trump administration’s plans at the Economic Club of Washington last month.
The European Union rolled out rules earlier this year requiring stablecoin providers in the region to follow specific standards. The UK’s financial watchdog plans to seek industry input this year.
Standard Chartered revealed last month it will spearhead a project to launch a token tied to the Hong Kong dollar under the city’s upcoming stablecoin laws.
Highlighting the trend, Stripe, a U.S. firm, made its biggest acquisition yet last month, purchasing stablecoin platform Bridge for $1.1 billion.
“Stablecoins and the more modern chains are really interesting for the payments use case, and that makes up our business,” said co-founder and president John Collison. The $91.5 billion financial technology company processed $1.4 trillion in payments last year.
PayPal, which already offers a dollar-pegged stablecoin called PYUSD, aims to expand the payment feature in 2025, expecting high demand from U.S. companies paying overseas vendors.
“OK. I give up. Klarna and I will embrace crypto! More to come… Last large fintech in the world to embrace it. Someone had to be last. And that’s a milestone of some sort,” Sebastian Siemiatkowski, chief executive of ‘buy now, pay later’ lender Klarna, wrote on the X social media platform last month.
Still, new players face tough odds in gaining traction. PayPal recorded just $163 million in transactions last month, dwarfed by Tether’s $131 billion, according to Visa figures.
Visa reported about 122 million stablecoin transactions worldwide last month. In contrast, the credit card giant handled an average of 829 million transactions daily on its network.
Martin Mignot, a partner at Index Ventures and supporter of Bridge, said stablecoins were “attractive” in regions with poor infrastructure, limited liquidity or high currency risks, though their benefits were less clear in Western markets.
Experts also caution that the market may not support a flood of coins as users start to judge the reliability of issuing companies.
11:FS’s Taylor noted that stablecoins aren’t actual cash but stand-ins for it, carrying the credit risk of the issuer and depending on their ability to handle operational challenges.
“Essentially, what the brand of the stablecoin tells you is who the issuer is,” he said. “Therefore, because the issuer is that organisation, your credit risk is X or Y. That’s not something you do with the dollar.”
