Banks Are Racing to Launch Stablecoins as Deposit Risk Grows

For years, banks approached stablecoins with caution, warning about volatility, fraud, regulatory uncertainty and the potential disruption to traditional banking.

In 2026, that stance is changing rapidly.

Major financial institutions are no longer simply watching the stablecoin market from the sidelines. They are exploring, piloting and, in some cases, launching their own digital-dollar products as banks increasingly confront a more immediate concern: what happens if deposits begin moving onto blockchain-based payment rails?

The shift is not necessarily about banks suddenly embracing crypto for its own sake. It is about controlling the infrastructure that could determine how money moves through the financial system in the years ahead.

The GENIUS Act Changed the Stablecoin Equation

The major turning point came with the GENIUS Act, which was signed into US law on July 18, 2025.

The legislation established a federal licensing framework for issuing dollar-backed payment stablecoins, creating a more clearly defined regulatory pathway for banks and other eligible issuers.

Under the framework described in the source material, stablecoin issuers with less than $10 billion in circulation fall under state regulatory oversight, while larger issuers come under the Office of the Comptroller of the Currency.

The framework also requires stablecoins to maintain reserves on a one-to-one basis, backed by assets such as cash and short-term US Treasuries.

Why the New Stablecoin Rules Matter for Banks

The significance of the legislation goes beyond giving financial institutions another digital product to sell.

It changes the regulatory treatment of stablecoins by positioning them as payment infrastructure rather than traditional securities.

That distinction has helped change the incentives for banks.

Bank of America CEO Brian Moynihan said that if stablecoins became legally available for banks to issue, the bank would enter the business.

The potential impact on traditional deposits is substantial.

By January 2026, Moynihan had publicly warned that as much as $6 trillion in US bank deposits could eventually migrate to stablecoins if regulators allowed them to generate yield.

That figure would represent roughly one-third of the US banking system’s deposits.

For banks, therefore, the stablecoin race is also a race to protect the deposit base.

Banks Want to Control the Rails Behind Digital Money

The strategic logic is becoming clearer.

If businesses and consumers increasingly move money through blockchain-based infrastructure, banks have two choices: participate in those networks or risk allowing competitors and new financial platforms to capture the activity.

That makes stablecoins less about cryptocurrency speculation and more about the future architecture of payments.

For traditional financial institutions, the question is increasingly:

If deposits move onto blockchain rails, whose rails will they use?

The answer could influence everything from corporate payments and treasury management to cross-border settlements.

Which Banks Have Actually Launched Stablecoin Products?

One of the most important distinctions in the rapidly developing bank-stablecoin market is the difference between a public announcement, a pilot program and an operational product.

Not every institution discussing stablecoins has actually launched one.

SoFi’s sofiUSD

SoFi Bank launched sofiUSD in December 2025, according to the source material.

The digital dollar is backed one-to-one by cash held in the bank’s Federal Reserve master account, making it one of the more visible examples of a traditional financial institution moving from experimentation toward a live stablecoin product.

JPMorgan’s JPM Coin and Kinexys

JPMorgan has taken a somewhat different approach.

Its Kinexys division has JPM Coin (JPMD) operating on a public blockchain for institutional customers.

However, the distinction is important: JPMD is technically a tokenized deposit rather than a stablecoin under the GENIUS Act framework.

The difference lies in what the token represents.

A tokenized deposit represents a claim on deposits held with JPMorgan, whereas a conventional stablecoin is backed through a separate reserve structure.

Citi’s Token Services

Citi has also moved beyond experimentation through its Token Services platform.

The initiative reflects a broader strategy among major financial institutions to use blockchain technology for institutional payments and money movement without necessarily adopting the same structure as privately issued stablecoins.

The Biggest Banks Are Taking Different Bets

The stablecoin race is not producing a single strategy across Wall Street.

Instead, a divide is emerging between banks pursuing shared stablecoin infrastructure and institutions developing their own tokenized deposit networks.

A consortium of 21 global financial institutions — reportedly including Citi, Goldman Sachs, Bank of America and UBS — is working toward a jointly issued US dollar-denominated stablecoin, with a potential launch target in the first half of 2027.

At the same time, JPMorgan, Bank of America, Citi and Wells Fargo are working on a Clearing House tokenized deposit network.

The two strategies address related problems but represent different approaches to digital money.

Public Stablecoins vs. Tokenized Deposits

A bank-issued stablecoin can provide a standardized digital representation of the US dollar that can potentially move across blockchain networks.

Tokenized deposits, by contrast, preserve the relationship between the digital token and a bank’s existing deposit infrastructure.

For banks, that distinction matters.

Stablecoins could create new payment networks, while tokenized deposits could help financial institutions modernize existing banking relationships without allowing deposits to migrate entirely into a separate digital-money ecosystem.

Why JPMorgan’s Strategy Is Worth Watching

One of the more notable details is JPMorgan’s absence from the 21-bank stablecoin consortium.

The bank has already invested heavily in its own digital-money infrastructure through JPM Coin and Kinexys.

That suggests a different strategic direction: rather than relying primarily on a shared stablecoin network, JPMorgan can continue developing private and permissioned infrastructure under its own control.

The distinction could become increasingly important for corporate treasury departments.

If businesses eventually have multiple forms of digital dollars available to them, they will need to consider factors such as interoperability, settlement speed, liquidity, regulatory treatment and the infrastructure provider behind each system.

How Big Could the Stablecoin Market Become?

Forecasts for the future size of the stablecoin market vary significantly.

Recent estimates cited in coverage have ranged from approximately $323 billion to more than $500 billion in projected stablecoin circulation as the regulatory environment develops.

The wide range reflects both the uncertainty surrounding adoption and the speed at which the regulatory framework is evolving.

The financial infrastructure supporting the market is also developing.

The source material points to new prudential standards for stablecoin issuers and a subsequent increase in bank activity around potential stablecoin offerings.

The result is an industry moving from theoretical discussions toward actual financial infrastructure.

Why Stablecoins Matter to Businesses

The implications extend well beyond banks and cryptocurrency companies.

Businesses managing payroll, international payments and corporate treasury operations could eventually become some of the largest users of blockchain-based settlement infrastructure.

Traditional payment systems can require hours or days to complete certain transactions, particularly across borders and through multiple intermediaries.

Stablecoins and tokenized deposits offer the possibility of near-instant settlement.

For multinational businesses, that could potentially change how treasury departments manage liquidity, payments and cross-border transactions.

Corporate Treasury Could Be the Next Battleground

As more institutional digital-money products become available, finance leaders may eventually have to decide which networks to integrate into their existing systems.

That could involve questions such as:

• Which bank’s digital-money infrastructure should the company use?
• How easily can different networks interact?
• What regulatory protections apply?
• How liquid are the underlying digital assets?
• How easily can stablecoins be converted into traditional bank deposits?
• What happens if regulations change?
• How much dependence should a company place on a particular bank or blockchain network?

These are no longer purely theoretical questions.

The financial institutions building the infrastructure today are effectively determining what those choices could look like tomorrow.

The Stablecoin Race Is Really a Race for the Future of Payments

The headline story may be that banks are finally embracing stablecoins.

The deeper story is more complicated.

Banks are trying to ensure that the next generation of digital payments does not develop entirely outside the traditional financial system.

The GENIUS Act helped establish a regulatory pathway for stablecoin issuance, while major banks are now experimenting with stablecoins, tokenized deposits and blockchain-based settlement networks.

But the market remains unfinished.

The regulatory framework is still evolving, different federal agencies are operating on separate timelines, and financial institutions are pursuing competing models for digital money.

That creates both an opportunity and a risk.

For banks, moving early could provide a role in shaping the emerging payment infrastructure.

For businesses, adopting the technology too early could mean building critical financial systems around standards and regulations that are still developing.

What Comes Next for Bank-Issued Stablecoins?

Over the next 12 to 18 months, the distinction between stablecoins, tokenized deposits and traditional digital banking could become increasingly important.

The banks that are currently experimenting with these technologies are not simply preparing another cryptocurrency product.

They are preparing for a potential change in how money moves.

And that is why the stablecoin race matters.

Banks spent years worrying that stablecoins could disrupt the financial system. Now they are building them because the bigger risk may be allowing someone else to control the rails.