Jamie Dimon, the CEO and Chairman of JPMorgan Chase (NYSE:JPM), wants stablecoin issuers to offer rewards on payments, not on balances, according to an interview this week with CNBC. Banks kindof already do this with credit cards.
The ongoing debate over whether stablecoin holders should earn interest on these digital assets continues as the details of crypto market infrastructure legislation are hashed out. The banks, fearful of competition, do not want stablecoin issuers to pay interest to holders of payment stablecoin. They fear this because many banks currently pay little or nothing to individuals who hold deposits. They hold cheap and lend high. It is a good business. If banks face competition for deposits, this may mean they need to improve their service to depositors. Of course, this may make legacy banks less profitable, but it would certainly make the masses happy.
Speaking with CNBC, Dimon says that if you hold a balance, you should be regulated as a bank. Apparently, he does not want a level playing field on the other side where JPM offers stablecoins and pays interest to holders.
Under the GENIUS Act, payment stablecoin issuers must hold 1-to-1 reserves in low-risk/risk-free assets. This means US Treasuries and similar. As Treasuries generate interest, stablecoin issuers could share this with users instead of keeping it all to themselves. Dimon says if you want to become a bank, then become a bank and do what you want. Meanwhile, a growing number of digital asset firms are doing just that.
In the end, policymakers should support the little guy – consumers. Legacy banks can adapt and compete with the same rules as crypto firms. Legacy banks have been good at creating regulatory moats to protect their business, but innovation will inevitably reduce this competitive edge. If you can’t beat them, join them.
