Why are JPMorgan and Citigroup racing into stablecoins now?

JPMorgan Chase and Citigroup, two of America’s biggest banks, are stepping deeper into the world of stablecoins.

Even though JPMorgan CEO, Jamie Dimon, has been known for his scepticism, the bank is pushing ahead with stablecoin projects to keep up with rapid changes in digital finance. 

Meanwhile, lawmakers in Washington are working to set rules that would make stablecoins a more accepted part of the US financial system.

JPMorgan Chase, which is the biggest bank in the US, is no stranger to digital innovation. But when it comes to cryptocurrencies, its CEO has been a long-time critic. 

On 15 July, during the bank’s second-quarter earnings call, Dimon said, “We’re going to be involved in both JPMorgan Depositcoin and stablecoins to understand it, to be good at it”.

Dimon made it clear that while the bank sees value in understanding stablecoins, he still questions their purpose. “I think they’re real, but I don’t know why you’d want to use a stablecoin as opposed to just payment”, he said. 

This cautious attitude is in line with his past comments where he called cryptocurrencies “useless” and “hyped”.

Despite Dimon’s personal doubts, JPMorgan is moving ahead. The bank has already launched a stablecoin product called JPM Coin, which is only available to institutional clients. 

Through its blockchain network, Kinexys (formerly known as Onyx), the bank now processes around $2 billion every day.

Last month, JPMorgan also tested a new deposit token called JPMD on Coinbase’s Base network, which runs on Ethereum. 

This shows that the bank is open to working with public blockchain systems, even though Dimon himself is unsure about their long-term use.

One of the reasons for JPMorgan’s push is competition from fintech firms. Companies like Dakota are using stablecoins to offer cheaper and faster international payments, especially in emerging markets. Dakota recently raised $12.5 million to expand its services to more than 100 countries.

Dimon recognised this challenge, saying, “We have to be cognisant of [fintech competition]. Way to be cognisant is to be involved”. 

Other big banks like Citigroup, Bank of America, and Wells Fargo are also exploring stablecoin projects and are reportedly working on a joint project with JPMorgan.

US lawmakers push for stablecoin rules

While big banks are making moves in the digital asset space, US lawmakers are working to give the sector a clear set of rules. One major effort is the GENIUS Act, a bill designed to set legal standards for US dollar-backed stablecoins.

The Senate passed the GENIUS Act last month, and although the House of Representatives voted against it on 15 July, President Donald Trump says lawmakers will vote again soon. 

Trump met with key members of Congress and said he is confident they will support the bill next time. On his social media platform, Truth Social, Trump wrote:

“The House will soon VOTE on a tremendous Bill to Make America the UNDISPUTED, NUMBER ONE LEADER in Digital Assets – Nobody does it better! The GENIUS Act is going to put our Great Nation lightyears ahead of China, Europe, and all others”.

Some lawmakers, however, are worried. Fox journalist, Eleanor Terret, reported that several members of the House fear the bill could open the door to a US Central Bank Digital Currency (CBDC). 

However, the GENIUS Act has provisions that would block the Federal Reserve from creating public digital wallets or accounts.

The US regulatory environment has already become more relaxed. Earlier this year, the Federal Reserve dropped two key rules that had required banks to get approval before offering crypto services or stablecoin products. 

This change has made it easier for traditional banks to enter the market and compete with fintech companies.

The Head of Digital Asset Research at Standard Chartered, Geoff Kendrick, has warned that if stablecoins reach a total market value of $750 billion, it could affect the US Treasury market. 

Because many stablecoins are backed by short-term Treasury bills, higher demand could push the federal government to rethink how it manages its debt.

Citigroup prepares for digital payment future

America’s third-largest bank, Citigroup, is also taking steps into the stablecoin world. During the bank’s recent post-earnings call, its CEO Jane Fraser, said Citigroup is “looking at the issuance of a Citi stablecoin, but probably most importantly is the tokenised deposit space, where we’re very active”.

Fraser explained that Citigroup is not only exploring issuing its own stablecoin but is also developing services around tokenised deposits, reserve management, and custody of crypto assets. 

Tokenised deposits are digital versions of traditional bank deposits, offering faster and more transparent transactions.

Citigroup’s plans come after it posted strong second-quarter earnings, which pushed its stock price to its highest level since the 2008 financial crisis. The bank also announced it would buy back at least $4 billion in shares. 

Fraser said the more favourable regulatory stance of the Trump administration has allowed banks like Citigroup to take part in digital asset services more easily.

Internationally, other banks are making similar moves. Leading French bank, Société Générale, is launching a dollar-backed stablecoin called “USD CoinVertible” on Ethereum and Solana this month. 

Meanwhile, the stablecoin sector is booming. Tether, the world’s largest stablecoin, reported that more than 109 million wallets held USDT at the end of 2024.

The recent public listing of Circle, another major stablecoin issuer, also shows strong interest in the sector from both institutions and retail investors.

Fraser sees Citigroup’s efforts as part of a larger strategy to modernise financial services. She believes tokenised deposits and stablecoins can offer clients faster, safer, and more efficient ways to handle payments and liquidity.

By getting involved now, Citigroup is positioning itself as a key player in the future of digital payments. Fraser noted that until recently, banks were held back by unclear rules. 

Now, with Congress moving towards a more defined framework, traditional financial institutions have more freedom to innovate.

The road ahead for banks and stablecoins

The entry of JPMorgan and Citigroup into the stablecoin market marks a turning point for the banking industry. 

Until now, stablecoins have mostly been the domain of crypto-native companies. But as the market matures and regulations take shape, big banks are beginning to see real opportunities.

For Dimon, stablecoins may still seem unnecessary compared to traditional payment methods. Yet, JPMorgan’s actions – like expanding its blockchain network and piloting new tokens – show that the bank is not willing to fall behind. Dimon put it simply: “The way to be cognisant is to be involved”.

Citigroup, meanwhile, is embracing the shift head-on. With plans for stablecoin issuance, tokenised deposits, and crypto custody services, it aims to provide a full range of digital payment solutions.

The GENIUS Act and other legislative efforts in Washington will play a key role in shaping how quickly these innovations become part of everyday banking. 

While political debates continue, the momentum is clear: stablecoins are moving from the edges of finance into the heart of the system.

As fintech firms continue to innovate and push into spaces once dominated by big banks, traditional players know they can no longer afford to wait and see. Whether out of belief or competitive pressure, they are stepping into the stablecoin arena – ready or not.

In short, the race is on, and the financial landscape is changing fast. Banks, regulators, fintech firms, and customers are all part of a larger shift towards a more digital and interconnected economy. What was once experimental is quickly becoming part of the mainstream.