Today, the U.S. saw a change of momentum from the banking industry.
39 State banking associations announced the BankChain Alliance, a network designed for the small-to-medium sized banking institutions from around the country.
Specifically, the alliance is expected to create a solution that integrates both stablecoins and tokenized deposits, as well as other relevant innovations for programmable settlement.
But this will be managed by the associations themselves, unlike individual initiatives. An infrastructure provider is being reviewed in order to officially launch next year.
Also, it was reported by WSJ that certain commercial banks are doubling down themselves.
J.P.Morgan may be considering launching their own stablecoin. This is interesting because it already has blockchain solutions for settlement and FX, as well as its JPMD deposit token.
There is a subsequent mention of Bank of America, Wells Fargo, and others looking to partner to position themselves better for international stablecoin transfers.
Stablecoins vs. Clarity Act
This is happening right before the Clarity Act’s scheduled vote on 15th September.
The legislation’s biggest objections span ethics and stablecoin yield, the latter which was largely propelled forward by the banking community since the start of the year.
Although there was a compromise a few months ago, it seems new opposition to the draft’s language helped to delay the bill’s voting process on the Senate floor.
This is leading to a multistablecoin world, where bank-issued and privately-issued stablecoins are being transferred both domestically and abroad.
Genius Act rulemaking proposals from the likes of the OCC, the Treasury, and the Federal Reserve are required to make all this happen. Agreement on key areas across the board is vital.
However, unlike the OCC and the Treasury, as well as the FDIC, the Federal Reserve has not yet published its proposals. The most recent update is the Treasury’s Section 3 proposals.
The Genius Act will likely go live early in 2027.
Stablecoins vs. Tokenized Deposits
Under this new system, banks have to ensure that stablecoins are not only interoperable with other regulated stablecoins, but also tokenized deposits and core general ledgers.
This summer marked a large shift in the U.S. domestic landscape because a number of tokenized deposit initiatives were either launched, revealed, or enhanced.
The Clearing House is developing its tokenized deposit solution, while Wells Fargo recently revealed an in-house initiative for tokenizing deposits with USD and GBP currencies first.
These complement other existing platforms, including: the Cari Network; Hazel Network; J.P. Morgan’s JPMD Deposit Token; N3XT Digital Dollar; USBC Dollar; and VersaBank’s receipt deposits.
Cross-Border Settlements
Cross-border settlement for corporate clients are already live from GSIBs such as Citi and HSBC. Relevant infrastructure is being developed across Barclays and Standard Chartered.
Similarly, many Central Bank Money pilots are happening.
This is most notably from BIS Agora project, as well as between national banking groups in the UK, France, Germany, South Korea, Malaysia, and Japan. All are testing their own versions.
Recently, SWIFT processed its first tokenized deposit transaction delivered on its anticipated tokenized deposit platform.
