The news comes at a time when many banks are considering issuing their own private stablecoins.
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Banco Santander SA, a global banking institution, is considering expanding crypto services to retail clients and potentially launching a stablecoin product.
The stablecoin plans are still in the early phases. According to a May 29 Bloomberg report, the bank is considering offering both dollar and euro-pegged fiat tokens.
Large banking institutions, including JPMorgan, Bank of America, Citigroup and Wells Fargo, are reportedly looking into launching stablecoins, following an industry-positive regulatory shift in the United States under US President Donald Trump.
Proponents of stablecoins argue they are a way to extend US dollar dominance, increase the velocity of capital in payment systems, bank the unbanked, and expose small businesses to global capital markets.
Related: UK FCA requests public comments on stablecoin, crypto custody regulation
Banking industry remains divided on stablecoins
Although several large banking conglomerates and financial services are mulling issuing dollar-pegged stablecoins, others in the banking industry are opposed to the proliferation of such assets.
Banking lobbyists and their allies in the US Senate attempted to block stablecoin legislation over fears that the digital fiat tokens will erode banking profits and steal market share from the legacy financial system. Yield-bearing stablecoins were a significant concern raised by the banking lobby and some US lawmakers.
“Do you want a stablecoin issuer to be able to issue interest? Probably not, because if they are issuing interest, there is no reason to put your money in a local bank,” US Senator Kirsten Gillibrand said at the DC Blockchain Summit in March 2025.
The senator noted that households and small businesses depend on these banking institutions for loans, and that yield-bearing stablecoins could undermine the retail lending market.
New York University (NYU) professor Austin Campbell recently outlined why the legacy banking sector is fearful of yield-bearing stablecoins.
Campbell said that offering consumers rewards in the form of yield disrupts the low-to-no-interest depositor account model at the heart of the fractional reserve system and modern retail banking.
Campbell was critical of lawmakers pushing regulations restricting the issuance of yield-bearing stablecoins. “The only people who benefit are billionaires and bank executives,” Campbell wrote in a May 21 X post.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom
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Cointelegraph by Vince Quill