PARIS/LONDON–Ten major banks including Bank of America, Deutsche Bank, Goldman Sachs, and UBS are jointly exploring issuing a stablecoin as part of an effort to stay abreast of the growth of digital assets, according to a new report.
The group of bank, which also includes Citi, MUFG. Barclays, TD Bank, Santander and BNP Paribas, will work together to explore creating blockchain-based assets pegged to G7 currencies, the banks said in a statement that was cited by Reuters.
According to the report, the project, which is in its early stages, will explore whether there is value in issuing assets on public blockchains which are pegged 1:1 to real-world currencies in the cryptocurrency known as stablecoins.
The Objective
“The objective of the initiative is to explore whether a new industry-wide offering could bring the benefits of digital assets and enhance competition across the market, while ensuring full compliance with regulatory requirements and best practice risk management,” the banks said in their statement.
Rueters noted that regulators and financial stability authorities have expressed concern that stablecoins could facilitate the movement of funds outside regulated banking systems, potentially undermining the role of commercial banks in global payment flows.
Nearly nine-tenths of stablecoin transactions are related to crypto trading while just 6% for actual payment of goods or services, BCG estimated in a report earlier this year, Reuters reported.
Tether Dominates Market
The market is dominated by the El Salvador-based Tether, which accounts for $179 billion of the $310 billion worth of stablecoins in circulation, according to CoinGecko.
As the CU Daily also reported earlier, a separate consortium of nine European banks said last month they were forming a new company to launch a euro-denominated stablecoin.
