JPMorgan downplays stablecoin threat as local bankers warn of $6.6 trillion risk

Source: CryptoNewsNet Original Title: JPMorgan downplays stablecoin threat as local bankers warn of $6.6 trillion risk Original Link: More than 100 community bank leaders are urging U.S. senators to close what they describe as dangerous loopholes in stablecoin legislation, warning that trillions of dollars could migrate out of traditional bank deposits and undermine local lending across the country. But JPMorgan does not share the ABA’s fears.

In a Jan. 5 letter sent to the Senate, members of the American Bankers Association’s (ABA) Community Bankers Council said stablecoin issuers are increasingly finding ways to offer yield-like incentives, despite a statutory ban on interest payments from issuers directly, threatening to siphon savings away from their vaults that rely on deposits to fund loans to households and small businesses.

“Allowing inducements like interest payments, yield, or rewards could incentivize customers to park their savings not in a bank, but in stablecoins,” the letter states. Treasury estimates cited by the ABA suggest as much as $6.6 trillion in bank deposits could be at risk if such practices continue.