The Bank of America is attempting to enter the stablecoin market and is positioning itself against established industry leaders like Tether and Circle. Pegged to fiat currencies like the US dollar, stablecoins account for billions in daily transaction volumes and traditional banks are unwilling to be left out of the loop. Tech giants like Tether and Circle already dominate the market, but traditional banks like the Bank of America, are moving fast to stake their claim. Bank of America’s stablecoin aspirations The CEO of the Bank of America, Brian Moynihan, stated on the February 26 that the Bank of America would issue a stablecoin as soon as Congress provides a clear legal framework. Since Moynihan made his statement, the bank has worked behind the scenes through industry groups like the American Bankers Association and Bank Policy Institute to attempt to persuade lawmakers to give traditional financial institutions a competitive edge. The bank has been attempting to get legislation that favors traditional banks while restricting non-bank issuers such as tech startups and fintech companies passed. Lawmakers are currently debating two key bills that could either positively or negatively impact the future of digital banking. The house’s STABLE act and the senate’s GENIUS act are both pending bills that could give federally qualified non-banks the permission to issue stablecoins. The Bank of America and other established financial institutions have argued that letting firms like Amazon or Meta into the financial space would create an unfair intersection between banking and commerce, which could potentially affect customer privacy. “The reason why you do that is because if you don’t, a retail company, for example, could look at your bank account, your statements, your expenses, and make some really, really intrusive and anti-competitive decisions about how they market to you. And so Congress a long time ago decided to make that separation. There is no such separation for current payment stablecoin issuers under both bills,” The Block reported . So far, limiting non-banks from issuing stablecoins hasn’t gathered much traction with either the Senate or the House, as both bills still have provisions for non-banking institutions interested in issuing stablecoins. Tether and Circle face fresh competition While the BoA works towards its goal of launching a stablecoin, Tether and Circle, the dominant issuers in the stablecoin market, are making moves to expand the stablecoin ecosystem. Circle is a company based in the US and promotes itself as a compliance-friendly fiat-pegged token issuer. It has been actively lobbying for legislation that supports non-bank issuers and ensures consumer protection. Tether’s CEO, Paolo Ardoino, commented on the restriction of non-banks from issuing stablecoins. “If a company like Meta can bring transparency, compliance, and user protection to the table, there’s no reason they shouldn’t participate. Creating artificial barriers only serves to protect incumbents—not users,” he said, as reported by the block. Tether, which is headquartered abroad has also hinted its interest in the US market. Ardoino recently visited Washington, DC and New York, where he suggested the creation of a US-based dollar stablecoin subsidiary that would cater to institutional clients. Tether’s USDT has over $145B in circulation, while Circle has around $60B in USDC issued. Circle is likely to benefit from legislation that enforces strict reserve and audit requirements, unlike Tether . “The biggest compliance question is the one that everyone has talked about, which is the reserve and the auditing requirements on the reserve. Tether has not done that in the past in the same way that, say, Circle has. The general conventional wisdom is that the reserve auditing requirements are going to be more difficult for Tether to meet.” Jennifer Schulp, director of financial regulation studies at the Cato Institute’s Center for Monetary and Financial Alternatives, said. Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More
