JPMorgan Sounds Alarm on Yield Stablecoins and Bank Risk

Ben Graham · 11 horas atrás

2025 was defined by crypto stablecoins and the high yields. Yes, every investor desires to turn a higher return on his/her investment. Therefore, when the number of stablecoins tracking the greenback shot especially after the approval of the GENIUS Act back in July, it came as no surprise that bankers had some form of opposition.

As of January 14, there are over $312Bn of various stablecoins in circulation. USDT by Tether dominates but there are even more from Circle, algorithmic options like USDS.

(Source: Coingecko)

With 2026 likely marked by even more stablecoins, not everyone is happy. During the Q4 2025 earnings call, JPMorgan CFO Jeremy Barnum warned investors that yield-paying stablecoins risk creating a shadow banking system outside long‑standing safeguards. These comments landed as the Bitcoin price traded near recent highs, with stablecoin supply still growing as new money enters crypto.

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What Are Yield Stablecoins?

Talks around yield-bearing stablecoins now sit at the center of US regulation as lawmakers try to draw a hard line between payments and savings. That line matters because stablecoins already act like digital dollars for millions of users. Add interest, and they start to look like bank accounts without bank rules. That makes regulators and banks nervous. Very nervous.

Simply put, a stablecoin is a crypto token designed to stay close to $1. Think of it as a digital dollar you can send anywhere, anytime. Popular examples like USDC aim for stability, not growth. Yield-bearing stablecoins add a twist. They pay you interest just for holding them, similar to a savings account. That yield often comes from Treasury bills or lending activity happening behind the scenes.

So what’s the issue? Banks argue this creates “bank-like” products without bank-style protections like deposit insurance or strict capital rules.

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Why is JPMorgan Worried?

Barnum said interest-paying stablecoins copy the core feature of banking: deposits that earn yield. Even as they mimic this design, the CFO argues that stablecoin issuers are avoiding the regulatory oversight developed over centuries. Without FDIC insurance, these risks destabilize the economy, especially if there is a bank run.

Considering these risks, Jamie Dimon, the CEO of JPMorgan, thinks stablecoin offering better yields than a bank deposit setup an “obviously dangerous” system. Should stablecoin gain global traction like it is now, banks will likely lose trillions in sticky deposits as users choose options that offer 24/7 liquidity and, in some cases, near-free transfers.

“One, I think it’s very clear, and it’s in the spirit of the Genius Act legislation and everything that we’re advocating for, that 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 sort of the associated prudential safeguards that have been developed over hundreds of years of bank regulation, is an obviously dangerous and undesirable thing.”

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GENIUS Act: To Ban or not to Ban Stablecoins Offering Yields

The GENIUS Act, which was signed into law, was hailed as a progressive crypto regulatory framework. The act, which creates guidelines on what stablecoin issuers should adhere to when issuing stablecoins tracking the USD, paved the way to the creation of more than a dozen stablecoins.

While the act laid down the ground rules, it also set a hard line on what separates a stablecoin that can be used a payment tool and those which are savings account. Specifically, the GENIUS Act expressly bans yield paid just for holding a stablecoin. Clearly, lawmakers want stablecoins to act like cash, not savings accounts. You can see the broader fight in this stablecoin rewards debate. Their logic is that, should a stablecoin issuer offer a yield, then they should comply with existing laws since each token in circulation is effectively a security.

1/ This is why we can’t have nice things.

It never ceases to amaze me how government can squander progress.

In this case, Congress passed the GENIUS Act to foster financial innovation. Now, after false and alarmist bank cries, they’re looking to undo a key part: rewards. pic.twitter.com/jycLowCUP3

— Alexander Grieve (@AlexanderGrieve) January 7, 2026

Presently, Tether and Circle don’t pay users any yield for holding USDT or USDC. However, third parties like some crypto exchanges often do offer attractive yields. These third parties are now being targeted by JPMorgan and the American Bankers Association. Their objective is to expand the GENIUS Act guidelines to include barring these third parties, whom they argue risk creating a shadow banking system.

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The post JPMorgan Sounds Alarm on Yield Stablecoins and Bank Risk appeared first on 99Bitcoins.