JPMorgan CFO Warns: Interest-Bearing Stablecoins Could Threaten the Regulated Banking System

Recently, JPMorgan Chief Financial Officer Jeremy Barnum expressed clear concerns about the rapid development of yield-bearing stablecoins during the latest earnings call.

He pointed out that these stablecoins, which mimic bank deposits and pay interest, are designed similarly to bank deposits but do not operate within the traditional banking regulatory framework.

Barnum believes that while this system has features of a bank, it lacks prudent regulatory safeguards such as deposit insurance, capital adequacy requirements, and ongoing regulatory oversight, which are obviously "dangerous and undesirable."

The advantage of yield-bearing stablecoins lies in faster, cheaper payment and settlement services, and potentially yields far higher than traditional bank deposits, directly threatening the deposit base and profit models of banks.

JPMorgan's warning reflects the deep concern of the traditional banking industry about its business model being impacted. Therefore, industry groups, led by the American Banking Association, have begun lobbying to view yield-bearing stablecoins as a significant threat.

According to the revised draft of the "Clarity Act" published this week, digital asset service providers will be prohibited from paying interest or yields to users "simply because they hold stablecoins," indicating that legislators aim to prevent stablecoins from functioning like unregulated bank deposits to maintain financial system stability.

However, the draft is not a "one-size-fits-all" approach; it also allows incentive mechanisms related to blockchain network functions, such as liquidity provision, governance participation, and staking validation rewards. This shows that legislators are trying to strike a balance between curbing financial system risks and not hindering blockchain technology applications.

Overall, traditional financial institutions represented by JPMorgan are attempting to incorporate or restrict this innovation through regulatory lobbying within the existing framework. The final legislative outcome in Congress will largely influence the future development of stablecoins and their role within the entire financial system.

#稳定币 #Interest-bearing stablecoins