The race to embrace stablecoins is heating up, with major issuer Circle (CRCL) soaring on its first day of trading Thursday, while the biggest banks in the US explore whether to issue their own coins.
On Thursday morning, Circle founder and CEO Jeremy Allaire stood on a balcony before the trading floor at the New York Stock Exchange, pumping his fists and cheering before ringing the opening bell.
“Let’s go! Let’s go!” Allaire yelled.
By the end of the day, Circle’s stock more than doubled on its market debut after listing at $31. It closed Thursday at $83, up 167%.
Circle’s USD Coin (USDC-USD) is the world’s second-largest stablecoin after Tether (USDT-USD).
Unlike bitcoin and other digital assets, stablecoin prices aren’t supposed to fluctuate. Instead, they are pegged to assets such as the US dollar. They also serve as the lifeblood of the crypto world, accounting for the bulk of its transaction volume.
Wall Street isn’t just celebrating the debut of a major stablecoin issuer. It’s also considering how it can compete against Circle in the future.
A group of big banks, including JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C), and PNC (PNC), met last week in a working group to discuss the prospect of offering stablecoins in a collaborative effort, according to people familiar with the matter.
One idea currently being floated is creating a Zelle-like stablecoin network, according to people familiar with the matter.
Representatives for the Clearing House Payments Company and Early Warning Services, the fintech company behind Zelle, were also part of the working group for tech and innovation executives of member banks.
The meeting was exploratory and marked the early stages of a conversation between the member banks, two of the people said. This gathering was spearheaded by PNC CEO William Demchak, and there will be more.
The Wall Street Journal first reported the existence of these discussions.
Big banks are beginning to weigh their options for whether to buy, build, or partner with a crypto firm to issue these assets because potential legislation setting rules around stablecoins is currently making its way through Congress and is expected to move to a final vote soon.
Another broader bill focusing on crypto market structure will lay out which regulatory agency oversees which crypto assets and is expected to be introduced soon as well.
Read more: Can you buy crypto with a credit card? See the pros and cons.
Banks are also eyeing other crypto activities. At least two big Wall Street institutions — Morgan Stanley (MS) and Charles Schwab (SCHW) — plan to offer cryptocurrencies through their wealth management platforms sometime next year.
In a Yahoo Finance podcast last month, Charles Schwab CEO Rick Wurster laid out plans to offer retail clients spot crypto within the next 12 months.
Morgan Stanley also plans to offer crypto trading to retail clients through its E-Trade platform, according to a May Bloomberg report. E-Trade had $1.29 trillion in client assets on its platform as of March 31, according to Morgan Stanley filings.
And the country’s biggest bank, JPMorgan, is also showing more acceptance for clients flush with digital assets.
Some of the company’s financing operations in trading and wealth management plan to accept selective crypto exchange-traded funds as collateral for loans in the coming weeks, according to a Bloomberg report.
In some cases, the bank will begin counting a client’s crypto holdings in assessments of their total net worth and liquidity, putting digital assets into the same playing field the firm uses for valuing things like stocks, art, and motor vehicles when underwriting how much money it can lend to them.
CEO Jamie Dimon said at the firm’s investor day in May that he’s “not a fan” of bitcoin, but that his bank would allow clients to own it.
“I don’t think we should smoke, but I defend your right to smoke,” Dimon said at the time. “I defend your right to buy Bitcoin, go at it.”
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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