Tether welcomes new competition as traditional banks prepare to enter the market and challenge its stablecoin dominance.
Several of the largest U.S. banks—including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo—are reportedly developing a joint stablecoin initiative, according to a May 23 report by the Wall Street Journal.
Sam Kazemian, founder of Frax Finance, confirmed the development, indicating that discussions among major banks may have moved beyond mere speculation.
This move marks a significant shift, as established institutions now compete directly with crypto-native players. It also reflects a clear change in the perception of stablecoins by traditional financial firms, now viewed as a strategic necessity within the global economic system.
Stablecoins have gained significant traction due to their role in providing dollar-backed liquidity in the cryptocurrency market. Traders use them to hedge against market volatility, and users in emerging economies rely on them for access to dollar-denominated assets.
As these tokens gain functionality and attract increased legislative attention in the United States, financial institutions have begun prioritizing them to stay competitive.
Greg Waisman, the Chief Operating Officer at Mercuryo, was quoted by CryptoSlate as having stated:
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.
Stablecoin Market Faces Shake-Up Amid Traditional Bank Entry
Tether’s USDT and Circle’s USDC dominate the $245.9 billion stablecoin market, together accounting for 87% of the total market share.
However, major banks could challenge this dominance by leveraging their extensive financial infrastructure and regulatory advantages.
Paolo Ardoino, the CEO of Tether, shared a brief yet pointed response on social media following the announcement.
He expressed confidence in Tether’s market leadership, suggesting that traditional banks are only now catching up to the advancements crypto-native firms have made over the past decade.
Tether continues to issue USDT, the most traded stablecoin globally, with a market capitalization exceeding $150 billion. Users widely utilize it for cross-border transactions, remittances, and digital commerce, especially in regions with limited access to the US dollar.
At the same time, BitMEX co-founder Arthur Hayes expressed a more skeptical stance, suggesting that the stablecoin initiative launched by the banks could pose serious challenges for Circle.
Bye bye Circle. Thanks for playing.
He stated:
Hayes’ comment implied that Circle could struggle to compete with the new layer of competition introduced by traditional financial institutions.
Circle is conducting strategic evaluations alongside this development, actively exploring options such as a potential public listing or acquisition by companies like Coinbase or Ripple.
