JPMorgan published a blog post warning that legislation governing the structure of the crypto market should close regulatory gaps rather than create new ones.
The authors—heads of the bank’s payments and blockchain divisions—insist that digital assets should not bypass the safeguards currently in place in traditional finance.
The key argument: assets functioning as securities should be subject to securities laws regardless of whether they are issued on a blockchain. Decentralized trading platforms should adhere to the same disclosure and customer protection standards as conventional exchanges.
Special attention is given to stablecoins: the bank cautioned against allowing products resembling bank deposits to operate outside the capital and liquidity requirements applicable to banks. Bonuses and cashbacks for holding balances could give consumers a false sense of security, increasing the risk of mass withdrawals during a crisis—a position that echoes the long-standing criticism leveled by the bank’s CEO, Jamie Dimon.
The publication comes amid a Senate race to pass the CLARITY Act before the August recess. Among the unresolved issues are ethical guidelines for officials with crypto interests, protections for DeFi developers from liability, and provisions regarding the yield of stablecoins.