JPMorgan Chase’s Chief Financial Officer Jeremy Barnum warned about the dangers of stablecoins that offer interest income.
“Creating a parallel banking system that has all the functions of banking services, including something very similar to an interest-bearing deposit, but without the prudential measures developed over centuries of banking regulation, is obviously a dangerous and undesirable thing,” he said during a fourth-quarter earnings call.
The topic was raised by Evercore analyst Glenn Schorr, who was interested in 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, aimed at creating transparent 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.
Legislators are also focusing on the Clarity Act, which aims to delineate regulatory authorities.
According to the latest draft of the bill, digital asset service providers 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 network functionality.
Back in October 2025, Multicoin Capital co-founder Tushar Jain stated that the Genius Act would trigger a withdrawal of deposits from traditional banks to more profitable stablecoins.