KEY FACTS: A consortium of major banks, including BNP Paribas, Bank of America, Goldman Sachs, Deutsche Bank, and Citi, has announced plans to explore the development of stablecoins pegged to G7 currencies such as the US dollar, euro, and yen, aiming to create a stable digital payment asset backed by fiat reserves on public blockchains. This move, intended to enhance competition and compliance in the digital finance space, comes amid the recent passage of the U.S. GENIUS Act, which establishes a regulatory framework for stablecoins but has sparked debate over potential risks, such as interest-bearing tokens draining traditional bank deposits. Facing competition from established stablecoins like Tether’s USDT and Circle’s USDC, the banks’ initiative could reshape global payments but must navigate complex regulatory, technological, and cybersecurity challenges across G7 jurisdictions.
Source:BNP Paribas
Major Banks to Launch a Stablecoin Linked to G7 Currencies
Major Banks Partner to Launch a Stablecoin Linked to G7 Currencies
A consortium of major international banks has unveiled plans to develop stablecoins directly pegged to the currencies of the world's leading economies. This initiative, spearheaded by heavyweights like BNP Paribas, Bank of America, Goldman Sachs, Deutsche Bank, and Citi, aims to bridge the gap between traditional banking and blockchain technology, offering a stable digital payment asset backed by real-world fiat reserves.
The announcement, detailed in a formal statement released on Friday by BNP Paribas, marks a significant pivot for these institutions, which have historically viewed cryptocurrencies with skepticism. For years, banks have grappled with the disruptive potential of digital assets, often positioning themselves as guardians against the volatility and regulatory uncertainties plaguing the crypto space. Now, however, they appear ready to harness that same technology to their advantage, potentially injecting fresh competition into a market long dominated by fintech innovators and crypto-native firms.
This project is an exploration of a "1:1 reserve-backed form of digital money" designed to function as a reliable payment tool on public blockchains. These stablecoins would be linked to the fiat currencies of the Group of Seven (G7) nations—comprising the United States, Canada, the United Kingdom, France, Germany, Italy, and Japan. This means the proposed assets could be pegged to major currencies such as the US dollar, the euro, and the Japanese yen, providing users with a hedge against the price swings that have plagued unpegged cryptocurrencies like Bitcoin and Ethereum. The joint declaration stated thus:
"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."
This emphasis on regulatory adherence underscores a cautious yet ambitious approach, reflecting the institutions' deep-rooted commitment to stability and oversight in an era where digital finance is increasingly intertwined with traditional systems.
While the statement stops short of providing a concrete timeline for the project's rollout, industry observers suggest that such an endeavor could take months or even years to materialize. There are several hurdles, including securing cross-border regulatory approvals to building the technological infrastructure necessary for seamless integration with existing banking rails. Moreover, the banks' entry into this arena would thrust them into direct competition with established stablecoin giants, most notably Tether's USDt (USDT), which boasts a staggering market capitalization exceeding $178 billion as of recent trading data. USDT, the undisputed leader in the stablecoin space, has processed trillions in transaction volume since its inception, serving as a digital dollar equivalent for traders, remittances, and decentralized finance (DeFi) applications worldwide.
This development is popping up at a time when the stablecoin ecosystem, buoyed by recent legislative breakthroughs in the United States. Just months ago, in July 2025, President Donald Trump signed the GENIUS Act into law, a landmark bill aimed at providing a comprehensive regulatory framework for payment stablecoins. The legislation, formally known as the Generating Enhanced National Innovation for U.S. Stablecoins Act, seeks to legitimize these assets by mandating strict reserve requirements, transparency measures, and consumer protections. Proponents hail it as a game-changer that could unlock trillions in institutional capital for blockchain-based payments.
Yet, the GENIUS Act's path to enactment was far from smooth. Crypto advocates celebrated its passage as a victory for innovation, arguing that clear rules would foster trust and accelerate adoption. "This is the green light we've been waiting for," said one blockchain analyst, speaking on condition of anonymity. "Banks can now experiment without fear of being labeled as reckless." However, the bill's implementation remains on a deliberate timeline: It won't take full effect for another 15 months, or 120 days after the U.S. Treasury Department and the Federal Reserve finalize supporting regulations. This delay allows regulators to iron out details, but it also leaves a window of uncertainty that could influence the banks' project trajectory.
Beyond Tether's behemoth USDT, the sector features a diverse array of contenders. USDC, issued by Circle in partnership with Coinbase, remains a favorite among institutions for its rigorous audits and compliance focus. Then there's Dai (DAI), a decentralized stablecoin overcollateralized by crypto assets on the Ethereum blockchain, appealing to DeFi purists who prioritize censorship resistance. Ethena's USDe (USDE) introduces synthetic yield mechanisms, blending stability with earning potential, while PayPal's PYUSD (PayPal USD) leverages the fintech giant's vast user base to push stablecoins into everyday commerce.
Adding a layer of intrigue is USD1, the stablecoin launched by World Liberty Financial, a crypto venture backed by the Trump family. Tied to the political currents that propelled the GENIUS Act forward, USD1 has garnered attention for its ties to influential figures, though its market share remains modest compared to the leaders.
This proliferation underscores stablecoins' evolution from niche trading tools to foundational elements of the global economy. Transactions involving these assets now rival those on Visa and Mastercard, powering everything from cross-border remittances in developing nations to instant settlements in high-frequency trading. As Stripe CEO Patrick Collison recently observed, "Stablecoins will force ‘everyone’ to share yield," compelling traditional finance to adapt or risk obsolescence.
For the G7-linked stablecoin project, success could mean more than just new revenue streams for the participating banks. It might catalyze a wave of interoperability between legacy systems and blockchains, enabling faster, cheaper payments across borders. Imagine a European exporter settling yen-denominated invoices in seconds via a euro-pegged token, or a Canadian importer using a USD-backed stablecoin to bypass forex fees. Such efficiencies could boost trade within the G7 bloc, which accounts for over 40% of global GDP.
Meanwhile, regulatory harmonization across G7 jurisdictions remains elusive; the European Union's MiCA framework, for instance, imposes stringent licensing on stablecoin issuers, while Japan's Financial Services Agency demands granular reporting. Cybersecurity threats, reserve audits, and the perennial specter of depegging events will test the consortium's resolve. As the project advances, it invites broader questions about the future of money.
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