JPMorgan CFO: Yield-Bearing Stablecoins Could Create a "Dangerous Parallel Banking System"

Odaily Jeremy Barnum, Chief Financial Officer of JPMorgan Chase, stated during the company's fourth-quarter earnings call that while JPMorgan supports blockchain technology and financial innovation, it holds clear reservations regarding the design of certain yield-bearing stablecoins. He believes these could replicate traditional banking functions without corresponding prudent regulation, potentially forming a "dangerous and undesirable parallel banking system."

Barnum pointed out that the bank's stance aligns with the regulatory intent set by the GENIUS Act, which is to establish clear boundaries for stablecoin issuance. He emphasized that if stablecoins possess features similar to "interest-bearing deposits" but do not bear the capital, risk management, and compliance requirements gradually developed over centuries of banking regulation, they would pose a risk to the existing regulated financial system. Although JPMorgan welcomes competition and innovation, it does not support "shadow-like" banking structures that circumvent established regulatory frameworks.

At the legislative level, the issue of stablecoin "yield" has become one of the core points of contention in the U.S. Congress's deliberation of the Digital Asset Market Clarity Act. The latest revised draft indicates that lawmakers tend to prohibit digital asset service providers from paying interest or yields to users solely for holding stablecoins, to prevent their function from being equivalent to bank deposits. Simultaneously, the draft still preserves space for incentive mechanisms related to network activities such as liquidity provision, governance participation, and staking. (Cointelegraph)