Why Are JP Morgan, Visa, and Other Giants Betting on Stablecoins?

Why Are JP Morgan, Visa, and Other Giants Betting on Stablecoins?

The Rise of Stablecoins: A New Financial Infrastructure?

The global financial ecosystem is undergoing a profound transformation. With the recent approval in the United States Senate of the Genius Act—a pioneering piece of legislation on stablecoins—and the public listing of Circle, issuer of USDC, cryptocurrencies backed by real-world assets are moving beyond their status as a technical novelty to become a central topic in institutional financial debate.

Stablecoins, unlike other highly volatile crypto assets, are designed to maintain parity with stable assets—typically the U.S. dollar. This allows them to serve as digital representations of fiat currency, facilitating their use as a means of payment, a store of value, or even as a vehicle for institutional investment.

The U.S. Treasury estimates that the widespread implementation of stablecoins could unlock a market of up to $2 trillion, thanks to their potential to reduce friction and costs in current payment and settlement systems.

Although the U.S. financial ecosystem already includes payment tools like Venmo, PayPal, or Cash App, which simulate instant transfers, stablecoins offer real-time transactions on a global scale, without the need for traditional banking intermediaries—representing a new paradigm in operational efficiency.

The Legislative Push Behind the Genius Act

The bipartisan approval of the Genius Act not only legitimizes the use of stablecoins within the U.S. financial system, but also establishes a clear regulatory framework: reserve requirements, annual audits, and consumer protections. However, the bill prohibits the payment of interest to stablecoin users, allowing the yield generated from the underlying assets to remain in the hands of the issuers.

What Are Stablecoins and Why Do They Matter?

From a technical standpoint, a stablecoin is a cryptocurrency whose value is pegged to that of an underlying asset—such as the U.S. dollar—through equivalent reserves. The leading stablecoins on the market, like Circle’s USDC and Tether’s USDT, have over $217 billion in circulation and are backed by instruments such as short-term U.S. Treasury bonds.

Stablecoins

For institutional investors, this presents a dual opportunity:

• Revenue generated from holding the underlying assets.
• Access to a programmable, global payment layer free from traditional banking intermediaries.

Financial Giants in Pursuit of Digital Money

Interest in stablecoins is no longer limited to tech startups. The world’s leading financial conglomerates—JP Morgan, Visa, Mastercard, and American Express—are actively deploying aggressive strategies to position themselves in what many see as the next major wave of financial innovation.

JP Morgan and the Launch of JPMD

JP Morgan has been one of the first major banks to launch its own token: JPMD (JPMorgan Deposit Token), a digital representation of traditional bank deposits. Unlike stablecoins issued by non-bank entities, JPMD maintains a direct link to the deposit accounts of institutional clients, allowing for 24/7 settlements and the generation of interest without leaving the regulated financial system.

This solution is particularly attractive for institutional investors and large corporations because it:

• Eliminates counterparty risk outside of banking hours.
• Enables more efficient capital rotation across global markets.
• Provides controlled exposure to blockchain technology while remaining within a traditional regulatory framework.

Visa, Mastercard, and the New Tokenized Payments Model

Credit card networks, which have dominated the payment infrastructure for decades, have come to recognize that the future may lie in digital tokens. Visa now enables the issuance of credentials based on stablecoins, while Mastercard has launched pilot programs with multiple stablecoins on its tokenized payment network.

These initiatives aim to reduce intermediation costs, provide faster alternatives to the SWIFT system, and ultimately preserve their relevance in an increasingly decentralized and competitive financial ecosystem.

From Credit Card Networks to Stablecoin Issuance

What Are Walmart and Amazon Seeking with Their Own Tokens?

The interest extends beyond the financial sector. Retail giants like Walmart and Amazon have begun exploring the development of their own internal digital currencies. Their primary goal is to reduce payment processing fees across their vast e-commerce networks, but these tokens could also be used to:

• Program discounts or perks for loyal customers.
• Automate logistical and financial processes.
• Monetize treasury balances more efficiently.

This strategic move would also allow them to access the payment system directly, without relying on intermediaries such as banks or credit card processors.

Economic and Operational Benefits of Stablecoins

Beyond their technological innovation, stablecoins represent a strategic solution to maximize efficiency and reduce costs within complex corporate structures. Large corporations and investment funds are identifying key advantages in their adoption, both operationally and financially.

Transaction Cost Reduction for Large Corporations

One of the strongest arguments in favor of stablecoins is their ability to drastically reduce payment processing fees. As previously mentioned, companies paid over $187 billion in such fees during 2024. By eliminating traditional intermediaries—such as correspondent banks, clearinghouses, or processors—digital tokens enable:

• Real-time peer-to-peer payments, with no need for bank reconciliations.
• Minimal transaction fees, regardless of volume.
• Greater control over cash flows, especially in international operations.

This cost reduction not only directly boosts profit margins, but also enhances competitiveness in sectors where microtransaction volumes are massive, such as e-commerce, marketplaces, or logistics.

Systemic Risks and Regulatory Concerns

Although stablecoins represent a promising innovation for financial markets, they also pose significant risks that must be understood by investors and addressed by regulators. From unexpected collapses to misuse for illicit purposes, stable digital tokens are not free from structural threats.

The USDC Case and the Collapse of SVB

In March 2023, the sudden collapse of Silicon Valley Bank (SVB) triggered a crisis of confidence in the stablecoin ecosystem. Circle, the issuer of USDC, had $3.3 billion deposited with SVB, causing USDC to temporarily lose its peg to the U.S. dollar.

This event served as a wake-up call for many institutional investors, revealing how traditional banking exposure can directly impact the value of a so-called “stable” token. Although USDC later regained its peg thanks to emergency measures, the reputational damage was considerable.

The Collapse of TerraUSD and Its Repercussions

Even more devastating was the collapse of TerraUSD (UST) in 2022, an algorithmic stablecoin that plummeted dramatically, bringing down investment firms, lending platforms, and entire crypto exchanges. This case highlighted how the lack of real backing can trigger a domino effect throughout the crypto-financial ecosystem.

Among the most severe consequences were:

• Bankruptcy of multiple platforms such as Celsius and Voyager.
• Massive losses for funds exposed to the Luna-Terra ecosystem.
• A renewed global regulatory push against uncollateralized stablecoin models.

Money Laundering Prevention and Political Conflict of Interest

The flexibility and anonymity enabled by stablecoins have also raised red flags among public authorities. A 2021 report by the U.S. Treasury pointed out that these tools could facilitate money laundering, sanctions evasion, and illicit financing.

Additionally, political figures like Senator Elizabeth Warren have warned about potential conflicts of interest between public officials and crypto projects, emphasizing the need to enforce strict ethical standards around government-linked investments.

As a result, the Senate has promoted frameworks such as the Genius Act, which aims to implement mandatory safeguards including:

• 1:1 reserve requirements.
• Annual audits for issuers.
• Prohibition of interest payments to token holders.
• Authority for the Treasury to declare foreign issuers as “non-compliant.”

A New Market for Public Debt: Can Stablecoins Rescue the Treasury?

One of the most surprising aspects of the rise of corporate stablecoins is their indirect impact on the sovereign debt market. As these digital currencies gain acceptance, their issuers are becoming key buyers of U.S. Treasury bonds, creating a new channel for absorbing public debt.

Debt Issuance and Absorption by Stablecoin Issuers

To maintain their peg to the U.S. dollar, issuers like Circle (USDC) and Tether (USDT) must back each token with highly liquid and secure assets. In practice, this means that short-term U.S. Treasuries have become the preferred assets used to support these currencies.

Currently, some stablecoin issuers are among the largest institutional buyers of U.S. debt, which brings mutual benefits:

• For the issuer: it generates secure and stable returns.
• For the Treasury: it provides a consistent demand for short-term debt instruments.

Is This Model Sustainable in the Long Term?

While this phenomenon represents an attractive source of funding for the U.S., experts warn that it is not a structural solution. The sustainability of the model depends on several factors:

• Continued trust in the stablecoin system.
• Regulated growth of the sector.
• Absence of major disruptions (such as the TerraUSD or SVB cases).

Moreover, as stipulated by the Genius Act, stablecoin users will not receive interest on their holdings, which may limit retail appeal and leave the yield exclusively in the hands of the issuers.

Even so, the fact that stablecoins are being used as indirect investment vehicles in public debt signals a historic convergence between decentralized finance and traditional fiscal policy.

Would You Like to Make Smarter Investment Decisions?

Join Our Investor Community

If you’re looking to stay informed about the latest trends in technology and artificial intelligence (AI) to improve your investment decisions, we invite you to subscribe to the Whale Analytics newsletter. By joining, you’ll receive:

• In-depth fundamental analysis to better understand market movements.
• Summaries of key news and relevant events that could impact your investments.
• Detailed market evaluations, perfect for any technology-driven investment strategy.

Staying informed and up to date is the first step toward success in the investment world. Subscribe today and join committed and proactive investors who, like you, are looking to make the best financial decisions.

Access now and unlock your full investment potential!

Ignacio N. Ayago CEO Whale Analytics & Mentes Brillantes

Permíteme presentarme: soy Ignacio N. Ayago, un emprendedor consolidado 🚀, papá con poderes 🦄, un apasionado de la tecnología y la inteligencia artificial 🤖 y el fundador de esta plataforma 💡. Estoy aquí para ser tu guía en este emocionante viaje hacia el crecimiento personal 🌱 y el éxito financiero 💰.

See Full Bio