- JPMorgan believes the prediction of stablecoin growth to 1 trillion USD is 'too optimistic.'
- However, the bank has begun discussions with partners about issuing its own digital currency.
JPMorgan Chase, along with other leading US banks, is considering collaborating to create a stablecoin that competes with cryptocurrencies like Tether's USDT and Circle's USDC.
According to the report from The Wall Street Journal (WSJ), these conversations are in the early stages and may change.
The discussions are taking place between JPMorgan Chase, Bank of America, Wells Fargo, Citi, and other commercial banks.
In response to this information, Chris Burniske, a crypto VC partner at Placeholder, has shared,
"You can smell the FOMO."
Surprisingly, JPMorgan's private push is in contrast to their cautious growth prospects for the industry.
JPMorgan Doubts 4-Fold Growth Prospects
Many companies, including Standard Chartered, predict the stablecoin market size will increase more than 4 times from the current 240 billion USD to 1 trillion USD in the next two years.
However, in a report by "The Block", JPMorgan's analysts, led by Nikolaos Panigirtzoglou, rejected the growth predictions as 'too optimistic.'
"We find the talk of tripling or quadrupling the size of the stablecoin universe in the next year to be overly optimistic."
They argue that the restrictions in the US Senate's stablecoin bill, the GENIUS Act, and the House's STABLE Act, limit digital USD to only a 'payment' tool with no interest.
The cryptocurrency industry, led by Brian Armstrong of Coinbase, has been pushing for interest-bearing stablecoins.
However, the US banking industry is reportedly strongly lobbying against it. This is not surprising, as this feature would directly compete with traditional interest-bearing products like money market funds.
Analysts add that last year, US money market funds attracted over 900 billion USD in cash inflows. Stablecoins would have cut into this segment if allowed to earn interest.
Currently, the only development path for 'payment stablecoins' is through the overall payment segment or broader cryptocurrency expansion, analysts note.
Based on this, the segment could account for about 7-8% of the total cryptocurrency market size.
However, analysts believe that interest-bearing stablecoins targeting institutional investors, such as BlackRock's BUIDL and Franklin Templeton's BENJI, could experience strong growth.
That said, the Senate's GENIUS Act has passed a major hurdle, raising hopes for a potential stablecoin regulatory framework in Q3 2025.
Overall, the stablecoin market size reached a record 249.5 billion USD, increasing over 280% from 65 billion USD at the beginning of the cryptocurrency price surge in 2023.
It will be interesting to see how native cryptocurrency stablecoins compete with potentially bank-issued digital USD.
