JPMorgan has backed the U.S. CLARITY Act, saying clear crypto regulations are necessary for the industry to grow. However, the banking giant also warned that rushing legislation without proper safeguards could create new risks for both investors. In addition, this could harm the financial system.
The comments come as lawmakers continue negotiating the bill ahead of the Senate’s August deadline. Key issues like stablecoin yield, anti-money laundering (AML) rules, and ethics provisions are still under discussion.
Blockchain Has Huge Potential, But Risks Remain
In a joint opinion piece, Umar Farooq, Global Co-Head of JPMorgan Payments, and Peter Muriungi, CEO of Digital Assets and Blockchain Solutions, said tokenization and programmable money could modernize finance by making payments faster. Meanwhile, they could reduce settlement times and improve cross-border transactions.
At the same time, they cautioned that regulatory clarity only works if it comes with strong protections. According to the executives, digital assets that function like securities should follow the same disclosure, custody, and investor protection rules. These should be the same as for traditional financial products.
Similarly, decentralized platforms operating like brokers or exchanges should also meet comparable regulatory standards.
Stablecoins Need Bank-Level Safeguards
JPMorgan thinks stablecoins present both opportunity and risk.
While stablecoins and tokenized deposits could improve payments, the bank warned that products offering rewards or yield without bank-level capital, liquidity, and consumer protections could mislead users. That, in turn, could increase the risk of panic withdrawals during periods of market stress.
The executives also warned that if large amounts of deposits shift from banks into stablecoins, traditional lending across the economy could be affected.
In addition, JPMorgan called for stronger AML rules. They argued that broad exemptions for some crypto infrastructure could make it harder to track illicit financial activity.
JPMorgan Continues Building Blockchain Infrastructure
Despite pushing for tighter regulations, JPMorgan continues expanding its blockchain business.
Its Kinexys payments platform recently added support for five new currencies, bringing the total to eight. The platform has already processed more than $4 trillion in transactions, with daily volumes exceeding $7 billion.
The bank also continues developing JPM Coin, a blockchain-based deposit token designed to give institutional clients near-instant, 24/7 settlement within a regulated banking environment.
