Bank of America Explores Stablecoin Options Post-Legislation
In a recent statement at a Morgan Stanley conference in New York, Bank of America (BAC) CEO Brian Moynihan revealed the bank’s intention to delve into stablecoins once significant cryptocurrency regulations are enacted. Moynihan emphasized that the bank has a solid understanding of the stablecoin landscape but faced uncertainties regarding compliance with existing banking regulations. He noted, “The problem before was it wasn’t clear we were allowed to do it under the banking regulations, and there was a lot of mystery about that.” Unlike cryptocurrencies such as Bitcoin, which are known for their price volatility, stablecoins are designed to maintain a steady value by being pegged to stable assets like the US dollar, positioning them as viable payment methods. Moynihan had previously indicated that the bank would consider launching a stablecoin provided the necessary legislation is passed.
Legislative Developments and Future Prospects
Moynihan clarified that Bank of America is waiting for the passage of two key legislative proposals—the Genius Act and the stable act—before proceeding with any stablecoin initiatives. He explained, “If they get the Genius Act or the stable act or anything like that passed,—and then they get the markets infrastructure enablement piece—that will allow us to figure out whether there’s really a business proposition” in stablecoins. In the meantime, the bank anticipates a significant downturn in its investment banking sector, projecting a decline of over 20% in the second quarter compared to the same period last year. However, trading revenue is expected to see a modest increase.
Wall Street’s Growing Interest in Stablecoins
Recently, Wall Street has begun to recognize the advantages stablecoins could bring to the realms of digital payments and broader financial systems. The Senate has reintroduced the Genius Act, which aims to establish guidelines for how bank holding companies and other entities can issue stablecoins, with hopes for its swift passage. Notably, bipartisan support has emerged, with senators proposing several amendments, including one to prevent any financial gains from stablecoin operations by the president and their family while in office. Additionally, an amendment from Senator John Hickenlooper aims to restrict interest payouts to stablecoin users to safeguard community banks’ competitive edge. Senate Majority Leader John Thune has reportedly stalled voting on these amendments.
Presidential Support for Cryptocurrency Legislation
President Trump has previously expressed a commitment to quickly advancing both pieces of legislation as part of a broader executive order aimed at making the United States the “crypto capital of the planet.” At the inaugural White House crypto summit held in early March, Trump expressed his desire for lawmakers to deliver stablecoin legislation to him before Congress’s recess commencing on August 5.
Circular IPO Sparks Optimism Among Investors
Investors recently celebrated the public listing of Circle (CRCL), a prominent stablecoin issuer, on the New York Stock Exchange, where the company’s stock price more than doubled on its debut. This event has rekindled optimism among bankers regarding the potential recovery of the IPO market this year. As Wall Street banks navigate the positive response to cryptocurrency in capital markets, they are also assessing their competitive stance against Circle. Moynihan remarked, “We’ve not been quite sure how big it will be, but we have to be ready, because at the end of the day, if people use it as a transactional account, we have to be ready to have those transactional deposits stay within our franchise.”
Collaboration Among Major Banks on Stablecoin Initiatives
A coalition of major banks, including JPMorgan Chase, Wells Fargo, Citigroup, and PNC, convened last week to explore the feasibility of offering stablecoins collaboratively. Reports indicate that one proposal under consideration is the establishment of a stablecoin network akin to Zelle, a digital payment platform owned by Bank of America and other large financial institutions. This meeting was described as preliminary, marking the initial discussions among the participating banks, with PNC CEO William Demchak leading the effort. Despite the potential benefits, Moynihan expressed skepticism about the rapid adoption of a single payment system, highlighting the complexities involved in changing consumer behavior.
