The White House’s cryptocurrency adviser has pushed back against JPMorgan Chase CEO Jamie Dimon’s assertion that issuers of interest-paying stablecoins should be regulated like banks.
Patrick Witt, executive director of the President’s Digital Asset Advisory Council, wrote in an
Stablecoin issuers that banks want to pay interest on customer balances face the same rules as traditional lenders, Dimon said, adding to the debate over U.S. cryptocurrency regulation.
He also addressed reported tensions with Coinbase CEO Brian Armstrong, who withdrew his support for the proposed Clarification Act a day before the Senate Banking Committee was scheduled to vote on the bill. Dimon believes there needs to be a line between rewards paid on transactions and interest paid on stored balances.
“The rewards are the same as the interest,” Dimon said. “If you’re holding a balance and paying interest, that’s the bank. You should be regulated by the bank.”
He said banks would accept a compromise in which cryptocurrency platforms offer rewards tied to transactions. But companies that operate like depository institutions are expected to meet the same standards as banks, including capital and liquidity rules, anti-money laundering controls and federal deposit insurance requirements.
“The deception here is that it’s not the payment of earnings on the balance itself that requires bank-like regulation, but the borrowing or rehypothecation of the dollars that make up the underlying balance,” Witt said. Rehypothecation occurs when a bank uses a customer’s collateral to back its own borrowing.
He also mentioned the Genius Act, which he said “clearly prohibits stablecoin issuers from doing the latter. Stablecoins ≠ deposits.”
