Bank of America's Plan Could Shut Down Coinbase and Tether Stablecoins

Bank of America is lobbying Congress to pass legislation that would give banks an edge in the growing stablecoin market.

Bank of America is reportedly lobbying Congress to pass legislation that would grant banks a central role in the burgeoning stablecoin market, ultimately aiming to prevent non-bank companies from readily issuing digital dollar-pegged tokens.

According to The Block, the $284 billion financial behemoth is collaborating with industry groups such as the American Bankers Association and the Bank Policy Institute in these efforts. These campaigns are part of a broader push to create a fully reserved, 1:1-backed “Bank of America coin.”

If successful, this initiative could systematically sideline and shut down the operations of prominent stablecoin projects developed by non-bank players. Among the companies that could be affected by this move are Coinbase, Circle, Tether, Amazon, Meta, and PayPal.

As the leading stablecoins in the market, USDC (by Circle) and USDT (by Tether) currently boast impressive market caps of $60 billion and $144 billion, respectively. Bank of America's desire to enter this market is no secret, but the bank's primary focus is on ensuring that the playing field tips heavily in favor of traditional banks.

While Circle is engaging in lobbying efforts to safeguard its own enterprise, Bank of America maintains that its offering would be characterized by greater transparency and full compliance with U.S. law—a narrative implicitly targeting competitors like Tether, which has faced regulatory attention in the past.

However, it's worth noting that Bank of America's own past interactions with regulators are not without blemish. The bank has incurred fines for issues ranging from underpaying FDIC insurance and double-charging customers to violations of the Home Mortgage Disclosure Act, culminating in a $16 billion DOJ settlement over financial fraud.