JPMorgan warns: Stablecoins may become tools for regulatory arbitrage and need to be included in a bank-level regulatory framework

JPMorgan CFO Jeremy Barnum stated during the earnings call that if regulatory rules are not aligned with traditional bank deposits, stablecoins may evolve into a "regulatory arbitrage" tool. He pointed out that some stablecoin models already exhibit deposit-like characteristics, such as providing incentives similar to yields, but are not subject to banking regulatory requirements like capital, liquidity, and consumer protection, which could create an unfair competitive environment. "If the same products are not regulated equally, it will open up arbitrage opportunities," Barnum said.

Currently, U.S. legislation is pushing for a cryptocurrency regulatory framework, including the Clarity Act, to clarify the regulatory division of labor between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, and to regulate the development of the stablecoin market. Additionally, whether to allow stablecoins to distribute reserve earnings to users has become a point of contention. Cryptocurrency companies, including Coinbase, support "interest-bearing stablecoins," while banks believe this would bring them closer to deposit products but lack corresponding regulatory constraints. JPMorgan expressed support for regulatory clarity but emphasized that "regulatory consistency" takes precedence over speed. At the same time, the bank is advancing product layouts, including JPM Coin and tokenized deposits, through its blockchain division Kinexys to modernize the payment system.