Opinion: How Issuers Can Adapt to The Emerging Threat of Stablecoins

Stablecoins can spark significant disruptions in the payments world. In fact, they already are.

But the more fascinating storyline is how exactly it plays out from here for stablecoins, which sidestep crypto’s famous volatility by being pegged to fiat currency like the U.S. dollar.

But the story may not unfold in ways you expect. It’s natural to think the old guard may get severely disrupted — but the better strategy is for them to jump in.

That’s already starting to happen.

JPMorgan Chase CEO Jamie Dimon is a famous crypto skeptic, but even he is getting his feet wet. The multinational finance corporation recently launched its own Deposit Token (JPMD), backed by actual commercial bank deposits, essentially marrying traditional banking with blockchain technology.

Even if he’s not a raving fan of the space, he admits that he wants to be a “player.”

That’s the smart move.

You may have also noticed that Citigroup and Bank of America also hurriedly announced they are working on stablecoins, too. Sense a trend?

Here’s the underlying fear, and the opportunity: Payment networks and issuing banks could take hits to their business models, since the shift threatens key elements of their balance sheets. Card issuers would see their interchange fees impacted, and processors would see network fees slump if companies turn to alternative payment rails.

Certainly investors are fretting about the unknown, with stocks like Visa off its mid-June high. Meanwhile, USDC stablecoin issuer Circle Internet Group, whose valuation went through the roof when it went public in June, saw its stock tumble in August after it said it would offer 10 million Class A shares to the public. 

Much of the momentum stems from the passing of the GENIUS Act. Lawmakers are trying to establish a regulatory framework for stablecoins, as the notion enters the mainstream — even as members of the general public still don’t know a whole lot about them. 

Some crypto firms — like Ripple Labs, which has developed its own dollar-pegged stablecoin, RLUSD — are applying for banking licenses, setting the table for more federal oversight and broader adoption.

Pair all that with a crypto-friendly executive branch — President Trump even issued a stablecoin of his own, USD1, issued by World Liberty Financial — and it is clear payment networks and card issuers have some adapting to do, and fast.

But don’t be surprised if the industry’s 800-pound gorillas are able to do so. After all, they have many cards to play. 

The appeal of cheaper transactions is compelling: Credit and debit card swipe fees amounted to a record $187.2 billion in 2024, according to the Merchants Payments Coalition. If stablecoins offer a path to faster, more affordable settlement for merchants, that is very attractive indeed.

It certainly explains why retail giants like Walmart and Amazon are both reportedly sniffing around the idea of stablecoins. If merchants can save even a portion of the typical 1.5%-3.5% on transactions, that kind of profitability boost — especially at the scale — gets your attention very quickly.

That, in turn, could indicate coming disruption in rewards programs. We are all used to our familiar travel-points or cash-back cards — but in a stablecoin universe, those may be changing, too. That may also help explain why payment networks and card issuers are rolling out more and more bespoke and creative rewards to keep users loyal and engaged.

The key: Don’t throttle change, but help shape it. That kind of strategy makes the most sense for payment networks and card issuers. Think of it as a calculated embrace. 

That way — due to their size and influence — they can help determine how this industry niche develops. If stablecoins indeed have the potential of a $2 trillion market, you certainly don’t want to be sitting on the sidelines.

In one sense, the two sides need each other. If stablecoin issuers were to bypass traditional networks entirely, and try to establish new consumer behaviors, that’s a difficult row to hoe. 

Habits are hard to change, and trust is challenging to build. Since traditional cards are already in almost every American wallet, and customers have longstanding relationships with prominent issuers like Chase, Amex and Citi, a network of alliances makes sense.

Of course, that will alter the composition of company balance sheets going forward — but that’s not necessarily a bad thing. It does, however, require them to be creative and nimble. 

Due to their ubiquity in the marketplace, they could still generate fees from transactions or data access. If they build their own blockchain-based platforms, like JPMorgan’s Kinexys, they can control the field of play.

The key is to be proactive rather than reactive. By essentially disrupting themselves — establishing themselves as key movers in this new and emerging payments universe, as well as the more familiar and traditional one — issuers can leverage the strengths and reach they already have.