Eyeing Tether's billions in profits, banks rush to launch stablecoins
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Eyeing Tether's billions in profits, banks rush to launch stablecoins
Societe Generale from France, Germany's Oddo BHF, the UK's Revolut, and even Hong Kong's Monetary Authority have all begun to enter the stablecoin market, hoping to grab a share of the pie in this field.
Navigating Web3 tides with focused insightsBy Yaqi Zhang, Wall Street Insights
Stablecoin USDT, the "anchor" of the crypto world, is quietly reshaping traditional finance.
An increasing number of banks are entering the stablecoin market. According to Bloomberg, institutions such as Société Générale, Germany’s Oddo BHF, UK-based Revolut, and even Hong Kong’s Monetary Authority have begun positioning themselves in this space, aiming to capture a share of the growing market.
Earlier, Tether Holdings Ltd., the world's largest stablecoin issuer, projected its net profit for 2024 would exceed $10 billion. In an interview, Tether CEO Paolo Ardoino said the company has already allocated more than half of its annual net profits toward investments this year.
Naveen Mallela, Global Co-Head of Kinexys at JPMorgan Chase’s digital assets division, expects stablecoins issued by banks to accelerate their development over the next three years and become mainstream products. As regulatory frameworks mature and technology advances, stablecoins are poised to become a key component of future financial markets.
Financial Institutions Are Actively Exploring Stablecoin Issuance
Faced with such an attractive opportunity, banks are taking action. Across Europe, financial institutions are actively exploring stablecoin issuance. Forge, a subsidiary of Société Générale, has already launched a euro-backed stablecoin for retail investors.
Meanwhile, firms like Oddo BHF SCA are developing their own euro-denominated versions, while London-based Revolut is considering launching its own stablecoin.
One driving force behind this trend is the regulatory clarity provided by Europe’s Markets in Crypto-Assets Regulation (MiCA). Additionally, Tether’s decision to discontinue its EURt stablecoin has opened up opportunities for other banks to enter the market.
Jean-Marc Stenger, CEO of SG-Forge, said in an interview that they are currently in talks with multiple banks about adopting their stablecoin, and are discussing partnerships or white-label technology licensing with around 10 banks so they can issue their own stablecoins:
"Do I think other banks will issue their own stablecoins? The answer is yes. It's a heavy lift—I'm not sure it will happen quickly—but it will happen."
The momentum isn't limited to Europe. Visa is also pushing forward globally on stablecoin adoption. In October, Visa launched a tokenization network enabling banks to issue stablecoins and plans to pilot the system with BBVA in 2025. Cuy Sheffield, Visa’s head of crypto, revealed that banks from Hong Kong, Singapore, and Brazil have shown strong interest, and Visa is collaborating with numerous banks worldwide.
Standard Chartered is also deeply involved and has been selected by Hong Kong’s Monetary Authority as one of the first issuers of a Hong Kong dollar-backed stablecoin, with plans to launch in 2025. Rene Michau, Standard Chartered’s Global Head of Digital Assets, said the initiative will further strengthen blockchain’s role in payments, and the bank aims to roll out its stablecoin by 2025.
Risks and Challenges of Stablecoin Issuance
Compared to deposit tokens being explored by large banks like JPMorgan Chase, stablecoins offer broader application potential.
Deposit tokens are typically only transferable among customers of the same bank, whereas stablecoins can be purchased and used by anyone with a crypto wallet. JPMorgan believes stablecoins and deposit tokens are not mutually exclusive, and anticipates bank-issued stablecoins will gain momentum and become mainstream within the next three years.
However, issuing stablecoins also carries risks.
Research from the European Central Bank shows that if a significant portion of retail deposits shift into stablecoins, banks’ liquidity coverage ratios could be negatively impacted.
Additionally, U.S. regulators still need to clarify acceptable reserve types for bank-issued stablecoins and determine whether stablecoin deposits are eligible for insurance protection. Hilary Allen, a law professor at American University, warned that if banks simultaneously offer uninsured stablecoins and insured deposits, it could confuse consumers and potentially trigger panic during times of crisis.
Currently, many central banks are testing or preparing to launch central bank digital currencies (CBDCs), which could replace bank-issued stablecoins in certain use cases—particularly in wholesale payments.
Facing this complex landscape, Avtar Sehra, CEO of Libre Capital, said:
"Every bank is exploring some form of commercial bank digital currency, but ultimately they may prefer to adopt consortium coins."
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