JPMorgan and other Wall Street banks reportedly in joint challenge for Tether’s stablecoin dominance

Some of the largest banks in the United States, including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo, are reportedly working on a joint stablecoin initiative, the Wall Street Journal reported May 23.

Sam Kazemian, founder of Frax Finance, confirmed the development, signaling that the conversations between major banks might have advanced beyond speculation.

This move marks a significant shift as established institutions look to compete directly with crypto-native players. It also reflects a clear shift in how these traditional financial firms view stablecoins as a strategic necessity in the global economic system.

Stablecoins have gained significant traction due to their role in providing dollar-backed liquidity in the crypto market. They allow traders to hedge against volatility while offering users in emerging economies access to dollar-denominated assets.

The growing utility of these tokens, combined with increasing legislative attention in the US, makes them a priority for financial institutions seeking to remain competitive.

Greg Waisman, Chief Operating Officer at Mercuryo, told CryptoSlate:

“The prospect of a consortium of leading US banks entering the cryptocurrency market with a joint stablecoin demonstrates how crypto native products may now be driving the evolution of financial markets. Stablecoins are a valuable source of liquidity in the digital token space supporting a variety of different projects and protocols.”

How will this affect the stablecoin market?

Two giants, Tether’s USDT and Circle’s USDC, currently dominate the stablecoin market, which is currently worth $245.9 billion. Together, they control 87% of the market.

However, the entry of major banks could challenge this dominance, especially given their vast financial infrastructure and regulatory influence.

Paolo Ardoino, CEO of Tether, responded to the news with a brief yet pointed message on social media:

“Welcome player 2.”

His remark suggests confidence in Tether’s position as the market leader, implying that traditional banks are only now catching up to what crypto-native firms have built over the past decade.

Tether’s USDT remains the most traded stablecoin globally, with a market cap above $150 billion. Its usage spans cross-border payments, remittances, and digital commerce, especially in regions with limited access to the US dollar.

Meanwhile, BitMEX co-founder Arthur Hayes took a more critical view, suggesting the banks’ stablecoin initiative could spell trouble for Circle. He said:

“Bye bye Circle. Thanks for playing.”

Hayes’ comment implies that Circle might struggle with these institutions’ new layer of competition.

This comes as Circle explores strategic options, including a potential public listing or acquisition by firms like Coinbase or Ripple.

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