Some of America's biggest banks dropped the ball when it came to Bitcoin. Now they're hoping for another opportunity to dominate the cryptocurrency market, but there's little reason to believe they'll succeed.

U.S. banks including JPMorgan Chase, Bank of America and Citigroup are considering whether they should jointly issue a stablecoin--a crypto token which functions like a digital dollar-- according to The Wall Street Journal.

It would be a sharp about-face for the banking industry, which has generally been slow moving in crypto. As recently as Monday, JPMorgan CEO Jamie Dimon said he is "not a fan" of Bitcoin, even as his bank finally allows trading in the token.

Stablecoins appear to provide more fertile ground. They could speed up cross-border payments and should be less volatile than Bitcoin and its peers. The GENIUS Act recently passed by the Senate is set to offer some regulatory certainty, establishing criteria on financial risk and the need for liquid assets to back stablecoins.

However, banks are already far behind a new circle of players who dominate the stablecoin market. The largest two stablecoin issuers are Tether and Circle. Tether shares ownership with major cryptocurrency exchange Bitfinex, while Circle has close ties to leading U.S. exchange Coinbase. They have now been joined by firms including the Trump family's World Liberty Financial, which said in March it would launch its own stablecoin.

A cumbersome consortium of banks which is only reluctantly coming round to the idea of cryptos in general is unlikely to make much headway. Even their political connections seem to be left wanting, given just last night President Donald Trump hosted memecoin investors at a private dinner.

Bulge bracket banks have consistently been behind the pace when it comes to crypto innovation. It's hard to believe they have a successful gameplan now to go on the offensive.

-- Adam Clark

***

Senate Axes California's EV Mandate in Blow to Tesla

The Senate voted to abolish a measure that let California set its own tailpipe emissions standards and canceled its ban on new gasoline-powered car sales by 2035. While the move was favored by other car makers, it's bad news for Tesla's ability to profit from the sale of regulatory credits.

   -- Senators voted 51-44 to nullify a waiver California enacted in 2022 and 
      that 11 other states later adopted that set stricter emissions standards 
      than the federal government. General Motors and other auto makers argued 
      that keeping the waiver could hamstring the industry by forcing electric 
      vehicle sales amid declining demand. 
 
   -- California's Democratic Gov. Gavin Newsom and others said California has 
      the right to enact regulations to help improve its air quality. But the 
      Senate used the Congressional Review Act, a law that allows legislators 
      to overturn the actions of federal agencies. 
 
   -- The California regulations form the basis for Tesla's sales of 
      zero-emission credits. This is a brisk business for Tesla, which sells 
      only electric vehicles, allowing it to far exceed targets set by 
      regulators. Sales of those credits to fellow auto makers generated $2.9 
      billion over the past 12 months. 
 
   -- House members separately passed a federal budget bill that would 
      eliminate or substantially reduce tax credits for clean energy and new 
      and used electric vehicles, and would impose annual fees of $250 for 
      electric vehicles and $100 for hybrid vehicles. 

What's Next: Because the House had already passed the resolution on California's waiver, it will head to the White House for President Donald Trump's signature. Democrats warned the use of the Congressional Review Act to undo rules could backfire on Republicans if Democrats could do the same thing.

-- Janet H. Cho and Al Root

***

From Tax Breaks to Medicaid Cuts: What's In the Spending Bill

Senate Republicans now have the driver's seat to steer President Donald Trump's tax and spending plans through by July 4, when the pressure will be mounting to raise the federal borrowing limit. Senators are likely to make changes to the proposal that narrowly passed the House early Thursday.

   -- The House version of the bill would make Trump's 2017 tax cuts permanent, 
      including lowering the top income tax rate to 37% from 39.6%. As a 
      compromise to blue-state members, lawmakers raised the allowance for 
      state and local taxes to $40,000 for households earning $500,000 or less. 
 
   -- The bill proposes eliminating taxes on tips, overtime pay, and car loan 
      interest payments for taxpayers who make less than $100,000 and creates 
      $1,000 investment accounts for children born between 2025 and 2029 that 
      can be later withdrawn to pay for college or buy a house. 
 
   -- It stops short of Trump's campaign promise to eliminate taxes on Social 
      Security income. The House bill gives an extra standard deduction of up 
      to $4,000 for individuals age 65 and over from 2025 to 2028, phasing out 
      at certain levels for individuals and married couples filing jointly. 
 
   -- Medicaid was a big target, facing nearly $700 billion in cuts by 
      increased work requirements and eligibility checks that could reduce 
      enrollment. The bill also cuts food and nutrition benefits for low-income 
      Americans by $267 billion over that time, the Congressional Budget Office 
      projected. 

What's Next: Tax provisions would increase the federal deficit by $3.8 trillion from 2026 to 2034, according to the Congressional Budget Office. Long-term bond yields are rising on the prospect of the U.S. government issuing trillions of dollars of more debt to finance the GOP's spending plans.

-- Elizabeth O'Brien and Janet H. Cho

***

The Fed Is Different Than Other Government Entities, Scotus Says

The Federal Reserve is different, according to the Supreme Court. While the court granted President Donald Trump's emergency request to fire independent federal agency heads, the unsigned order made a specific point that the central bank wasn't part of that. Financial markets have worried about Fed independence.

   -- The court's ruling focused on cases involving leaders of independent 
      agencies whom Trump had removed from office. Those officers may be 
      removed pending a full hearing of the case, the court ruled. But it 
      called the Fed a uniquely structured, quasi-private entity. 
 
   -- Trump 2.0 has repeatedly criticized Fed Chair Jerome Powell, the man he 
      nominated to take the top spot during his first administration. While the 
      ruling doesn't explicitly prevent Trump from firing Powell or any other 
      central bank officials, it does provide some relief to those concerned 
      about Fed independence. 
 
   -- The court's conservative majority noted the risk that independent 
      commissioners pose to the president's constitutional powers. The three 
      liberal justices said the order allowed the president to overrule a 
      longstanding Supreme Court precedent that prevented the arbitrary removal 
      of agency heads. 
 
   -- This order doesn't formally eliminate that precedent. But it does allow 
      the president to remove Biden administration appointees to the National 
      Labor Relations Board and the Merit Systems Protection Board while the 
      case is litigated. 

What's Next: The court's move suggests a willingness to hear arguments for the overturn of the precedent, which is called Humphrey's Executor v. U.S. and dates back 90 years. An overturn could further expand presidential power.

-- Matt Peterson, Nicole Goodkind, and Liz Moyer

***

Anthropic May Have Broken Through the AI Ceiling

The artificial intelligence start-up Anthropic is rolling out its next generation of AI language models it says are able to perform complex, long-running tasks and provide more precise responses to instructions. It may represent a milestone as software developers race to create newer technology.

   -- At its Code w/Claude event on Thursday, Anthropic unveiled Claude Opus 4 
      and Claude Sonnet 4. This is after Anthropic had struggled to make the 
      next generation of large language models. Its Claude 3.5 Opus, announced 
      about a year ago, never materialized and was eventually scrapped. 
 
   -- Anthropic describes Claude Opus 4 as able to work continuously for 
      several hours and excelling at coding, research, writing, and scientific 
      discovery. It can significantly expand the work of AI agents, Anthropic 
      said. Claude Sonnet 4 is less powerful but brings stronger performance to 
      "everyday use cases," it said. 
 
   -- Model-makers have worked around technical problems by creating 
      "reasoning" models that work through problems in a drawn-out step-by-step 
      fashion. This produces better answers, but can also take several minutes 
      to get a response. They are hoping new models can produce the same 
      quality but faster. 
 
   -- Anthropic cited a number of companies that have tested Claude Opus 4, 
      including the fintechs Block and Rakuten and Cognition. Companies testing 
      the capabilities of Claude Sonnet 4 include GitHub, which Anthropic said 
      would introduce it as the model behind a new coding agent in GitHub 
      Copilot. 

What's Next: In brief testing by Barron's, Claude 4.0 provided high-quality answers much faster than OpenAI's current top model, ChatGPT o3. Claude Opus 4 would suggest that Anthropic is the first company to break through this technical ceiling. Others like OpenAI and Alphabet's Google could soon follow.

-- Adam Levine and Liz Moyer

***

This Quantum Computing CEO's Ambition to Mirror Nvidia

Quantum computing company IonQ has grand aspirations to mirror the success of chip maker Nvidia. CEO Niccolo de Masi told Barron's he doesn't just want the company to solve the world's most complex problems--he wants it to become an industry leader, envisioning an ascent similar to that of the biggest names in the semiconductor sector.

   -- IonQ was one of the first quantum pure plays to go public. It's the 
      brainchild of Duke professors Christopher Monroe and Jungsang Kim, who 
      aimed to take trapped-ion quantum computing from a laboratory setting to 
      the market.K 
 
   -- "We're in the business of quantum just like Nvidia and Broadcom are in 
      the business of classical GPUs," de Masi said. "I believe IonQ will be 
      the Nvidia player." 
 
   -- The stock is on the right track to emulating Nvidia, it has surged 450% 
      over the past 12 months, though it's only up 10% so far in 2025. Shares 
      slid in March as it became the subject of a short report from Kerrisdale 
      Capital, alleging IonQ embellished "relatively immaterial past 
      achievements" and provided "limited, error-prone systems." de Masi called 
      the allegations "baseless and nonsense." 
 
   -- IonQ has yet to turn a profit, and many view quantum as a speculative bet 
      largely trading on headlines and sentiment. 

What's Next: Ultimately, IonQ's chief executive sees the company following a similar trajectory to that of start-ups. In the future he indicated that he would be open to its acquisition by a larger tech company, particularly one specializing in artificial intelligence.

-- Mackenzie Tatananni and Elsa Ohlen

***

Do you remember this week's news? Take our quiz below to test your knowledge. Tell us how you did in an email to thebarronsdaily@barrons.com.

1. Nvidia CEO Jensen Huang says the U.S. government's latest move to limit chip exports to China is shortsighted and ultimately will only help China. How much of a revenue impact did he say it would have on the chip maker?

a. $10 billion b. $15 billion c. $5 billion d. $2.5 billion

2. Alphabet CEO Sundar Pichai kicked off the Google I/O Keynote this week by detailing more than a dozen artificial intelligence models and research breakthroughs and over 20 AI products and features, including which of the following:

a. AI powered search b. 3-D videoconferencing c. AI powered glasses d. All of the above

3. Elon Musk said Tesla is on track to begin its robotaxi program in Austin, Texas, next month, starting with 10 vehicles. The business will eventually expand, and Musk told CNBC he envisions how many self-driving Teslas on the road by the end of next year?

a. A few hundred b. A few thousand c. Hundreds of thousands d. None of the above

4. A recession could bring the opportunity home buyers are waiting for when it comes to lowering the price of real estate. Fitch Ratings estimates that nationally homes are overvalued by how much?

a. 11% b. 15% c. 19% d. 23%

5. A global rout in the bond market only got worse this week. The 30-year Treasury bond yield soared above 5% and reached a 52-week high, reaching the highest level it's seen since when?

a. October 2023 b. October 2021 c. May 2020 d. May 2018

Answers: 1( b); 2( d ); 3( c ); 4( a); 5( a )

-- Barron's staff

***

-- Newsletter edited by Liz Moyer, Rupert Steiner, Callum Keown

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 23, 2025 07:04 ET (11:04 GMT)

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