The Intensifying Competition for Stablecoin Dominance in Banking and Payments

Conventional financial organizations throughout the US, Europe, and Asia are transitioning to stablecoins as regulatory ambiguities begin to diminish.

Payment firms such as PayPal, Mastercard, and Visa are either introducing stablecoins, incorporating stablecoin settlement into their payment frameworks, or developing the necessary infrastructure to facilitate them.

The competition isn’t confined to companies but is also evolving at the banking sector level. In early October, a coalition of prominent global banks, including Goldman Sachs, Deutsche Bank, Bank of America, BNP Paribas, and Citi, established a consortium to investigate the issuance of “reserve-backed” digital currency on public blockchains.

Progress has surged following the enactment of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which was signed by US President Donald Trump on July 18. Various players are opting for diverse models, ranging from fully collateralized retail stablecoins to tokenized deposits and wholesale settlement tokens.

Here’s how the competition is developing.

GENIUS initiates the US stablecoin competition

Prior to the GENIUS Act, the main avenue for US stablecoins was New York’s trust charter system. PayPal took this course in August 2023 by launching PayPal USD (PYUSD) through Paxos, which is sanctioned by the New York State Department of Financial Services.

Wisconsin-based Fiserv unveiled FIUSD in June 2025 and intends to embed it into banking and merchant settlement systems by year’s end, utilizing Paxos and Circle infrastructure. After the signing of GENIUS, Fiserv broadened its stablecoin strategy through collaboration with the Bank of North Dakota on the “Roughrider Coin” interbank settlement pilot.

Mastercard became part of Paxos’ Global Dollar Network in June 2025 to facilitate stablecoin settlement across its merchant and payment channels, enhancing support for PYUSD, USDC, and FIUSD. Visa commenced settling USDC on Ethereum in 2021 and expanded that to Solana in 2023, enabling processors such as Worldpay and Nuvei to satisfy obligations directly in stablecoin instead of through wire transfers.

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Custody and trust banks have taken steps to secure the asset-servicing tier. BNY Mellon now safeguards stablecoins issued by Ripple and Société Générale.

Some banks are adopting a different strategy. JPMorgan is testing its deposit token, JPMD, on Base. According to JPMorgan’s blockchain division, Kinexys, deposit tokens serve as an alternative to stablecoins for cash settlements and payments aimed at institutional clients.

Major retailers are also investigating issuance. Walmart and Amazon are reportedly considering branded stablecoins. Meanwhile, remittance service provider Western Union is preparing USDPT on Solana for international remittances.

The GENIUS Act becomes effective following an 18-month implementation phase or 120 days post the issuance of final regulations.

MiCA is active, yet US dollar continues to dominate stablecoins

Euro stablecoins still account for merely a small proportion of global stablecoin volume, with most liquidity concentrated in dollar-pegged USDC and USDT. This supremacy was established prior to the GENIUS Act. With US TradFi giants accelerating their entry into the stablecoin landscape, this dominance is anticipated to increase.

“Lacking a strategic response, European monetary sovereignty and financial stability could deteriorate,” Jürgen Schaaf, payments consultant at the European Central Bank, cautioned in a blog entry.

Europe’s stablecoin transition is being influenced by the Markets in Crypto-Assets (MiCA) regulation, which took effect for stablecoins in mid-2024. The regulatory framework offers banks and regulated financial institutions a route to issue euro-denominated stablecoins, prompting accelerated compliant stablecoin operations.

In France, Société Générale’s digital asset subsidiary, SG-Forge, has issued EURCV and USDCV, with custody managed by BNY Mellon. Germany’s AllUnity, a collaboration involving DWS, Deutsche Bank, Galaxy, and Flow Traders, has launched the EURAU stablecoin and plans to broaden it across multiple blockchains.

One of the most significant advances came from a group of nine European banks aiming to establish a shared alternative. ING, UniCredit, KBC, and DekaBank are part of a consortium in the Netherlands to issue a euro stablecoin.

This initiative is expected to debut in 2026 and is positioned as part of the bloc’s effort for payments sovereignty and lesser dependency on US-based stablecoin infrastructure.

Asia’s fragmented stablecoin competition

Asia’s approach to stablecoins is evolving along regional regulatory lines instead of through a cross-border framework like MiCA.

Japan established the earliest stablecoin framework among major economies. Revisions to the Payment Services Act came into force in June 2023, creating a legal category for “issuer-backed” stablecoins that must be fully redeemable at par and issued solely by banks, trust companies, or licensed money transmitters.

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The nation’s major banks — Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho — have been working toward
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a collaborative introduction of a yen-supported stablecoin, with a potential launch by the conclusion of the fiscal period, which wraps up on March 31. Mitsubishi disclosed on Friday that its stablecoin issuance has received the green light from the Financial Service Agency.

The governance of Hong Kong commenced in August under the Hong Kong Monetary Authority. Numerous companies have shown interest, but the HKMA has warned that most applications are likely to be denied. Major Chinese technology firms have also queued for a Hong Kong stablecoin license but have reportedly paused their initiatives due to influence from Beijing.

One of the significant declarations came from a proposed partnership between Standard Chartered Hong Kong, Hong Kong Telecom, and Animoca Brands, which aims to launch a Hong Kong dollar-backed stablecoin once authorized.

Revamping the perception of stablecoins

Stablecoins came under regulatory scrutiny following the downfall of Terra’s UST in 2022, highlighting the inherent risks of algorithmic peg systems.

New regulations introduced generally classify stablecoins as tokens that are entirely backed by cash or short-term liquid assets and are redeemable at face value. This effectively bars algorithmic stablecoins from licensed issuance, although they persist in the realms of decentralized finance.

Stricter regulation has paved the way for traditional financial entities to enter the arena with centrally governed stablecoins and bank-issued deposit tokens. These instruments are being incorporated into their existing payment frameworks, settlement systems, and corporate transactions.

Consequently, stablecoins are increasingly serving as functional payment and settlement infrastructure across consumer payments, institutional transfers, and international transactions.

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