JPMorgan Chase's Chief Financial Officer Jeremy Barnum warned about the risks associated with interest-bearing stablecoins.
“Creating a parallel banking system that has all the functions of banking, including something very similar to interest-bearing deposits, but without the accompanying safeguards developed over hundreds of years of banking regulation, is clearly a dangerous and undesirable thing,” he stated during the fourth-quarter earnings call.
This topic was raised by Evercore analyst Glenn Shore, who inquired about JPMorgan's stance on stablecoins amid lobbying efforts by the American Bankers Association and legislative debates in the U.S. Congress.
Barnum responded that the bank's position aligns with the Genius Act, which aims to establish clear rules for stablecoin issuers. However, the financial institution is "categorically against" the formation of a parallel banking system operating outside the protective measures being developed.
Lawmakers are also focusing on the Clarity Act, which seeks to delineate the powers of regulators.
According to the latest draft of the bill, providers of digital asset services will be prohibited from paying interest or any income “simply for holding” a stablecoin. This is intended to prevent stablecoins from becoming unregulated equivalents of bank deposits.
However, the bill allows for rewards for active participation in the ecosystem. Exceptions are made for income from:
- providing liquidity;
- participating in protocol governance;
- staking;
- other activities that ensure the network's functionality.
It is worth noting that in October 2025, Multicoin Capital co-founder Tashar Jain stated that the Genius Act would trigger a shift of deposits from traditional banks to higher-yielding stablecoins.