Several major U.S. banks, including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo, are in preliminary discussions to issue a joint stablecoin. This initiative aims to compete with the growing cryptocurrency industry and maintain their dominance in the payments ecosystem.

The conversations involve companies co-owned by these banks, such as Early Warning Services (operator of Zelle) and The Clearing House (a real-time payment network). The proposed stablecoin would potentially be used across member institutions and beyond, though the discussions are in early stages and subject to change.

A final decision depends on factors like consumer and business demand and the regulatory framework shaped by new legislation. Banks are preparing for the possibility that stablecoins could become widely adopted, potentially diverting deposits and transactions.

Stablecoins are digital currencies designed to maintain a one-to-one peg with a national currency like the U.S. dollar. They are backed by reserves such as cash or U.S. Treasuries and are used in the cryptocurrency sector for trades and storing value. Banks see stablecoins as a tool to speed up traditional financial processes like cross-border payments.

The potential move by banks coincides with growing support for stablecoins under the Trump administration. The GENIUS Act, a bill aiming to establish a federal framework for stablecoin issuance, is gaining momentum. The Senate has cleared a procedural hurdle on the bill, which includes limitations on stablecoin issuance by nonfinancial public companies.

Banks are also wary of tech giants entering the stablecoin space and are seeking a digital edge. A bank-backed stablecoin could offer a faster, more secure alternative for payments. However, some smaller banks face challenges in creating their own stablecoin consortium.

Donald Trump has positioned himself as a "crypto president," advocating for mainstream crypto adoption to improve the banking system and reinforce dollar dominance. Trump-aligned entities, like the Trump family’s World Liberty Financial, have launched their own stablecoins.