JPMorgan said that 4x stablecoin growth forecast to $1T was ‘far too optimistic.’
However, the bank was in early talks with peers to issue its digital dollar.
JPMorgan Chase, alongside other top U.S. banks, is reportedly exploring whether to jointly create a stablecoin to rival crypto-native ones like Tether’s USDT and Circle’s USDC.
According to a The Wall Street Journal (WSJ) report, the conversations were in an early stage and may change.
But the talks were between JPMorgan Chase, Bank of America, Wells Fargo, Citi, and other commercial banks.
Reacting to the update, Chris Burniske, a crypto VC partner at Placeholder, said,
“You can smell the FOMO.”
Surprisingly, JPMorgan private push contrasts its somewhat reserved growth outlook for the sector.
JPMorgan doubts the 4x growth outlook
Most firms, including Standard Chartered, expect the stablecoin market size to grow over 4x from the current $240 billion to $1 trillion in the next two years.
However, in a “The Block” report, JPMorgan analysts, led by Nikolaos Panigirtzoglou, downplayed the growth projections as ‘too optimistic.’
“We find talk about tripling or quadrupling of the stablecoin universe over the coming year or two to be far too optimistic.”
They cited the restriction stipulated in the U.S. Senate stablecoin bill, GENIUS Act, and the House’s STABLE Act, which limits digital dollars to ‘payment’ and non-interest yield instruments.
The crypto industry, led by Coinbase’s Brian Armstrong, pushed for interest-bearing stablecoins.
However, the U.S. banking industry reportedly lobbied strongly against it. This wasn’t unexpected, because such a feature would directly compete with traditional interest-bearing products like money market funds.
The analysts added that last year, U.S. money market funds attracted over $900 billion in inflows. Stablecoins would have eaten into this share if allowed to bear yield.
Now, the only growth path for the ‘payment stablecoins’ would be either through the overall payment segment or broader crypto expansion, the analysts noted.
Based on this, the segment may command about 7-8% of the overall crypto market size.
However, the analysts said that yield-bearing stablecoins eyeing institutional players, like BlackRock’s BUIDL and Franklin Templeton’s BENJI, may experience massive growth.
That said, the Senate GENIUS Act has cleared a key hurdle, raising hopes of a potential stablecoin regulatory framework by Q3 2025.
Overall, the stablecoin market size hit a record $249.5 billion, up by +280% from $65 billion at the beginning of the current crypto bull run in 2023.
