Mastercard, JPMorganChase, Citi, BofA share stablecoin plans

Lionel Ng/Bloomberg

The stablecoin-focused GENIUS Act is progressing in Congress in the midst of bank earnings season, putting banks such as JPMorganChase , Bank of America and Citigroup ; and card companies like Mastercard in front of analysts to answer questions about crypto.

Many banks are planning to issue their own stablecoin or work as part of a coalition, though the specifics are still emerging. Visa and Mastercard are also pushing for a role in stablecions, though the digital asset is still not widely used for payments, and its future as a payment option is in doubt.

"When it comes to deciding how they want to pay and be paid, consumers and businesses want to have the choice to use the right tool for the job. Those can be cards, real-time payments, money transfers, buy now/pay later, we enable them all. And we will also offer this choice for stablecoins," said Jorn Lambert, chief product officer at Mastercard, during a conference call with analysts.

Mastercard's plan

While Mastercard does not report second quarter earnings until July 31, the card company this week hosted an analyst call that covered stablecoins, agentic commerce and other payment technology topics.

Mastercard is not issuing a stablecoin, but sees itself as a "bridge" that makes it easier for the network's clients and partners to mint, distribute and redeem stablecoins through the card issuers that are on Mastercard's platform. "We're starting out with connecting stablecoins to our network just like any other currency, enabling consumers and businesses to use them to purchase goods and services or move money," Lambert said. Lambert said there are three areas where Mastercard sees opportunity in stablecoins.

Acknowledging that 90% of stablecoin activity is in investments, and not payments, the card network says it can facilitate stablecoin purchases and then enable the digital asset's stored value to be used for purchases, similar to what Mastercard does with traditional currency and bank deposits. Mastercard also plans to let its partners access services connected to stablecoins, part of the company's existing initiative to draw sources of income from outside payment processing.

Read more about bank earnings. (Corporate Earnings News | American Banker)

"We expect that as regulatory clarity progresses, more financial institutions and wallets will offer choice to consumers distributing and even issuing stablecoins," Lambert said, adding these firms will need technology, security and risk products. Stablecoins will also require scale, or a wide range of acceptance options, which Lambert contends fits well with Mastercard's business model.

"Scaling stablecoins will fundamentally be about utility to consumers and businesses and interoperability between the existing financial system and this new rail," Lambert said. "Utility and interoperability is what we do."

And as new uses emerge for stablecoins, Mastercard plans to enable cross-border payments, B2B transactions and other transfers through the card network's global network.

"Think about that for a moment, instant access to 150 million locations worldwide." That's essential to bring utility to stablecoins," Lambert said, noting Mastercard has more than 100 active stablecoin and crypto programs, including partnerships with Kraken, Gemini Bybit, Crypto.com and MetaMask. Morgan Stanley analysts said there's space for Mastercard to operate in the stablecoin market without directly issuing a stablecoin.

"Even if stablecoins begin to see adoption among financial institutions and merchants for various use cases, Mastercard can play an important role by providing instant access to 150 million acceptance locations worldwide for stablecoin holders, offering its consumer protections like zero liability, fraud protection, chargeback rights, and rewards, currency conversion and settlement for cross border disbursements, and compliance with local regulations," Morgan Stanley analysts said in a research note.

Visa reports earnings July 29. In an email, Visa's public relations team noted several steps the card network has taken to support stablecoins, including a partnership with Bridge, a Stripe-owned stablecoin orchestration company, to support stablecoin payments. In an April Visa post by Jack Forestall, Visa's chief product and strategy officer, the card network stressed its utility as a firm that can enable stablecoin payments where there is a demand, such as underserved markets.

What big banks are saying

The banks that reported earnings this week told analysts they are interested in stablecoins, though their remarks were tepid given the lack of clear short-term demand for payments.

During Citigroup's earnings call, CEO Jane Fraser said the bank is looking to issue its own stablecoin and also tokenized deposits, where the bank is "very active." Fraser also said the bank will provide conversions from traditional currency to crypto.

During Tuesday's JPMorgan earnings call, CEO Jamie Dimon said the bank will be involved in stablecoins, both through its JPMorgan deposit token and a bank-issued stablecoin. Dimon said there is a need to be aware of how fintech companies are using stablecoins to create accounts and tap payments and rewards, and it is important "to be cognizant of that," and the only way to be cognizant is to "be involved." But Dimon also said, "I don't know why you'd want a stablecoin as opposed to just a payment."

Bank of America CEO Brian Moynihan told analysts the bank has done a "lot of work" on stablecoins and will issue a stablecoin at "an appropriate time," based on an assessment of demand. Moynihan also said BofA would likely work as part of a consortium to issue a stablecion. During Morgan Stanley's earnings call, CFO Sharon Yeshaya said the bank is examining potential uses for its clients, but it is a "little early to tell" how a stablecoin would fit.

Even as stablecoins grow in credibility — and major financial services industry players begin to more widely acknowledge stablecoins, there's the question of how stablecoins provide significant improvement in utility, cost or customer experience versus existing instruments, Phil Bruno, ACI Worldwide's chief strategy officer, told American Banker.

"We believe it's more likely that the future of cross-border payments will include stablecoins as part of a broader ecosystem of technologies and services — which include current systems such as instant payment networks, both domestic and cross-border," Bruno said, adding that in this type of hybridized environment, it makes sense that banks and other financial institutions will offer stablecoins, as the goal will be not to bet on one singular solution but to prepare for a multipolar payments environment that blends the best of both digital and traditional infrastructure.

Payment analysts say that despite the hype around stablecoins, their utility for payments is still in question given the maturity of the U.S. payments market. "Stablecoins lack cards' seamless user experience, global merchant acceptance footprint, high conversion rates, security, global merchant acceptance footprint, high conversion rates, security, compliance infrastructure and consumer protections," analysts from Jeffries said in a research note.