JPMorgan CFO: Yield-bearing stablecoins may form a "dangerous parallel banking system"

CoinVoice has learned that JPMorgan Chase Chief Financial Officer Jeremy Barnum stated during the company’s Q4 earnings call that JPMorgan supports blockchain technology and financial innovation, but maintains a clear caution regarding the design of certain yield-bearing stablecoins, believing that without appropriate prudent regulation, they could replicate traditional banking functions, thereby creating a “dangerous and unwelcome parallel banking system.”

Barnum pointed out that the bank’s stance aligns with the regulatory intent set forth by the GENIUS Act, which aims 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 that have gradually developed over centuries within the banking regulatory system, they could pose risks to the existing regulated financial system.

While JPMorgan welcomes competition and innovation, it does not support “shadow banking” structures that bypass existing regulatory frameworks. At the legislative level, the issue of “yield” on stablecoins has become one of the core disagreements during the U.S. Congress’s review 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 because they hold stablecoins, to prevent their functions from being equivalent to bank deposits; at the same time, the draft still leaves room for incentives related to liquidity provision, governance participation, staking, and other network activities.