The White House crypto advisor rejected JPMorgan CEO Jamie Dimon’s claim that issuers of interest-paying stablecoins should be regulated like banks.
Stablecoins do not need to be treated as deposits because the Genius Act explicitly prohibits issuers from lending the reserves backing their tokens, wrote Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, in an X post.
Dimon said banks want stablecoin issuers that pay interest on customer balances to face the same rules as traditional lenders, sharpening the debate over U.S. crypto regulation.
He also addressed reported tensions with Coinbase CEO Brian Armstrong, who withdrew his support for the proposed Clarity Act a day before the Senate Banking Committee was to vote on the legislation. Dimon argued that there needs to be a dividing line between rewards paid on transactions and interest paid on stored balances.
“Rewards are the same as interest,” Dimon said. “If you’re going to carry balances and pay interest, that’s the bank. You should be regulated by a bank.”
Banks would accept a compromise where crypto platforms offered rewards tied to transactions, he said. But companies that operate as depository institutions should meet the same standards as banks, including capital and liquidity rules, anti-money laundering controls, and federal deposit insurance requirements.
“The trick here is that it is not the payment of yield on a balance per se that requires bank-like regulations, but rather the lending or remortgaging of the dollars that make up the underlying balance,” Witt said. Rehypothecation occurs when banks use customers’ collateral to back their own loans.
He also pointed to the Genius Act, which he said “explicitly prohibits stablecoin issuers from doing the latter. Stablecoins ≠ Deposits.”
