JPMorgan Downplays Stablecoin Risks Amid $6.6 Trillion Threat Warning
- JPMorgan sees stablecoin growth as non-threatening to traditional banks.
- Local bankers warn of a $6.6 trillion disintermediation threat.
- Regulatory parity and consumer protections urged by banking groups.
JPMorgan Chase downplays the potential threat posed by stablecoins, suggesting growth to $500–750 billion, despite warnings from regional bankers about a $6.6 trillion risk, according to recent reports.
The discourse underscores ongoing concerns with stablecoin adoption, highlighting potential risks to traditional banking structures and prompting calls for regulatory parity and risk assessments.
Lede: JPMorgan Chase has downplayed the systemic threat posed by stablecoin growth, projecting the market could rise to $500–750 billion. This view contrasts with broader concerns about potential disruptions to traditional banking systems.
Nurt Graph: Teresa Ho, Head of U.S. Short Duration Strategy at J.P. Morgan, cited a conservative forecast for stablecoin expansion. In contrast, over 100 regional bank executives express alarm about a possible $6.6 trillion deposit risk.
Bankers on Stablecoins
Regional bankers, including the ICBA, are urging action to mitigate potential risks to balance sheets. They highlight the dangers of disintermediation due to yield-bearing stablecoins, which could undermine traditional deposits. The banking groups have petitioned for regulatory parity, arguing that stablecoins could accelerate under the GENIUS Act. They emphasize the need for consumer protections and systemic risk assessments.
Potential Systemic Risk
The implications of unregulated stablecoin growth could be profound, with potential impacts on lender activities. Historical precedents like the TerraUSD collapse underscore existing concerns regarding stability and market resilience. Insights from the U.S. Department of Treasury and other financial bodies emphasize the importance of ensuring systemic risk assessments. These assessments aim to address possible financial, regulatory, or technological impacts of burgeoning stablecoin adoption.
Teresa Ho, Head of U.S. Short Duration Strategy at J.P. Morgan, stated, “There are reports out there that say stablecoins could grow to $2 trillion by the end of 2028, which we believe is a little bit optimistic. A more realistic scenario is that the market could grow two to three times from where we are right now in the next couple of years, which is equivalent to $500 to $750 billion.” She added, “Overall, while adoption is poised to grow further, it might be at a slower pace than what some might anticipate.” source
