JP Morgan warns that interest-bearing stablecoins could disrupt banks

Stablecoins took a hit during JPMorgan Chase’s fourth-quarter earnings call this week, with executives expressing support for blockchain technology while drawing a divided line against stablecoin designs that mimic traditional deposits.

Important points:

• JPMorgan supports blockchain innovation, but warns that stablecoins will mimic bank deposits without oversight.
• The bank says interest-paying stablecoins could create a more flexible banking system.
• Increasing yields can speed up the adoption of stablecoins and increase the risk of bank deposits and stability.

The discussion started with a question from Evercore analyst Glenn Shor, who asked how the bank would view stablecoins amid new pressure from the American Bankers Association and active discussions in Congress on digital economy legislation.

Jeremy Barnum, chief financial officer at JPMorgan, said: The role of the bank It is generally in line with the goals of the Genius Code, which aims to establish clear rules for issuing and managing stablecoins.

The yields of stablecoins mimic those of bank deposits

Barnum said that interest-bearing stablecoins could reintroduce banking services without a system that supports the financial system.

He also warned that tokens that offer returns for holding them can function like deposits while avoiding capital requirements, financial regulations and regulatory scrutiny.

“The creation of a uniform banking system with all aspects of banking, including something very similar to interest payments, without the prudential controls that have been developed over centuries of banking, is dangerous and inappropriate,” Barnum said.

While emphasizing that JP Morgan is open to competition and technological progress, Barnum stressed that innovation should not come at the expense of financial stability.

He argues that stablecoins designed to deliver negative returns blur the line between payment instruments and other forms of storage, increasing systemic risk if not followed.

Verdict: Most True.

JPMorgan CFO Jeremy Barnum called interest-paying stablecoins a ‘parallel banking system’ without proper regulation, warning of the danger of traditional finance.

Key Evidence: According to CoinDesk, Barnum showed how these things mimic…

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Bank worries are not uncommon. Last year, industry representatives described the rise of stablecoins as a direct threat to the financial models of banks, especially when lenders continue to offer low interest rates on deposits.

Stablecoins have already gained traction as border payment tools, blockchain stability, and access to the dollar, largely due to their speed and low cost.

Increasing returns on these products will facilitate their adoption and increase competition for deposits.

Lawmakers move to restrict interest in stablecoin companies

This possibility is now being considered in Congress. Stablecoin rewards have become a hot topic of debate in lawmakers’ debate over the Digital Asset Market Clarity Act, a range of proposals aimed at clarifying responsibilities for regulating the cryptocurrency sector.

The document that was amended this week would prohibit digital service providers from charging interest or issuing “stablecoin-related deposits,” indicating lawmakers’ intent to ban stablecoins from acting like bank accounts.

At the same time, the draft law leaves room for incentive models that are related to participation in blockchain systems, such as giving money, participating in governance, or saving.

This difference shows that policymakers are trying to balance between innovation and protection, allowing cryptocurrency networks to reward participation while preventing stablecoins from becoming weakly regulated deposits.

A note JP Morgan warns that interest-bearing stablecoins could disrupt banks appeared for the first time Cryptonews Arabic.

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