Why Bank of America’s (BAC) Bold Leap for Digital Dollars Could Benefit Shareholders

Legacy banks are beginning to embrace digital assets, and Bank of America (BAC) is the latest to prepare for a potential U.S. dollar-backed stablecoin, pending regulatory clarity.

The timing aligns with growing momentum behind the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) in Washington. As Bank of America signals caution about the macroeconomic outlook for the rest of 2025, this strategic move reflects both a necessary shift to keep pace with peers and a bold step into uncharted territory. While the risks are real and the implications far-reaching, I remain cautiously bullish about BAC’s forward-looking approach.

Joining Forces for a Unified Digital Dollar Network

Bank of America is planning to join major peers, such as JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C), in developing a stablecoin network modeled after Zelle. The initiative would leverage existing infrastructure—specifically, Early Warning Services and The Clearing House—to create a unified, fiat-backed stablecoin designed for retail and cross-border payments. The goal is to streamline traditional systems, such as ACH, by offering faster and more cost-efficient transactions.

Bank of America has also floated the idea of launching its own “Bank of America Coin”, but for any of this to move forward, it will depend on the passage of favorable legislation.

Washington Paves the Way with the GENIUS Act

This is where the GENIUS Act comes into play. Just days ago, the Senate passed the crypto regulation bill with strong bipartisan support in a 68–30 vote, sending it to the House for further consideration. The bill includes key provisions like 1:1 reserve backing, segregated customer funds, and strict anti–money laundering standards.

 U.S. Senate building on Capitol Hill in Washington, D.C.

Regulation has always been an inevitable and necessary step for digital assets, and now that more explicit rules are emerging, traditional banks are finally feeling confident enough to get involved.

Costs and Benefits for BAC Shareholders

There are clear incentives for banks to enter the stablecoin market. It offers potential cost savings, new revenue streams from transaction processing, and opportunities to develop innovative financial products. At a broader level, it could help reinforce the U.S. dollar’s dominance as the global reserve currency.

However, stablecoins carry real risks. Though more “stable” than unbacked cryptocurrencies, they are still vulnerable to collapse, as seen with TerraUSD in 2022, and pose potential systemic threats. Critics warn that the failure of a major issuer could have a ripple effect across the financial system. Some advocacy groups argue the GENIUS Act lacks sufficient consumer protections and could shift the burden of failure onto taxpayers.

Building a Zelle-style stablecoin alliance also presents challenges. Banks must align on key features and governance—a challenging task given differing priorities. Even if the network succeeds, it will face competition from established players like Circle’s USDC, Tether (USDT), and PayPal (PYUSD). Retail giants like Walmart and Amazon are also eyeing the space, potentially bypassing card networks like Visa by tapping into their massive customer bases.

Bank of America’s Strong Q1 Amidst Macroeconomic Caution

Still, this transformation will take time to unfold. In the meantime, Bank of America’s Q1 2025 earnings were largely positive. The bank posted a solid EPS beat at $0.90, driven by a 9% year-over-year rise in sales and trading revenue and 4% growth in consumer spending. Perhaps most notably, Bank of America’s capital position is stronger than ever, with total assets climbing to $3.35 trillion.

However, the outlook isn’t as rosy as its first quarter results. The company expressed uncertainty over the macroeconomic outlook due to potential tariffs and their impact on the economy.

For example, if retailers raise the price of a television due to tariffs, fewer Americans will use their Bank of America cards to process the transaction. So, banks are quite vulnerable to economic stagnation. This, combined with the risky pivot into digital currencies, may be “cause for pause” among investors. 

Is Bank of America a Buy, Sell, or Hold?

On Wall Street, BAC earns a Strong Buy consensus rating based on 18 Buy, two Hold, and zero Sell ratings in the past three months. BAC’s average price target of $49.38 implies an upside potential of almost 10% over the next 12 months.

See more BAC analyst ratings

Recently, Wells Fargo analyst Mike Mayo issued a Buy rating on BAC, noting the bank’s “strategic focus on expanding its consumer deposits and wealth management services, along with international commercial expansion, positions it for long-term growth.”

BAC Positioned for a Win in Ongoing Stablecoin Shift

Bank of America’s move into digital currencies reflects a clear shift in the financial landscape—an uncertain but necessary step that no major bank can afford to ignore. While details are still being finalized and collaboration among competing banks will be crucial to building a stablecoin network, Bank of America’s core business remains solid, consistently exceeding expectations.

With its strong balance sheet and operational scale, the bank is well-positioned to lead innovation in this emerging space. One thing is sure: the GENIUS Act favors large institutions, and Bank of America is well placed to capitalize on it.