As Tether says it is on track for a record $10B net profit in 2024, banks around the world are exploring launching their own stablecoins for payments
- Banks are starting to issue stablecoins for payments, payroll — SocGen, Standard Chartered are among banks expanding efforts
Context & Ripple Effects
Tether’s reported profit target followed its disclosure that it expected to direct billions of dollars of planned investment across several sectors, underscoring the financial scale its stablecoin business had reached Tether’s planned 2025 investment program.
The bank experiments were an early signal of a broader response: later coverage tracked stablecoin launches by fintechs and banks as issuers rushed into stablecoins and joint exploration by major commercial banks of a shared bank stablecoin.
First-order effects
- SocGen and Standard Chartered move stablecoins closer to practical payment and payroll use, putting bank-issued digital money into direct comparison with incumbent stablecoin settlement.
- Tether’s projected record profit reinforces the commercial incentive for banks to examine whether payment balances and settlement flows should remain outside bank-controlled rails.
Second-order effects
- Other banks and fintechs face pressure to define their own issuance, distribution, and settlement strategies; subsequent coverage shows that response broadening beyond the initial bank group to fintechs and other banks.
- A fragmented set of issuer-led payment coins raises the importance of interoperability and governance choices, especially for customers that need to move value across banks and platforms.
Third-order effects
- If bank issuance expands, competition may shift from a contest over a single stablecoin product to competing networks for programmable settlement, with control over customer relationships and policy rules becoming a core differentiator.
- The later move by large US banks toward a tokenized-deposit network suggests an alternative structural path: banks may favor deposit-based rails rather than fully adopting the stablecoin model through a tokenized deposit network.
The trend: Stablecoin economics are pushing banks, fintechs, and incumbent issuers toward competing forms of digitally native payment and settlement infrastructure.