Bank of America wants in on the stablecoin game. CEO Brian Moynihan said they’re ready to issue their own, but only if Congress sorts out the rules. It’s a big shift for traditional banking, and it’s kicking off a quiet, but intense, battle for control of a market that could be worth trillions. Everyone wants a piece.
- Banks, tech giants, and crypto companies are vying for control of the stablecoin market as Congress debates new legislation. The outcome could reshape the future of digital payments.
- Banks are lobbying to ensure they can issue stablecoins and limit the involvement of tech companies, citing concerns about data privacy and market dominance. They fear tech companies could gain access to vast amounts of consumer spending data.
- The existing rivalry between Tether and Circle is intensifying, with Circle positioning itself as the more compliant and trustworthy option in the U.S. market. The focus is on reserve transparency and preventing collapses like Terra-Luna and Silicon Valley Bank.
Right now, Congress is debating stablecoin legislation, and it’s become a tug-of-war between banks, tech giants, and the crypto companies already in the space – Tether and Circle, mostly. They’re all jockeying for position, trying to shape the rules to benefit themselves. Banks, naturally, want to keep things…bank-like. They’re lobbying hard to make sure *they* get to issue stablecoins, and that companies like Amazon or Meta don’t just waltz in and take over.
The argument, according to people involved, isn’t just about money. It’s about data. Banks worry that if tech companies issue stablecoins, they’ll have access to a frightening amount of information about your spending habits. “They could look at your bank account, your statements, your expenses, and make some really, really intrusive decisions,” one lobbyist explained. It’s a privacy concern, and a competitive one. But so far, those efforts to limit non-banks haven’t gained much traction. Both the Senate and House bills currently allow non-banks to issue stablecoins.
Banks aren’t giving up, though. They’re pushing for amendments to the bills, hoping to restrict non-banks. Fidelity, Goldman Sachs, and BNY Mellon are also involved, all wanting a say in how things shake out. It’s a bit of a turf war, really. One lobbyist put it bluntly: banks want to “own all of it,” not share the space with open networks.
The Battle Lines
Everyone agrees that passing stablecoin legislation is a good thing – it’ll bring clarity and regulation to the market. But *who* controls that market is the real question. These aren’t just digital tokens; they’re potentially new payment rails, promising cheaper and faster transactions. It’s a big deal, and everyone wants a slice of the pie.
The current bills would allow “qualified” non-banks to issue stablecoins, which means companies like Tether and Circle wouldn’t be the only players. This is where things get interesting. Some lawmakers are echoing the banks’ concerns, questioning why tech companies should be allowed to issue currency-like instruments. Representative Maxine Waters, for example, pointed out that under the current bills, even Elon Musk could launch a stablecoin on X. It’s a valid point, and a little unsettling.
Tether CEO Paolo Ardoino disagrees. He argues that if a company like Meta can ensure transparency and compliance, they should be allowed to participate. Limiting issuance to banks, he says, just protects the incumbents. Polygon’s Head of Payments, Aishwary Gupta, takes a different tack. He thinks the focus should be on safety and standards, not *who* is issuing the stablecoin. Can they maintain reserves? Are they transparent? Is the technology secure? Those are the questions that matter.
Trump’s Wild Card
And then there’s Donald Trump. His support in both the Senate and House adds another layer of complexity. World Liberty Financial, a DeFi project backed by Trump, is also looking to issue a stablecoin. This could potentially undermine the banks’ efforts to restrict non-bank issuance. Representative Bryan Steil, on the other hand, believes the market should decide the winners and losers. More competition, he argues, is good for consumers.
Banks worry that widespread adoption of non-bank stablecoins could drain deposits from traditional banks, potentially causing economic problems. Representative Stephen Lynch echoed this concern, saying stablecoins could “compete with bank deposits.” It’s a legitimate fear, and one that’s driving the banks’ lobbying efforts.
Tether vs. Circle: The Existing Rivalry
While banks are fighting to restrict non-banks, the existing rivalry between Tether and Circle is heating up. Circle, based in the U.S., has been positioning itself as the more trustworthy option for years. They’ve been actively lobbying in Washington, D.C., and emphasizing their commitment to compliance.
The collapse of Terra-Luna and Silicon Valley Bank are still fresh in everyone’s minds, so the focus is on how to prevent similar catastrophes. A key issue is reserves. Circle maintains a relatively straightforward reserve strategy, while Tether’s reserves are more varied – including Bitcoin and precious metals. The general consensus is that Circle would have an easier time meeting the stricter reserve requirements likely to be included in the legislation.
Tether, the market leader with over $145 billion in USDT, doesn’t currently operate in the U.S. Circle, with around $60 billion in USDC, would benefit from legislation that makes it harder for Tether to compete in the American market. Circle has been actively portraying itself as the more responsible issuer, eager to comply with U.S. law. They’ve even been pushing an “America First” approach to digital asset legislation.
Tether, however, isn’t backing down. They’re planning a full audit by a “Big Four” accounting firm and recently hired a new CFO, both aimed at bolstering trust. They’re even considering setting up a U.S.-based subsidiary to compete directly with Bank of America and other banks. It’s a messy, complicated fight, and the outcome will shape the future of stablecoins in the United States.
