Bank of America is preparing to enter the stablecoin market, competing directly with dominant players like Tether and Circle.
With billions of dollars in daily transactions tied to fiat-pegged digital assets, traditional financial institutions are seeking a stronger foothold in the evolving digital economy.
Bank of America pushes for regulatory clarity
Bank of America CEO Brian Moynihan announced in February that the bank is ready to issue a stablecoin once Congress provides a clear regulatory path. Since then, the bank has been lobbying through groups like the American Bankers Association and the Bank Policy Institute to influence lawmakers. Its goal is to secure an advantage for traditional banks while limiting the role of non-bank issuers, including tech firms and fintech startups.
Two pending bills in Congress—the House’s STABLE Act and the Senate’s GENIUS Act—are central to the ongoing debate. Since they establish regulatory parameters, these proposed bills can define how non-bank entities will gain participation in stablecoin creation. Recently, Bank of America and additional large institutions voiced their opposition to stablecoin issuance by Meta or Amazon because it introduces significant privacy challenges and competitive hazards.
Concerns over non-bank participation
Bank of America and its supporters maintain that companies involved in digital finance activities create confusion regarding banking and non-banking separation. Bank of America and its partners assert that the overlap creates risks for companies to gain control of sensitive customer data that threatens both privacy and market equity. Legislative proposals released so far demonstrate that they have not eliminated the possibility for non-bank organizations to issue stablecoins.
Even though traditional banks oppose their involvement in the market, lawmakers avoid setting strict restrictions on non-bank financial institutions. Advocates state that the innovation should not be confined to conventional financial institutions when providing access to stablecoin issuance.
Tether and Circle respond to growing competition
While Bank of America positions itself for entry, Tether and Circle expand their influence in the stablecoin market. Circle has been lobbying for regulatory standards that support non-bank issuers while focusing on consumer protection and transparency. Tether, which operates internationally, is exploring entry into the U.S. market and recently proposed launching a dollar-backed subsidiary for institutional clients.
Circle maintains about $60 billion worth of USDC although Tether holds the largest amount at over $145 billion USDT. Experts predict that Tether will encounter difficulties from rigorous audit and reserve protocols because the company has received criticism for its insufficient third-party audit performance compared to Circle.