Why Does JPMorgan Plan to Issue the JPMD Stablecoin?
JPMorgan, one of the major banks in the United States (US), plans to create a stablecoin named JPMD following the approval of the Genius Act bill that passed the US Senate.
This is viewed by former CEO of one of the largest exchanges, Arthur Hayes, who believes that JPMorgan is trying to shift to crypto assets due to cost reduction. In general, stablecoins offer a high level of cost efficiency, are easily accessible, and facilitate cross-border transactions.
"Why is JPMorgan going through the trouble of encouraging customers to switch from regular deposits to JPMD? The first reason is cost reduction. If all regular deposits become JPMD, then JPMorgan can effectively eliminate its compliance and operational departments," he stated, quoting his official blog.
According to him, major banks overall, including JPMorgan, can spend up to $20 billion per year to comply with regulatory requirements. Therefore, by converting all regular deposits to stablecoins, these costs can be significantly reduced, even to zero.
He added that by issuing JPMD, JPMorgan can buy US bonds worth billions of dollars without worrying about large costs. Thus, the motivation for major banks in the US to adopt stablecoins lies in their annual cost savings.
Disclaimer Alert. Not Financial Advice (NFA). Do Your Own Research (DYOR).