Santander Joins Big Banking Push Into Stablecoins, JPMorgan no Longer Stands Alone

Key Takeaways

• When it launched JPM Coin in 2019, JPMorgan was ahead of the curve of stablecoin adoption.
• Today, a string of major global banks want to issue their own stablecoins.
• Santander is in the early stages of developing euro- and dollar-denominated digital currencies.

When JPMorgan Chase launched JPM Coin in 2019, it was well ahead of the curve of stablecoin adoption. Now, nearly six years later, some of the bank’s largest industry peers are scrambling to get in on the action too.

In the latest instance of big banks exploring their stablecoin options, Banco Santander is reportedly considering launching its own euro- and dollar-denominated digital currencies.

Bank-Owned Stablecoins: The Story So Far

In February 2019, JPMorgan introduced a new stablecoin that would establish the bank as an early pioneer in what would become a tidal wave of institutional adoption.

Back then, the most popular stablecoin, USDT, had a market capitalization of just over $2 billion. Today, USDt’s market cap has ballooned to over $150 billion, and the total stablecoin supply now exceeds $240 billion. 

By October 2023, JPM Coin’s daily transaction volume had climbed to $1 billion. And unlike USDt, USDC and other retail stablecoins, it did so without high-frequency DeFi transactions.

In recent years, other banks have sought to emulate JPMorgan’s model of an institutional stablecoin for wholesale interbank payments.

In 2023, Société Générale–FORGE (SG–Forge)  debuted EUR CoinVertible (EURCV), a euro-pegged coin that was originally developed to help institutional investors manage their cash flow. 

From an initial focus on wholesale payments and institutional users, bank-issued stablecoins have now started to gain a foothold in the retail space. Earlier this year, EURCV was listed on Bitstamp, where it can be swapped for various crypto assets and fiat currencies. 

More Banks Explore Stablecoin Options

Following JPMorgan’s lead, a growing number of banks are exploring their stablecoin options.

Initiatives include the Deutsche Bank-backed ALLUnity and Standard Chartered’s joint venture with Animoca Brands and HKT. 

More recently, a consortium of some of the largest U.S. banks entered negotiations to develop a joint stablecoin that could streamline the movement of money between financial institutions.

Santander’s Stablecoin Ambitions

According to a Bloomberg report on Friday, May 30, Santander is the latest bank to consider launching its own stablecoins.

Options on the table include issuing coins pegged to euros and dollars, as well as expanding support for third-party stablecoins.

Besides stablecoins, Santander has been at the forefront of blockchain-based payments for years. 

The bank is an investor in Ripple and has adopted its technology to streamline cross-border settlements. It is also involved with the Fnality project, which aims to build a network of interoperable, wholesale payment systems for real-time, multicurrency transactions.

GENIUS Act Could Favor Banks

While private technology companies issue the most widely used stablecoins today, emerging U.S. legislation could give banks a boost in the sector.

The GENIUS Act draws a clear regulatory distinction between bank and non-bank stablecoin issuers, with differing requirements for licensing, oversight, and reserve management.

Under the GENIUS Act, banks would be able to issue stablecoins via subsidiaries as long as they have approval from their primary federal regulator.

Moreover, because banks already operate under strict prudential regulation, approval processes would likely be faster and more integrated into existing supervisory frameworks.

Non-banks, on the other hand, would need to obtain a “qualified payment stablecoin issuer” (QPSI) license from a federal agency and would not be able to rely solely on state-level money transmitter licenses.