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Tether Holdings, the issuer of the largest stablecoin USDT, is preparing to close 2024 with a net profit exceeding $10 billion. This achievement has prompted major global banks to take action. Numerous large banks from Europe to Asia plan to enter the stablecoin market.
European Banks Prepare to Issue Stablecoins
France’s major bank, Societe Generale, has opened its Euro-backed stablecoin to individual investors through its subsidiary SG-Forge. German investment bank Oddo BHF is also working on a new stablecoin in Euros. Additionally, UK-based digital bank Revolut is reportedly considering launching its own stablecoin.
Deutsche Bank’s subsidiary DWS plans to launch a stablecoin in 2025. Spanish bank BBVA aims to initiate a pilot project in collaboration with Visa in 2025. In Hong Kong, a consortium involving Standard Chartered, Animoca Brands, and Hong Kong Telecom is conducting tests to issue a Hong Kong dollar-backed stablecoin.
US and Other Regions’ Banks Eye the Stablecoin Market
The entry of US banks into the stablecoin market depends on the clarity of regulatory frameworks. Visa’s tokenization network, set to launch in 2025 with BBVA, will support the technological infrastructure in this area. Cuy Sheffield, Visa’s Crypto President, noted strong demand from banks in Hong Kong, Singapore, and Brazil.
JPMorgan Chase believes that stablecoins can coexist with its own developed deposit tokens. Naveen Mallela, the head of the digital asset unit Kinexys, stated that interest in bank-issued stablecoins is rapidly increasing and will become mainstream within the next three years.
However, these initiatives are not without risk. According to the European Central Bank, stablecoins could reduce retail deposits, lowering banks’ liquidity ratios. In the US, uncertainty remains regarding the reserves that will back stablecoins and whether these funds will be insured.
With the rise of cryptocurrencies, banks find themselves in a new competitive landscape. While Tether’s significant profits offer opportunities for banks, regulatory uncertainties will likely determine which entities emerge ahead in this race.
