Mastercard and Visa stepped back from their card partnerships with Binance Holdings, distancing themselves from the cryptocurrency platform that's under threat from regulators worldwide.

Congress must act to ban nonbanks from issuing stablecoins. The products are virtually equivalent to bank deposits, and should be regulated as such.

There is an urgent need for a new class of security solutions that will allow people to retain control of their decentralized financial lives with confidence and safety.

"Smart" contracts enable the Chicago-based trust bank to carry out deals without intermediaries, while archiving details on transactions that can be useful later. Experts say other banks could follow despite the complexities of cutting-edge technology and the risk of being hacked.

The Federal Reserve issued fresh policy guidance around stablecoin issuance, distributed ledger technology and fintech partnerships. Legal and policy analysts anticipate a further chilling effect on bank engagement with so-called novel activities.

The Federal Reserve has outlined the process state member banks must follow before issuing, redeeming or holding stablecoins. The agency also says it will create an examination process to monitor novel activities.

The payment giant's entry into the stablecoin market is expected to renew the debate over the appropriate regulatory oversight for digital tokens. It could also have ripple effects in areas such as the debate over instant payments.