Wall Street Giants JPMorgan and Citi Flirt With Joint Stablecoin—Because What’s Finance Without a Little Herd Mentality?

Banking titans circle the crypto watering hole—again. Early-stage talks suggest JPMorgan and Citi might actually play nice this time, teaming up on a shared stablecoin. Because nothing says ’innovation’ like legacy institutions scrambling to copy the crypto kids.

Details? Thin. Motives? Thicker. Watch for the usual suspects: cost-cutting, control, and that sweet, sweet arbitrage between TradFi ego and DeFi FOMO. Just don’t hold your breath—these are the same guys who still fax settlement instructions.

JPMorgan doubts the 4x growth outlook

Most firms, including Standard Chartered, expect the stablecoin market size to grow over 4x from the current $240 billion to $1 trillion in the next two years. 

However, in a “The Block” report, JPMorgan analysts, led by Nikolaos Panigirtzoglou, downplayed the growth projections as ‘too optimistic.’

“We find talk about tripling or quadrupling of the stablecoin universe over the coming year or two to be far too optimistic.”

They cited the restriction stipulated in the U.S. Senate stablecoin bill, GENIUS Act, and the House’s STABLE Act, which limits digital dollars to ‘payment’ and non-interest yield instruments. 

The crypto industry, led by Coinbase’s Brian Armstrong, pushed for interest-bearing stablecoins. 

However, the U.S. banking industry reportedly lobbied strongly against it. This wasn’t unexpected, because such a feature WOULD directly compete with traditional interest-bearing products like money market funds. 

The analysts added that last year, U.S. money market funds attracted over $900 billion in inflows. Stablecoins would have eaten into this share if allowed to bear yield. 

Now, the only growth path for the ‘payment stablecoins’ would be either through the overall payment segment or broader crypto expansion, the analysts noted.

Based on this, the segment may command about 7-8% of the overall crypto market size. 

However, the analysts said that yield-bearing stablecoins eyeing institutional players, like BlackRock’s BUIDL and Franklin Templeton’s BENJI, may experience massive growth. 

That said, the Senate GENIUS Act has cleared a key hurdle, raising hopes of a potential stablecoin regulatory framework by Q3 2025. 

Overall, the stablecoin market size hit a record $249.5 billion, up by +280% from $65 billion at the beginning of the current crypto bull run in 2023.

It will be interesting to see how crypto-native stablecoins compete with likely bank-issued digital dollars.