Stablecoins Risk 'dangerous' Parallel Banking System:... Yield-bearing
Jeremy Barnum told JPMorgan shareholders that yield-bearing stablecoins risk creating a parallel banking system without the safeguards of traditional regulation.
Stablecoins emerged as a topic during JPMorgan Chase’s fourth-quarter earnings call on Tuesday, with executives expressing support for blockchain technology while warning that certain stablecoin designs could threaten the regulated banking system.
The comments came in response to a question from Evercore analyst Glenn Schorr, who asked about stablecoins in light of recent industry lobbying by the American Bankers Association and ongoing congressional markups related to digital asset legislation.
Responding to the question, JPMorgan chief financial officer Jeremy Barnum said the bank’s position aligns with the intent of the GENIUS Act, which seeks to establish guardrails around stablecoin issuance.
Barnum warned against the use of interest-bearing stablecoins that replicate traditional banking without the equivalent oversight.
“The creation of a parallel banking system that sort of has all the features of banking, including something that looks a lot like a deposit that pays interest, without the associated prudential safeguards that have been developed over hundreds of years of bank regulation, is an obviously dangerous and undesirable thing,” he said.
Barnum added that while JPMorgan welcomes competition and innovation, it remains firmly opposed to the emergence of a parallel banking system operating outside established regulatory protections.
As Cointelegraph reported last May, the US banking lobby views yield-bearing stablecoins as a major disruption to its business model, with one industry insider describing the response as a full-blown “panic.” The concern is not without merit.
Stablecoins have grown rapidly as tools for payments, onchain settlement and dollar access, offering faster transactions and lower costs. The prospect of yield-bearing versions only sharpens the threat, particularly as banks continue to offer depositors relatively modest interest rates.
Related: Wall Street’s crypto debate is over as banks go all-in on BTC, stablecoins, tokenized cash
Source: CoinTelegraph
