Wall Street Banks Plan Joint Dollar Stablecoin to Challenge Tether, Circle

Wall Street’s Dollar Coin Takes Shape, Promising Near-Instant Cross-Border Transfers

21-Firm Financial Alliance Includes Goldman Sachs

Launch Planned for First Half of Next Year in Challenge to Tether, Circle

A Wall Street-backed digital dollar that can be traded 24 hours a day, free from the constraints of banking hours and borders, is taking shape. A consortium of 21 major global financial firms, including Goldman Sachs, plans to jointly issue a dollar stablecoin in the first half of next year. The project would create a new payments rail capable of processing dollar-based trade settlement and overseas remittances in seconds, down from one to two days now.

The consortium, which includes Goldman Sachs, Deutsche Bank and UBS, announced on Sept. 1 that it will bring the dollar stablecoin to market in the first half of next year. A dollar stablecoin is a blockchain-based digital token designed to maintain a one-to-one value with the US dollar. The group aims to challenge Tether’s USDT and Circle’s USDC, the dominant dollar stablecoins.

The token will target wholesale, institutional and retail markets, including cross-border payments and digital-asset settlement, the consortium said. The move underscores banks’ push to reclaim digital-dollar issuance and payments from crypto-native firms.

21 Global Financial Firms Unite Around Dollar Coin, Challenging FX Payments

Japanese, Middle Eastern and African Institutions Join, Linking Clients, FX and Payments Networks

The stablecoin market is dominated by nonbank specialists such as Tether and Circle, which control more than 80% of the sector. Global financial firms had largely focused on tokenizing traditional assets such as bank deposits rather than issuing coins directly, seeking to preserve a profit model built around conventional money.

That stance began to shift last year as the US government moved to formalize rules for cryptocurrencies, making stablecoin adoption increasingly difficult to ignore. Large financial institutions have now decided to jointly issue a stablecoin, leaning on the credibility they have built over decades.

Issuance Could Expand to the Euro and Other G7 Currencies

The 21 firms said on Sept. 1 that they will issue a dollar stablecoin in the first half of next year. The consortium includes 10 North American firms such as Goldman Sachs and Bank of America, eight European firms including UBS and Santander, and leading financial institutions from Japan, the Middle East and Africa. The alliance has more than doubled from 10 firms when it was launched in October last year. It plans to start with the dollar and expand issuance to stablecoins tied to Group of Seven currencies, including the euro.

South Korean financial companies are also considering joining. A senior official at a major bank said the participant list has not been finalized and the bank is internally reviewing whether to join the consortium.

McKinsey estimates annualized payment volume for stablecoins used in transactions at about $390 billion, equal to just 0.02% of the global market. Even so, the market’s growth potential has been recognized strongly enough that the US administration and Congress are seeking to bring it into the regulated financial system through legislation. Citigroup projects the value of stablecoins in circulation will swell to $1.9 trillion by 2030.

For financial institutions, stablecoins have become a market they cannot afford to ignore. If customers hold stablecoins instead of deposits, banks’ funding base could weaken. Stablecoins can also bypass parts of existing foreign-exchange remittance systems and card-payment networks. Another attraction is that issuers can invest the dollars they receive in short-term Treasuries and earn interest income.

Competition to Issue Stablecoins Set to Intensify

This alliance differs from OpenUSD, or OUSD, which includes Samsung Electronics, Shinhan Financial Group and Dunamu. OUSD is focused on building a distribution ecosystem for stablecoins in payments and remittances by bringing together card companies, exchanges and big tech firms. The new consortium, by contrast, centers on global banks creating a separate entity to issue stablecoins.

If traditional financial firms with established customer bases, capital strength and know-your-customer and anti-money-laundering systems enter the market as issuers, the dollar stablecoin market led by Tether and Circle could change significantly.

Because all 21 firms are participating together, the initiative could connect their corporate clients, asset-management customers, and foreign-exchange and payments networks in a single system. That means the project is not simply about creating another coin. It could become a shared payments infrastructure for the global banking industry.

Another notable feature is the consortium’s decision to use an open blockchain rather than remain on a closed network used only internally. That would create a direct link between traditional finance and the digital-asset ecosystem. An industry official said stablecoins depend less on technology than on distribution, trust and network effects, adding that a global alliance would be well positioned to broaden adoption.

Competition for control of stablecoin issuance is poised to intensify further. Kyvalis, a Europe-centered alliance of 37 financial firms, plans to issue a euro-linked stablecoin as early as the end of this year. Central banks in China and elsewhere are also pushing ahead with digital versions of their own currencies. That leaves private-sector financial stablecoins facing growing scrutiny. The European Central Bank has repeatedly raised concerns about the effect wider adoption of private stablecoins could have on monetary policy and financial stability.

Hwang Jung-soo, New York correspondent / Cho Mi-hyun, reporter hjs@hankyung.com