Traditional Finance Institutions Expand Stablecoin Presence, Challenging Incumbents

Major traditional finance institutions are making significant moves into the stablecoin market, signaling a shift from crypto-native dominance to broader industry competition. This influx of established players, including Goldman Sachs, Citigroup, Santander, and Deutsche Bank, is challenging existing stablecoin issuers like Circle and Tether.

Reports indicate that Goldman Sachs, Citigroup, Santander, and Deutsche Bank are collectively committing approximately $270 million to a new dollar-stablecoin venture, codenamed “Project Faro.” This initiative, part of a 21-institution coalition, aims to fund five years of operations for a U.S.-incorporated issuer targeted for a 2027 launch. The stated goal of Project Faro is to challenge the current market leaders, Tether and Circle, who together control about 85% of the roughly $290 billion stablecoin market.

Regulatory developments appear to be a key catalyst for this market entry. The GENIUS Act, signed into law in 2025, established the first U.S. framework for dollar-pegged tokens, providing a clearer regulatory path for traditional financial institutions. The U.S. administration has also framed dollar stablecoins as a strategic tool for extending the dollar’s global reach and hegemony, prompting banks to view stablecoin settlement as a business they cannot afford to cede.

Beyond new ventures, established financial players are expanding their existing stablecoin-related services. SoFi has launched its own stablecoin, SoFiUSD, which has recently expanded its presence onto the Polygon network, in addition to Ethereum and Solana. SoFi has also introduced SoFi Earn, a tokenized deposit product offering a 4.40% yield that converts into SoFiUSD. The company, which serves over 17 million members, settles its entire card program over Mastercard’s network.

Payment networks are also integrating stablecoin settlement capabilities. Anchorage Digital is providing settlement services, enabling its tokens to settle transactions on Visa’s network, starting with Western Union’s USDPT. Anchorage Digital has also recently facilitated stablecoin corridor transactions between the U.S. and Mexico. Mastercard has been actively expanding its stablecoin services, including the launch of its Global Money Platform following the acquisition of stablecoin firm BVNK, and the rollout of a Stablecoin Security tool and Agent Pay for Machines. Visa has also broadened its stablecoin settlement program across multiple blockchains.

Circle is also expanding its reach, having struck a deal to bring USDC settlement to banking rails in Latin America, with an initial pilot in Colombia.

Despite these developments, uncertainties remain. Project Faro is still in its early stages, lacking a final name, token, or CEO. Furthermore, bank-issued tokens face a considerable challenge in gaining market share against established players. The direction suggests a contested ground for the onchain dollar, but the ultimate success and impact of these new ventures are yet to be determined. It is important to note that stablecoins are not solely crypto’s business anymore, and traditional finance has not fully claimed the onchain dollar, nor have Tether and Circle been displaced as market leaders.

Why This Matters

The materials describe a narrow update: Major financial institutions like Goldman Sachs, Citigroup, Santander, and Deutsche Bank are investing in a new stablecoin venture. Project Faro has no token, no CEO, and no final name.

Broader Context

Source materials place the factual news in this context: For years, stablecoins were crypto’s business, dominated by Tether and Circle and used mostly to trade digital assets. That era is ending.