Regulatory Dawn and AI Integration: JPM Leads the Transformation of Stablecoins in Traditional Banking

JPM Coin is a dollar-backed stablecoin announced by JPMorgan Chase in February 2019, positioned as an institutional payment tool for business-to-business (B2B) transactions, based on JPMorgan's self-developed Quorum consortium Blockchain, operating on its developed Interbank Information Network (IIN) interbank network.

According to data from JPMorgan Chase for 2024, the launched platform Kinexys has processed over $1.5 trillion in transaction volume, handling more than $2 billion in transactions on average each day. JPMC has become the first traditional bank to achieve large-scale application of stablecoin, setting a benchmark for financial institutions to embrace Blockchain technology.

JPMorgan CEO Jamie Dimon has had a contradictory attitude towards cryptocurrencies, criticizing the speculative nature of cryptocurrencies like Bitcoin while also stating, "These financial technologies are smart, and we must participate." This contradictory statement actually reveals the strategic considerations of traditional financial groups in the face of technological change—if they do not actively布局 stablecoins, payments, and accounts, they may be disrupted by emerging tech companies.

The Scale and Growth Logic of the Stablecoin Market

The current stablecoin market size has reached 225 billion USD, accounting for about 7% of the global cryptocurrency ecosystem (which is approximately 3 trillion USD), and has achieved positive market value growth for seven consecutive months, demonstrating strong industry strength.

JPMorgan analyst Kenneth Worthington pointed out that stablecoins "may be a better form than fiat currency," as their digital and on-chain traceable characteristics make them easy to self-custody and facilitate instant transactions, especially achieving significant advantages in cross-border capital flows—compared to the traditional SWIFT system (which typically requires 3 days for settlement), stablecoins can be credited instantly and prioritized, highlighting the alternative value of "digital fiat currency."

Regarding future growth potential, the market shows significant growth: JPMorgan predicts that the scale may reach 500 to 750 billion dollars in the coming years, while optimistic expectations anticipate it could reach 2 trillion dollars by the end of 2028. Considering that the ecosystem is still in its adolescence, the infrastructure construction cycle, and the nurturing mentality of young people, actual growth may be slower than optimistic expectations, reflecting the complexity and uncertainty of industry development.

The Stablecoin Layout of Traditional Banking

The traditional banking sector's approach to stablecoins is essentially a defensive innovation practice, with a dual core motivation: on one hand, it aims to resist the continuous erosion of traditional payment business by Fintech platforms like PayPal and Block's Cash App, and on the other hand, it seeks to seize the key entry point for institutional-level digital financial services through first-mover advantage.

This strategic choice reflects the banking industry's adaptive adjustments to emerging technologies and reveals its deeper considerations in maintaining market dominance. Different institutions have formed differentiated paths based on their resource endowments: JPMorgan Chase's JPM Coin focuses on real-time payment scenarios between institutions, Citibank emphasizes tokenized deposits and cryptocurrency custody services, while Bank of America builds ecological synergy capabilities by participating in stablecoin-related businesses.

The formation of this differentiated competitive landscape not only avoids homogenized internal consumption but also enables the banking industry to achieve multi-point coverage in the digital asset field.

Impact of Regulatory Framework Restructuring

The GENIUS Act (Guiding and Establishing the National Innovation Act for U.S. Stablecoins) has been signed into law, marking the formal establishment of the regulatory framework for U.S. stablecoins. This act responds directly to the market concerns exposed by the 2022 TerraUSD redemption crisis through a dual design of "legal identity verification + strict reserve mechanism," laying the institutional foundation for the mainstream adoption of stablecoins.

Core regulatory provisions:

1. Issuers are prohibited from paying interest on stablecoins, clarifying their "non-yielding digital cash" attribute;

2. Requirement for 1:1 reserve support, assets limited to US dollars, short-term government bonds, and high-quality liquid assets;

3. Allow non-bank institutions, insured depository institutions (IDIs) subsidiaries, and state-chartered entities to act as issuing bodies.

The "prohibition of interest" clause has a critical impact: on one hand, it weakens the direct competition between stablecoins and bank deposits, as well as money market funds; on the other hand, it strengthens its functional positioning as a payment tool.

However, we must consider the uncertainty of whether non-bank issuers can access the Federal Reserve's balance sheet, which may expose them to liquidity risks similar to those of traditional shadow banks — in extreme cases, making it difficult to respond quickly to withdrawal pressures.

The core competitive advantage of bank-issued stablecoins lies in their compliance endorsement. Taking deposit tokens as an example, they rely on the mature liquidity management framework and regulatory compliance system of traditional banks, which provides a higher credit foundation and risk controllability compared to stablecoins issued by non-banks.

The Multidimensional Impact of Stablecoins on Traditional Financial Markets

The impact of stablecoins on traditional financial markets is reflected in three dimensions: the reconstruction of payment efficiency, the innovation of capital market settlement, and the transmission of systemic risks. Its integration with financial technology is reshaping the underlying logic of traditional financial infrastructure.

In terms of payment, the instant settlement characteristics of stablecoins achieve a leap in efficiency compared to traditional ACH and SWIFT systems (which take several days), while JPMorgan further amplifies this advantage by combining AI technology with stablecoins.

The trading anomaly identification system developed by the institution is 300 times faster than traditional methods. Through the synergy of real-time risk monitoring and instant value transfer, it promotes the transformation of cross-border payments and settlements from the "T+N" model to the "T+0" real-time model, reshaping the efficiency boundaries of financial infrastructure.

On the capital market level, stablecoins are exploring deep integration with AI-driven assets. The current size of AI-related bonds managed by JPMorgan reaches $1.2 trillion, accounting for 14% of the U.S. investment-grade bond market. The dynamic valuation characteristics of these assets have created a demand for real-time settlement tools.

Stablecoins can be applied in real-time collateral adjustment scenarios for AI bonds, such as achieving instant settlement of collateral value fluctuations in algorithm-driven portfolio rebalancing, reducing counterparty risk exposure caused by traditional settlement delays.

Risk Transmission Layer: It is necessary to be vigilant about the cross-market spillover effect of "run risk". The 2022 TerraUSD collapse event showed that the run risk of algorithmic stablecoins could trigger a chain reaction;

Although bank-backed stablecoins reduce endogenous risks through a 1:1 fiat reserve mechanism, large-scale centralized redemptions may still transmit to the traditional system through financial markets.

For example, a concentrated sell-off of short-term government bonds in the reserve asset pool may trigger a liquidity crisis in the bond market, subsequently affecting the stability of the balance sheets of traditional banks holding similar assets, forming a transmission chain of "stablecoin run - reserve asset sell-off - traditional financial market volatility."

Stablecoins serve as a key bridge connecting traditional finance and web3, with their core value fully demonstrated through scenarios such as improved payment efficiency and optimized cross-border flows. Under the dual drivers of the GENIUS Act regulatory framework and the integration of AI technology, the process of mainstreaming has become irreversible.

The role of traditional banks has profoundly transformed, evolving from skeptics of cryptocurrency to active participants, by issuing stablecoins (such as JPM Coin) and exploring tokenized deposits, both defending against Fintech competition and seizing the entry point of digital finance.