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Key Takeaways
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A group of 21 major financial institutions plans to launch a U.S. dollar-pegged stablecoin by 2027.
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The initiative comes amid renewed interest in cryptocurrency, driven by bitcoin‘s recent price surge.
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Tether and Circle currently dominate the stablecoin market, but competition may increase with this move.
Big banks and other financial institutions want to launch their own cryptocurrency.
A group of 21 firms—including Bank of America (BAC), Capital One (COF), Citi (C), Goldman Sachs (GS), and Wells Fargo (WFC)—announced Tuesday that they intend to issue a U.S. dollar-denominated stablecoin, a type of cryptocurrency that is designed to reflect the value of its referenced asset, in the first half of 2027. The group is set to launch a yet-to-be-named company dedicated to supporting the stablecoin by the end of this year.
The announcement follows renewed interest in crypto, as the price of bitcoin, the world’s largest and most well-known coin, surged in mid-August and closed out the month trading at around $80,000. Though bitcoin has given back a little bit of ground since, the possibility of momentum returning to crypto markets is proving to be a potent lure for businesses, crypto native and otherwise.
Last October, when the initiative was first announced, the group was about half the size and mostly consisted of large international banks. That’s right around when the price of bitcoin hit an all-time high above $126,000 and then cut in half in the following months. With crypto in a bear market, stablecoins didn’t do much since early October, with their overall circulating supply sitting largely unchanged at just over $300 billion, according to rwa.xyz.
Tether’s USDT and Circle’s (CRCL) USDC have long dominated the stablecoin market, accounting for nearly 90% of the total value. With major financial services firms now muscling in, it would suggest there could be more pie to go around.
Read the original article on Investopedia
Source: finance.yahoo.com