JPMorgan Chase Chief Financial Officer Jeremy Barnum said stablecoins could develop into a form of regulatory arbitrage if new regulations fail to align them with traditional banking standards.
Speaking on the bank’s first-quarter earnings call Tuesday, Barnum framed the debate less as a technology shift and more as a matter of oversight. Some stablecoin models could replicate bank-like products while avoiding the safeguards applied to deposits, including rules around interest payments and customer protection, he said.
“If the same product is not regulated in the same way, you open the door to arbitrage,” Barnum said, pointing to structures that offer rewards similar to dividends. In that scenario, he added, firms could “run a bank” without being subject to basic banking rules.
The comments come as lawmakers weigh new frameworks for digital assets. The proposed Clarity Act aims to define how crypto markets are divided between regulators such as the Securities and Exchange Commission and the Commodity Futures Trading Commission. It also reflects a broader effort to establish clearer regulations for stablecoins and related products.
The debate also extends to whether issuers of stablecoins, crypto tokens whose value is tied to a traditional asset, mostly the dollar, should be allowed to offer returns to users.
Some crypto firms, including Coinbase (COIN), have pushed for the ability to transfer interest earned on reserve assets to coin holders, arguing that it would make stablecoins more useful as savings tools.
Banks have pushed back, saying that yield-bearing stablecoins are starting to resemble deposits without the same capital, liquidity and consumer protection requirements. In their view, it creates an uneven playing field, allowing non-banks to attract funds by offering returns that regulated banks are limited to providing.
The issue has become a central point of tension in Washington DC as policymakers weigh how to prevent stablecoins from acting as bank-like products outside the traditional regulatory perimeter.
Barnum said JPMorgan supports the push for clarity, but emphasized that consistency matters more than speed. Without it, he warned, new entrants could gain an advantage by operating outside existing regulatory boundaries.
He played down the idea that stablecoins will disrupt the bank’s core payments business. JPMorgan already operates a large wholesale payments network that processes transactions at low cost and high speed, leaving little room for margin-driven disruption.
Instead, the bank integrates similar technology into its own systems. Through its blockchain unit, Kinexys, JPMorgan has developed tools like JPM Coin and tokenized deposits that allow institutional clients to move money around the clock and automate transactions.
Barnum described these efforts as part of a broader modernization strategy. Features often associated with stablecoins, such as programmable payments, are already being built into existing infrastructure rather than replacing it.
On the consumer side, he said stablecoins are often framed as “digital cash” but still face well-known hurdles, including identity checks.
JPMorgan reported stronger-than-expected first-quarter results, driven by a rebound in trading and investment banking. Net income rose 13% year over year to $16.49 billion, while revenue rose 10% to $50.54 billion. The bank set aside less for potential loan losses than expected, which signals stable credit conditions among borrowers.
