The Great Bank Stablecoin Race: How Traditional Finance Is Building Crypto's Next $2 Trillion Infrastructure
For years, Wall Street dismissed stablecoins as crypto's answer to a problem nobody had. Now, every major U.S. bank is racing to issue one. SoFi just became the first nationally chartered bank to launch a stablecoin on a public blockchain. JPMorgan, Bank of America, Citigroup, and Wells Fargo are reportedly in talks to launch a joint stablecoin through their shared payment infrastructure. And somewhere in Washington, the GENIUS Act has finally given banks the regulatory clarity they've been waiting for.
The stablecoin market has surpassed $317 billion—up 50% from last year—and institutions are no longer asking if they should participate. They're asking how fast they can get there before their competitors do.
SoFi Makes History: The First Nationally Chartered Bank Stablecoin
On December 18, 2025, SoFi Technologies did something no American bank had done before: it launched a fully reserved stablecoin on a public, permissionless blockchain. SoFiUSD isn't just another digital dollar—it's a strategic bet that blockchain infrastructure will fundamentally transform how money moves.
"Blockchain is a technology super cycle that will fundamentally change finance, not just in payments, but across every area of money," said Anthony Noto, CEO of SoFi. The statement might sound like typical CEO hyperbole, but SoFi is backing it with real infrastructure.
The SoFiUSD Architecture
SoFiUSD is built first on Ethereum, with plans to expand cross-chain over time. What makes it unique is its dual identity:
When held on SoFi's platform: SoFiUSD functions as a tokenized deposit. Users earn interest and receive FDIC insurance coverage up to applicable limits. This isn't a stablecoin in the traditional sense—it's bank money that happens to live on a blockchain.
When held elsewhere: SoFiUSD becomes a conventional stablecoin. No interest, no insurance—just a dollar-pegged digital asset backed by cash reserves at SoFi Bank.
This hybrid model threads a regulatory needle that other banks will likely follow. It preserves the consumer protections that come with bank deposits while enabling the 24/7, instant settlement capabilities that make stablecoins attractive.
Beyond Retail: The B2B Play
SoFi isn't targeting crypto traders with SoFiUSD—at least not initially. The stablecoin is designed for commercial applications:
- Settlement for card networks: SoFiUSD can enable faster merchant settlement, reducing the multi-day float that currently benefits payment processors
- International remittances: SoFi Pay integration allows cross-border transfers that settle in seconds rather than days
- White-label stablecoin infrastructure: Other banks and fintechs can use SoFi's framework to issue their own branded stablecoins
The Galileo integration is particularly significant. With over 160 million accounts on the platform, SoFi can offer stablecoin functionality to fintech partners that would otherwise lack the regulatory standing or technical capability to build their own.
The GENIUS Act: Why Banks Are Moving Now
The sudden acceleration of bank stablecoin projects isn't coincidental. In July 2025, President Trump signed the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins), creating the first comprehensive federal framework for stablecoin issuance.
What the GENIUS Act Allows
Under the new law, banks can issue "payment stablecoins" through regulated subsidiaries. The requirements are straightforward but strict:
- One-to-one reserves: Every stablecoin must be backed by high-quality liquid assets—cash, short-term Treasuries, or central bank reserves
- No yield on stablecoins: Issuers cannot pay interest to stablecoin holders (though tokenized deposits can still pay interest)
- Bank Secrecy Act compliance: All stablecoin issuers are treated as financial institutions for anti-money laundering purposes
- Redemption guarantees: Holders must be able to redeem stablecoins for dollars on demand
The Two-Track Regulatory System
The GENIUS Act creates a dual framework:
Federal oversight: Any issuer with more than $10 billion in outstanding stablecoins must be supervised by federal regulators—the OCC for nonbanks, or the bank's primary regulator for bank subsidiaries.
State oversight: Smaller issuers (under $10 billion) can opt for state-level regulation, provided the state regime is "substantially similar" to federal standards.
This structure explains why large banks are moving quickly. Once they cross the $10 billion threshold, they'll need federal approval anyway. Better to start under federal supervision and scale up than to build on a state framework that might require costly restructuring later.
Wall Street's Joint Stablecoin Project
While SoFi went solo, America's largest banks are exploring a collaborative approach. According to reports, JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo have held discussions about launching a joint stablecoin through their shared payment infrastructure.
The Players: Early Warning Services and The Clearing House
The effort involves two entities co-owned by major U.S. banks:
Early Warning Services (EWS): The parent company of Zelle, which processed over $800 billion in peer-to-peer payments in 2025.
The Clearing House (TCH): Operates the RTP (Real-Time Payments) network that handles real-time payments between banks.
A joint stablecoin built on this infrastructure would have immediate access to the interbank payment rails that move trillions of dollars daily. Unlike standalone stablecoins that require on/off ramps, a bank consortium stablecoin could integrate directly with existing account relationships.
Individual Bank Initiatives
While the consortium explores collective options, banks are also hedging with independent projects:
JPMorgan: The bank's JPM Coin has been operating internally since 2019. In November 2025, JPMorgan extended JPM Coin functionality to public blockchains through its Kinexys platform, piloting tokenized deposit and stablecoin-based settlement tools for institutional clients.
Citigroup: Citi is developing services to let clients send stablecoins between accounts or convert them to dollars for instant payments. The bank is also reportedly planning to introduce cryptocurrency custody services in 2026.
Wells Fargo and Bank of America: Both are participants in the consortium discussions, though neither has announced standalone stablecoin projects.
The Global Banking Stablecoin Push
The U.S. isn't alone. Banks worldwide are racing to establish positions in the stablecoin market.
Europe: MiCA-Regulated Euro Stablecoins
Nine major European banks—including ING, UniCredit, and Deutsche Bank—have formed a consortium to launch a MiCA-regulated euro stablecoin by mid-2026. Operating under the EU's comprehensive crypto regulatory framework, these banks can offer something U.S. competitors currently cannot: a fully compliant euro-denominated stablecoin for European commerce.
G7 Multi-Currency Initiative
An even larger consortium of nine global banks—Goldman Sachs, Deutsche Bank, Bank of America, Banco Santander, BNP Paribas, Citigroup, MUFG Bank, TD Bank Group, and UBS—has announced plans to develop a jointly backed stablecoin focused on G7 currencies. This multi-currency approach could enable instant foreign exchange settlement without the friction of current correspondent banking relationships.
What This Means for the Stablecoin Market
The $317 billion stablecoin market is about to get much more crowded—and much more competitive.
USDT and USDC: The Incumbents Under Pressure
Tether's USDT controls 60% of the stablecoin market with $187 billion in circulation. Circle's USDC holds 25% at $75.7 billion. Together, they account for 90% of total stablecoin value.
But their dominance faces structural challenges:
Regulatory asymmetry: Under the GENIUS Act, bank-issued stablecoins have clearer regulatory standing than offshore alternatives. Institutions that previously defaulted to USDT or USDC for liquidity may prefer bank-issued alternatives for compliance reasons.
Integration advantages: Bank stablecoins can integrate directly with existing account relationships, ACH transfers, and wire networks. Users won't need to maintain separate crypto exchange accounts or deal with on-ramp friction.
Trust premiums: For institutional users, a stablecoin backed by a regulated U.S. bank with FDIC-insured reserves may command a trust premium over alternatives, even if the technical architecture is similar.
The $2 Trillion Projection
Citi Institute projects the stablecoin market could reach $1.6 trillion by 2030. Standard Chartered sees $2 trillion as achievable. If stablecoin growth accelerates at its current pace—50% in 2025, potentially higher with institutional adoption—these projections may be conservative.
The question isn't whether bank stablecoins will capture market share. It's whether they'll expand the overall market or simply reallocate existing volume from USDT and USDC.
The Competitive Implications
For Existing Stablecoin Issuers
Circle has positioned USDC as the institutional-grade stablecoin, with Visa integration and a June 2025 NYSE listing. Bank competition threatens this positioning directly. When JPMorgan or Citi offers equivalent functionality with deeper institutional relationships, USDC's value proposition narrows.
Tether faces different pressures. USDT's strength is liquidity and global availability, not regulatory compliance. Bank stablecoins are unlikely to displace USDT in offshore markets or regions where traditional banking access is limited. But they could erode USDT's share in regulated institutional flows.
For Fintechs and Crypto Natives
Smaller players face a choice: build proprietary stablecoin infrastructure (expensive, regulatory complex) or integrate bank-issued alternatives (faster, but creates dependency). SoFi's white-label model suggests banks will actively court fintechs as distribution partners rather than treating them as competitors.
For Consumers
The average user may not notice the transition. If their bank app suddenly offers instant, 24/7 transfers with no fees—enabled by stablecoin rails under the hood—they'll use it without caring about the underlying infrastructure. The real impact is in the business model: banks that control stablecoin infrastructure can capture margin that currently flows to Visa, Mastercard, and ACH processors.
The Bottom Line
2026 will be remembered as the year traditional finance embraced stablecoins not as a threat to be managed, but as infrastructure to be owned. SoFi's first-mover status matters less than the signal it sends: the most heavily regulated financial institutions in the world now see stablecoins as essential infrastructure.
Key takeaways:
- SoFi is first, but not alone: Major banks are months, not years, behind
- GENIUS Act changes everything: Clear regulation removed the primary barrier to bank participation
- Tokenized deposits vs. stablecoins: Banks will offer both, with different risk/reward profiles
- Market expansion, not just reallocation: Bank participation will likely grow the stablecoin market, not just redistribute existing share
- Global coordination: Multi-bank, multi-currency stablecoin projects suggest a future where traditional finance runs on blockchain rails
The $317 billion stablecoin market is entering its institutional era. Whether that's good for crypto's decentralization ethos is debatable. What's not debatable is that the infrastructure war for digital dollars has officially begun—and traditional banks intend to win it.
As stablecoin infrastructure becomes central to both traditional finance and Web3 applications, developers need reliable access to blockchain networks. BlockEden.xyz provides enterprise-grade RPC endpoints and APIs across major chains including Ethereum, where most bank stablecoins are launching. Explore our API marketplace to build on infrastructure ready for the institutional era.