The White House crypto adviser pushed back on JPMorgan CEO Jamie Dimon’s claim that interest-paying stablecoin issuers should be regulated like banks.
Stablecoins do not need to be treated as deposits because the Genius Act expressly prevents issuers from lending the reserves that back their tokens, Patrick Witt, the executive director of the President’s Digital Assets Council, wrote in an X post.
Dimon said banks want stablecoin issuers that pay interest on customer balances to face the same rules as traditional lenders, heightening the debate over US crypto regulation.
He also addressed reported tensions with Coinbase CEO Brian Armstrong, who withdrew support for the proposed Clarity Act a day before the Senate Banking Committee was scheduled to vote on the legislation. Dimon argued that there must be a line between rewards paid on transactions and interest paid on stored balances.
“Rewards are the same as interest,” Dimon said. “If you have to have balances and pay interest, it’s the bank. You should be regulated by a bank.”
Banks would accept a compromise where crypto platforms offer rewards tied to transactions, he said. But firms that act as depository institutions should meet the same standards as banks, including capital and liquidity rules, anti-money laundering controls and federal deposit insurance requirements.
“The deception here is that it is not the payment of returns on a balance sheet per se that necessitates bank-like regulations, but rather the lending or rehypothecating of dollars that make up the underlying balance sheet,” Witt said. Rehypothecation occurs when banks use customers’ collateral to back their own loans.
He also pointed to the Genius Act, which he said “explicitly prohibits stablecoin issuers from doing the latter. Stablecoins ≠ Deposits.”
