US banks fear stablecoins offering competitive interest on deposits.
JPMorgan Chase executives addressed stablecoins with yield features during their fourth-quarter earnings call. Chief financial officer Jeremy Barnum voiced support for blockchain technology but cautioned against designs mimicking banks without oversight. His remarks followed a question from Evercore analyst Glenn Schorr about industry lobbying efforts and congressional digital asset legislation.
Barnum stated JPMorgan backs the core principles of the GENIUS Act, a bill establishing rules for stablecoin issuers. He specifically criticized interest-paying stablecoins, calling them a threat to financial stability. “Creating a parallel banking system that offers deposit-like products with interest — but lacks centuries of bank safeguards — is clearly dangerous,” Barnum said. The bank welcomes competition but opposes unregulated financial structures.
A reported in May 2025 that U.S. banks described yield-bearing stablecoins as triggering full “panic” among traditional institutions. These digital dollars already challenge banks through faster payments and cheaper settlements. Adding competitive yields intensifies pressure as banks offer modest returns on deposits.
An updated draft of the Digital Asset Market Clarity Act explicitly bans paying interest “solely for holding a stablecoin.” Lawmakers aim to block tokens from functioning like uninsured bank accounts.
The proposal carves exceptions for active participation rewards. Users could still earn yields through liquidity provision, governance voting, staking, or network validation tasks. These activities require user action, distinguishing them from passive holdings.
The bank experiments with blockchain for cross-border payments yet defends its core deposit business. Barnum emphasized that technology adoption requires regulatory parity. Stablecoins must face rules comparable to banks if they perform similar functions.
Global stablecoin supply exceeds $290 billion, growing 20% annually in emerging markets where they provide dollar access. Yield-bearing versions could redirect savings away from banks, especially in high-inflation economies.
Circle and Paxos removed automatic interest features from their tokens, focusing on transactional utility. Others partner with regulated banks to comply with evolving standards.
The outcome hinges on two factors: regulatory speed and real demand for yield. As Congress debates, JPMorgan and peers push for level playing fields. The next six months will determine whether stablecoins integrate into existing finance or build alternative systems.
For now, passive yields on dollar-pegged tokens face extinction in U.S. markets. The industry must prioritize practical use cases over easy returns. Financial innovation continues, but within boundaries that protect systemic stability. Banks and crypto builders alike now navigate this constrained reality.
