JPMorgan CFO: Stablecoin Yield 'Obviously Dangerous and Undesirable'

Jeremy Barnum, the Chief Financial Officer of American banking monolith JPMorganChase, is warning about yield-bearing stablecoins.

In response to an analyst question during the bank's fourth-quarter earnings call this morning, Barnum labeled stablecoin yield as an "obviously dangerous and undesirable thing," claiming such instruments represent a parallel banking systems that lacks prudential safeguards.

What's the Scoop?

• Scared of Stables: JPM CFO Jeremy Barnum rebuked yield-bearing stablecoins earlier today. "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 dangerous and undesirable thing."
• Competitive Motivation: JPMorgan, a regulated bank and issuer of tokenized deposit coin JPMD, stands in direct competition with stablecoin issuers. While both help customers make payments, stablecoins could provide depositors with enhanced yield by virtue of their more simplistic structure, a potential threat for traditional banking system economics.
• Clarity Ban: The Digital Asset Market Clarity Act, released overnight, seeks to prohibit issuers stablecoin issuers from distributing yield back to passive token holders, but does allow for rewards tied to actions, such as account opening incentives and cashback rewards.