JP Morgan “Even if the stablecoin bill passes, rapid market growth is difficult...Interest limit is the key constraint”

JP Morgan has taken a cautious stance on the impact of the stablecoin-related bills (GENIUS Act, STABLE Act) being promoted in the U.S. Congress on the market. According to The Block, JP Morgan analysts evaluated that even if these bills are passed, expectations that the stablecoin market could grow 3 to 4 times within 1 to 2 years are overly optimistic.

The analysts pointed out that both bills prohibit the payment of interest on stablecoins and define them as ‘payment stablecoins’ similar to existing fiat currencies. This regulatory design could undermine the competitiveness of stablecoins compared to traditional financial products like money market funds that pay interest, ultimately acting as a factor hindering market growth.

Particularly with cryptocurrency-collateralized and algorithm-based stablecoins like DAI, there were concerns raised about the possibility of a total ban depending on the bill's content. This suggests that it could disadvantage decentralization-based projects.

On the other hand, JP Morgan maintained a positive outlook on yield-generating stablecoins like BlackRock’s tokenized treasury product BUIDL and Figure Markets’ security yield token YLDS. It is evaluated that these assets can exploit a middle ground between traditional and digital assets by providing actual yields and being designed to fit the regulatory environment, enabling sustained growth.

This analysis by JP Morgan suggests that the institutionalization of the stablecoin market can change depending on the competitiveness of their design structures and revenue models, beyond merely whether the law is passed or not.