jpmorgan

J.P. Morgan Chase has warned that federally regulated, interest-bearing stablecoins could pose a direct threat to traditional banking deposits, underscoring growing tensions between incumbent lenders and the rapid evolution of onchain financial infrastructure.
Speaking during a fourth-quarter earnings call on 13 Jan, executives argued that stablecoins designed to resemble deposits risk creating a parallel banking system that replicates core economic functions of banks without the same prudential safeguards.
Deposit risk and business model pressure
While J.P. Morgan has increasingly embraced crypto infrastructure and trading, the comments highlight a clear red line when it comes to stablecoins competing directly for deposits.
J.P. Morgan CFO Jeremy Barnum stated that creating a parallel banking system is a dangerous and undesirable outcome, noting it runs contrary to the spirit of the GENIUS Act legislation.
"You would effectively have something that looks like a deposit, pays interest, and has all the features of banking, but without the associated prudential safeguards that have been developed over hundreds of years of regulation," Barnum said.
Undermining core structures
J.P. Morgan framed the risk as systemic rather than ideological. The bank noted that the impact of stablecoin deposits depends on how money flows through the financial system and what assets ultimately back those instruments.
Barnum warned that if allowed to scale without equivalent regulatory oversight, interest-bearing stablecoins could undermine core funding structures across the sector.
"It is clearly a risk for some firms, for many firms, and ultimately a threat to existing business models," Barnum said. "We embrace competition—this is not about avoiding competition—but about avoiding a parallel ecosystem with the same risks and economic properties, without appropriate regulation."
The comments come as US lawmakers debate frameworks that would explicitly permit stablecoin issuers to pay yield, potentially accelerating competition for deposits at a time when banks remain sensitive to funding stability following recent stress events.
Despite its caution, J.P. Morgan stopped short of rejecting stablecoins outright, instead questioning whether they deliver meaningful consumer benefits relative to existing banking products.
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A new reality has dawned on Wall Street: JPMorgan no longer expects the Federal Reserve to cut interest rates in 2026. Instead, the largest U.S. bank now predicts a 25 basis point rate hike in Q3 2027. At the beginning of January, JPMorgan was still betting on a 25 bps rate cut this year.
The shift comes after Friday’s U.S. labor market report, which showed a bigger-than-expected slowdown in job creation — but also a drop in unemployment to 4.4% and continued strong wage growth. In short, the labor market remains too strong for the Fed to justify easing.
“If the labor market weakens significantly in the coming months or inflation drops sharply, the Fed might still ease this year,” JPMorgan analysts noted.

Banks Rewriting Forecasts, Markets React
JPMorgan isn’t alone in its pivot. Goldman Sachs has also pushed its expected rate cuts from March and June to June and September, and lowered its 12-month U.S. recession probability from 30% to 20%.
“If the labor market stabilizes as expected, the Fed is likely to shift from risk management to normalization,” Goldman stated.
Barclays and Morgan Stanley also moved their Fed expectations to mid-2026. Morgan Stanley had previously forecast the first cut as early as January or April.
Market sentiment confirms the shift: the CME FedWatch tool now shows a 95% chance the Fed will hold rates at its January meeting, up from 86% before the jobs report.

Rising Tensions: Powell vs. Trump?
The story isn’t just economic — politics is heating up too. Fed Chair Jerome Powell claimed over the weekend that the Trump administration threatened him with criminal charges, allegedly related to expenses for the Fed’s building renovation. The stunning allegation has reignited the debate over the central bank’s independence.

Bitcoin Takes a Hit
Crypto markets didn’t take the news lightly. Bitcoin dropped back to $90,561, giving up recent gains and marking a 2.48% weekly loss. All eyes are now on Tuesday’s Consumer Price Index (CPI) data, which could offer clues to the Fed’s next move.

Summary
As the Fed signals tighter monetary policy and political tensions flare, investors are left searching for direction. Whether in equities or crypto, especially Bitcoin, the pressure from policy uncertainty is being felt immediately — and this could just be the start of a volatile chapter in 2026.

#Fed , #JPMorgan , #bitcoin , #Powell ,#FederalReserve

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,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“

Most account closures in the U.S. — a phenomenon known as debanking — are driven more by government pressure than private biases, according to a new report from the Cato Institute. The analysis shows that federal influence over financial institutions is far greater than commonly acknowledged.
What is debanking?
Debanking refers to the sudden and often unexplained termination of accounts — not only by banks, but also by credit unions, crypto exchanges, payment apps, and other financial entities.
Economist Nicholas Anthony explains that debanking typically occurs for one of three reasons:

🔹 Operational grounds, such as the bank no longer wanting to serve a client

🔹 Ideological motives, such as religious or political beliefs

🔹 Government pressure, either direct or indirect
According to Anthony, it is this third category — government-driven closures — that poses the greatest threat.

Hidden Hand: How Washington Influences Account Closures
The Cato Institute warns that U.S. authorities often influence financial institutions behind the scenes, nudging them to drop certain clients. While these closures may appear voluntary, they’re frequently rooted in pressure from federal regulators.
Key findings include:

🔹 72% of conservatives believe the real issue lies in government overreach

🔹 This public sentiment has already begun influencing federal policy, especially during the Trump administration, which issued executive orders on debanking and appointed pro-crypto officials to agencies like the SEC

Legislative Reform Proposed
Anthony argues that the current framework transforms banks into unofficial enforcement arms of federal agencies, incentivizing them to cut ties with clients to reduce regulatory risks.
He proposes three major reforms:

🔹 Repeal secrecy rules that prevent banks from explaining account closures

🔹 Eliminate reputation risk regulations

🔹 Reform the Bank Secrecy Act to protect consumers from arbitrary debanking

Crypto Industry in the Crosshairs
The crypto sector has been particularly vulnerable to debanking. Many firms have found themselves cut off from the traditional banking system — often without warning or justification.
Anthony cites an example where the FDIC (Federal Deposit Insurance Corporation) allegedly sent private letters to banks, instructing them to cease crypto-related activities — with no timeline, meetings, or explanations. In practice, these letters functioned as “termination orders.”
He also references a 2015 incident where money-transfer businesses serving Somalia were rapidly shut out of the banking system after U.S. authorities launched a crackdown on alleged money laundering.

Community Pushback & JPMorgan Allegations
In a December interview with Fox News, JPMorgan CEO Jamie Dimon denied claims that the bank had closed customer accounts due to religious or political views. His statement followed accusations from Jack Mallers (CEO of Bitcoin Lightning app Strike) and Houston Morgan, who said their personal accounts were closed without explanation.

Conclusion: The Invisible Hand of the State
The Cato Institute report paints a worrying picture: financial freedom in the U.S. is increasingly shaped by government intervention, not market forces.
Anthony concludes:
“If Congress fails to act, debanking will become a powerful tool — not just against crypto, but against the very principle of free access to financial services.”

#debanking , #DigitalAssets , #CryptoRisks , #JPMorgan , #SEC

Stay one step ahead – follow our profile and stay informed about everything important in the world of cryptocurrencies!
Notice:
,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“