JPMorgan’s CEO, Jamie Dimon, stated that crypto firms offering yields on stablecoins should follow bank-like regulations, sharpening the longstanding debate over U.S. crypto legislation.
Bank-like interest calls for equal oversight
In a media interview, Dimon asserted a clear correlation between stablecoin rewards and bank interest. “The banks feel strongly that rewards are the same as interest,” he said. “If you’re going to be holding balances and paying interest, that’s a bank. You should be regulated like a bank.”
Crypto platforms provide rewards tied to transactions, and banks accept them. But firms that function like deposit-taking institutions have a different ecosystem to address. Hence, Dimon framed the concern as one of ‘fairness and safety’.
The differences in opinion may be a tug of war
Dimon addressed the friction with Brian Armstrong after the Coinbase chief withdrew his support for the CLARITY Act, just a day before the Senate Banking Committee was set to vote.
Dimon argued the importance of needing a thin line between the rewards offered on transactions and interest paid on assets. He stressed that banks could compromise on the rewards given by the crypto platforms.
However, if a crypto firm is holding customer funds in a way that resembles a bank, including capital and liquidity rules, anti-money laundering controls, federal deposit insurance, and more, then it should be subjected to regulations.
Armstrong says the banks should instead compete. In a previous interview, he opined that the Clarity Act could curb the stablecoin rewards, just because it could threaten the deposit-based banking models.
However, Dimon points toward the broader compliance burden for the safety of users, from anti-money laundering checks to community lending obligations, well designed to protect the current model of the financial system.
“For the safety of the system, not just the fairness of competition,” Dimon said.
