A seismic shift is underway in the stablecoin market as traditional financial institutions — from European lenders to global payments giants — rush to launch their own blockchain-based tokens. The catalyst is clear: Tether is on track to surpass $10 billion in net profits for 2024, and new European regulations are opening doors for compliant alternatives. As of December 28, 2024, the race to capture a share of the $138 billion stablecoin market has attracted banks on three continents.
TL;DR
- Tether (USDT) is projected to exceed $10 billion in net profits for 2024, drawing banks into the stablecoin market
- MiCA regulation in the EU is forcing Tether to discontinue its EURt stablecoin, creating an opening for compliant competitors
- Societe Generale, BBVA, Revolut, and Deutsche Bank-backed ventures are all developing stablecoin products
- Visa has launched a tokenization platform for banks, working with BBVA on a 2025 pilot
- USDC by Circle is positioned as the primary MiCA-compliant alternative for European traders
The Tether Profit Machine That Got Banks Attention
Tether Holdings is on track to close 2024 with more than $10 billion in net profits, according to CEO Paolo Ardoino. The USDT stablecoin commands a market capitalization of $138.75 billion, making it the third-largest cryptocurrency by market cap behind Bitcoin at $95,163 and Ethereum at $3,397, according to CoinMarketCap data from December 28. Those profit numbers have not gone unnoticed in traditional finance.
Until recently, banks watched from the sidelines. That is changing rapidly. Societe Generale Forge has made its EUR-backed stablecoin available to retail investors. French financial group Oddo BHF is developing a euro-denominated stablecoin. London-based Revolut is considering issuing its own version. AllUnity, a venture involving Deutsche Bank-owned DWS, plans to launch a stablecoin in 2025. And Spanish lender BBVA is building its own entry.
MiCA Creates a Regulatory Fork in the Road
The European Union’s Markets in Crypto-Assets Regulation, or MiCA, is reshaping the competitive landscape for stablecoins across the continent. The regulation requires stablecoin issuers to maintain strict operational standards, provide full transparency about their reserves, and ensure sufficient liquidity to back their tokens at all times. Firms that were already AML-registered in an EU member state by December 28, 2024, have until the end of 2025 to obtain full authorization.
Tether has already discontinued its EURt stablecoin in response to the new rules, and there is growing speculation that USDT itself could face restrictions on European exchanges if it fails to achieve full MiCA compliance. That regulatory pressure has created a vacuum that competitors are eager to fill.
USDC, issued by Circle, has emerged as the primary beneficiary. It already holds an Electronic Money Institution license from French regulators and conducts regular independent audits through Grant Thornton. The stablecoin is fully backed by U.S. dollars and Treasury securities, giving it the transparency profile that MiCA demands.
Visa, JPMorgan, and the Infrastructure Play
Payments giant Visa has positioned itself as infrastructure provider for the bank-issued stablecoin wave. In October 2024, the company launched a tokenization platform enabling banks to issue their own stablecoins, and it is working with BBVA on a pilot program slated for 2025. Cuy Sheffield, Visa’s head of crypto, confirmed that the company is engaged with banks across Hong Kong, Singapore, and Brazil at various stages of the process.
JPMorgan Chase, which has operated its own JPM Coin for interbank transfers using permissioned blockchain technology, expects the growing interest in bank-issued stablecoins to accelerate and become mainstream within three years, according to Naveen Mallela, global co-head of the bank’s Kinexys digital asset unit. The bank views stablecoins and tokenized deposits as complementary rather than competing products.
Standard Chartered has also moved aggressively, partnering with Animoca Brands and Hong Kong Telecommunications to become one of the first issuers of an HKD-denominated stablecoin under the Hong Kong Monetary Authority’s experimental program. The bank hopes the stablecoin could go live in 2025.
Risks and Challenges Remain
Despite the enthusiasm, significant hurdles persist. A European Central Bank analysis found that converting retail deposits into stablecoin issuers’ deposits weakens a bank’s liquidity coverage ratio — a key metric showing a bank’s ability to meet short-term obligations and withstand market turbulence. Hilary Allen, a law professor at American University, has warned that issuing uninsured stablecoins alongside insured deposits could create significant consumer confusion about what is and is not protected during a crisis.
SG-Forge CEO Jean-Marc Stenger, whose firm is in discussions with approximately 10 banks about partnerships or white-labeling arrangements, believes bank-issued stablecoins are inevitable but acknowledges the heavy lifting involved. “Do I think that other banks will be issuing their own stablecoins?” he said in an interview. “The answer is yes. It’s heavy lifting, I am not sure it will happen any time soon, but it will happen.”
Why This Matters
The convergence of MiCA regulation in Europe, Tether’s massive profitability, and traditional banks’ growing comfort with blockchain technology is creating a once-in-a-generation reshuffling of the stablecoin market. For crypto traders and businesses operating in the EU, the transition period between now and the end of 2025 represents both a risk and an opportunity — the risk of disrupted USDT liquidity, and the opportunity to adopt more transparent, regulated alternatives. The banks that move fastest will capture the spoils of a market that Tether built but may not dominate forever.
This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.
tether making $10b in profit while banks scramble to compete is the funniest thing ive seen all year. they had years to figure this out
tether making $10b while banks scramble is peak irony. they could have built this in 2019 when libra got announced but nope, too busy writing thinkpieces about bubble risk
MiCA forcing Tether out of EURt is actually a huge opening for Societe Generale and BBVA. First mover advantage in compliant stablecoins is nothing to scoff at.
mica killing eurt is a feature not a bug. eu regulators finally did something useful by forcing transparency
the irony of banks building on the same tech they spent years calling a scam is not lost on anyone
banks spent years lobbying against crypto and now they want their own stablecoins. the fastest 180 in financial history