JPMorgan Chase warns: Stablecoins may become a tool for regulatory arbitrage and need to be incorporated into a banking-level regulatory framework.

JPMorgan Chase CFO Jeremy Barnum stated in an earnings call that stablecoins could become tools for "regulatory arbitrage" if regulatory rules are not aligned with those of traditional bank deposits. He pointed out that some stablecoin models already possess deposit-like characteristics, such as offering incentives similar returns, but are not subject to the capital, liquidity, and consumer protection requirements of traditional banking regulations, potentially creating an unfair competitive environment. "If the same products are not regulated equally, it opens up arbitrage opportunities," Barnum said. Currently, US legislation is pushing for a crypto 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. Furthermore, whether to allow stablecoins to distribute reserve returns to users has become a point of contention. Crypto companies, including Coinbase, support "interest-bearing stablecoins," while banks argue that this would make them closer to deposit products, lacking corresponding regulatory constraints. JPMorgan Chase expressed support for regulatory clarity but emphasized that "regulatory consistency" takes precedence over speed. Meanwhile, the bank is leveraging its blockchain division, Kinexys, to modernize its payment system by developing products including JPM Coin and tokenized deposits. (CoinDesk)