- The GENIUS Act establishes clear rules for American banks to issue stablecoins backed one-to-one by high-quality assets.
- Banking consortiums, like Zelle, serve as effective models for shared stablecoin infrastructure and payment processing.
- International examples show banks can collaborate on blockchain payment systems while ensuring regulatory compliance.
- Consortium-backed stablecoins offer strategic advantages including faster innovation, regulatory influence, and new revenue opportunities.
- With regulatory clarity, American banks are positioned to lead in programmable money by cooperating on stablecoin initiatives.
The GENIUS Act, now law after being signed by former President Trump, provides American banks clear guidelines for issuing stablecoins. The legislation mandates stablecoins maintain one-to-one backing with assets like cash and U.S. Treasury securities, allows issuers to choose between state or federal regulation, and excludes stablecoins from being classified as securities, simplifying their use in payments.
The banking consortium behind Zelle illustrates a successful business model banks can replicate for stablecoins. Zelle processes over $1 trillion annually by sharing infrastructure costs among banks while each maintains its customer relationships. This collaboration allows seamless, instant payments across banks.
International experiences support the consortium approach. South Korea’s largest banks launched a stablecoin partnership through the Open Blockchain and Decentralized Identifier Association (OBDIA), sharing infrastructure for blockchain-based payments. Also, Project Agorá unites seven central banks, including the Fed, and more than forty institutions to experiment with tokenized deposits and programmable money for cross-border payments and automated settlements.
Banks face growing competition from crypto-focused firms like Circle, which recently went public and pursued banking licenses. Stablecoins already move trillions yearly with 24/7 programmable payment capabilities that traditional systems lack. A consortium offers scale, shared costs, and unified standards, enabling banks to compete with fintech, crypto issuers, and tech companies.
Benefits of a consortium-backed stablecoin include defending market share while enabling new growth through advanced features like round-the-clock settlement and programmable payments. Innovation can accelerate as banks avoid duplicating blockchain infrastructure. Broad participation offers immediate access to millions of customers, fostering network effects among users and merchants.
The consortium arrangement redefines competition, shifting the focus to firms outside the banking sector and enhancing regulatory compliance and consumer trust as advantages. It also allows banks to help shape stablecoin regulations with proactive industry standards supporting stability and consumer protection.
New revenue streams arise from programmable finance capabilities such as automated treasury and supply chain finance, on-chain lending, and decentralized finance integration. The collective network effect raises switching costs for clients, making bank-issued stablecoins more durable.
With the GENIUS Act providing clear regulation, banks acting together can influence governance, share development expenses, and extend their trusted financial services into the digital domain. The existing infrastructure and regulatory framework support these efforts.
For further details on similar stablecoin consortium strategies and blockchain analytics, additional information is available from Zelle’s annual processing, South Korea’s bank stablecoin partnership, and Project Agorá overview.
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