Card Networks See Opportunity in Stablecoins as Trump Signs GENIUS Act

President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law on July 18, ending a turbulent week in Washington as political maneuvering in the House temporarily stalled the legislation. 

The GENIUS Act enhances the legitimacy of stablecoins, which could introduce threats to traditional payment methods, including credit cards. But the largest card networks in the U.S., Mastercard and Visa, have said they see stablecoins as a means of growth in the payment arena.

And those growth avenues stand to extend to card issuers. Even if an issuer isn’t planning to pursue stablecoin-related lines of business at this time, it can educate its customers about the security and benefits credit card payments offer over emerging payment solutions.

By paving a path for regulatory oversight of stablecoins, the “GENIUS Act will make America the undisputed leader in digital assets, bridging massive investment and innovation” into the country, according to the White House’s fact sheet on the act. 

Credit card issuers may bristle at the mention of stablecoins because cryptocurrencies have the potential to compete with credit cards if they gain acceptance as a viable payment tool.

And merchants may one day encourage their customers to make payments in stablecoins, as rerouting payments to cryptocurrencies may allow businesses to bypass card interchange fees. 

Leading financial institutions have been quick to announce their plans to incorporate stablecoins into business strategies. JPMorgan Chase CEO Jamie Dimon spoke on the topic during the company’s recent earnings call. 

By partnering with stablecoin providers, financial institutions can better understand their capabilities and gaps as the market for digital asset payments grows. Dimon said fintech competitors “are very smart” and have designs on expanding their presence in financial sectors.

“They’re trying to figure out a way to create bank accounts, to get into payment systems and rewards programs, and we have to be cognizant of that,” Dimon said. “And the way to be cognizant is to be involved.”

Card issuers concerned that stablecoin use will erode card payment volume have time to assess the landscape. Mastercard executives delivered a presentation last week during which they downplayed the threat of stablecoins immediately replacing card payments, according to a Payments Dive report.

The company’s Chief Product Officer, Jorn Lambert, said during the presentation that cryptocurrencies aren’t “currently used as a general purpose payment tool.”

“While the technology powering stablecoins holds tremendous promise — high-speed, 24-7 availability, low cost, profitability, immutability, etc. — those attributes alone do not suffice to turn stablecoins into a payment tool,” Lambert added.

Card issuers can point customers to the time-tested benefits cards offer that stablecoins lack. During the presentation, Lambert highlighted a few of those attributes, including the anti-fraud capabilities, predictability, and reliability of card networks. 

He also said he expects Mastercard to introduce cards designed for stablecoin transactions and to support banks that enable stablecoin use for their customers.

Visa offers support to banks seeking to build a strategy for stablecoins.

Visa is closely watching the stablecoin space, offering resources to help banks develop strategies and manage programs for digital assets. It also provides stablecoin-linked cards that let users spend their digital balances directly with merchants.

While the GENIUS Act ushers in an “exciting new frontier” for cryptocurrency, Trump said it also raises questions for credit card issuers with an eye on future revenue potential. 

Issuers that familiarize themselves with stablecoin use cases, and leverage the knowledge and expertise of their card network partner, can position themselves for success in a payments space that looks a bit different than it did just a few weeks ago.