Stablecoins that offer interest-bearing rewards may increasingly resemble bank deposits. But unlike traditional deposits, they lack the regulatory safeguards that undergird the banking system. That gap, according to JPMorgan CFO Jeremy Barnum, risks creating what he calls a “parallel banking system.”
The issue, according to Dailynews Letter, is already on lawmakers’ agenda. During JPMorgan’s fourth-quarter 2025 earnings call, Evercore analyst Glenn Schorr noted that Congress is preparing to debate stablecoin policy, referencing a letter from the American Bankers Association that underscores the urgency of addressing a loophole around interest on stablecoins. Schorr added that Treasury estimated “$6.6 trillion of bank deposits could be at risk if they don’t close that loophole.”
Against this backdrop, Barnum zeroed in on the growing overlap between crypto products—like stablecoins—and traditional banking. “The creation of a parallel banking system that sort of has all the features of banking, including something that looks a lot like a deposit that pays interest, without the associated prudential safeguards that have been developed over hundreds of years of bank regulation, is an obviously dangerous and undesirable thing,” he said.
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Barnum stressed that his concern is not rooted in resisting competition or technological innovation. Instead, he argued that allowing deposit-like products to operate outside the regulatory framework banks must follow introduces systemic risk, creating an ecosystem with similar economic functions and vulnerabilities, but without the protections designed to safeguard consumers and the broader financial system. “Clearly, there is some risk for some firms, maybe for many firms, and some version of a threat to the business model,” he said.
The JPMorgan CFO isn’t rejecting crypto advancements entirely. Rather, he’s warning against regulatory gaps. “We’ve been quite involved in the whole blockchain technology space for some time. … As you know, we launched our first tokenized money market fund,” he said. “So I say that all by way of saying that we see the interesting developments in the space, the technological innovation. We’re engaged. We’re watching. We care.”
For Barnum, the debate ultimately comes down to consumer protection. As interest-bearing stablecoins grow in popularity, the question facing regulators is whether deposit-like products should carry deposit-like safeguards.
