JPMorgan financial chief Jeremy Barnum told investors on the bank’s fourth-quarter earnings call Tuesday that stablecoin issuers and third-party platforms paying interest create a risky parallel banking system, and he urged banning yield payments on stablecoins, as he stated. He said the move aims to prevent deposit-like products from operating without long-established prudential safeguards.
Barnum characterized the bank’s advocacy as aligned with the GENIUS Act, noting it is “in the spirit of the GENIUS Act legislation.” He warned that the arrangement can replicate banking features without oversight.
He added that “The creation of a parallel banking system that 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 like, dangerous and undesirable thing.”
Lobbying groups representing banks have pushed Congress to bar exchanges and platforms from offering yields on stablecoins, arguing such rewards could trigger large outflows and harm deposit stability.
Barnum acknowledged that JPMorgan works in blockchain, including tokenized money market funds and its own deposit token, and said, “We always embrace competition.” He said the bank will match useful consumer services and avoid promoting redundant solutions.
The Senate is debating draft legislation that would restrict stablecoin rewards to activity-based payments rather than passive holding, and the Agriculture Committee delayed markup while seeking broader support (Ed. note: the Banking Committee is scheduled to debate the bill this week).
