JPMorgan Skeptical of $1 Trillion Stablecoin Projections Despite U.S. Regulatory Progress
While some industry forecasts predict the stablecoin market could soar past $1 trillion within the next two years, analysts at JPMorgan say that vision is likely overstated—even as the U.S. moves closer to passing stablecoin legislation.
In a report shared this week, JPMorgan’s global markets team, led by managing director Nikolaos Panigirtzoglou, questioned recent bullish projections that expect stablecoin supply to triple or quadruple from the current $240 billion mark. Their assessment comes despite growing momentum around U.S. regulatory efforts to bring structure to the space.
Two proposed bills—the GENIUS Act in the Senate and the STABLE Act in the House—aim to create legal clarity around stablecoin issuance. The GENIUS Act has seen more traction so far, with lawmakers voting to advance it earlier this week. However, both bills include a key restriction: stablecoins would not be allowed to pay interest.
According to JPMorgan, this restriction is a critical roadblock to rapid stablecoin expansion. Interest-bearing financial products like money market funds attracted $900 billion in inflows over the past year, the analysts noted. Without the ability to offer returns, stablecoins may struggle to compete for capital.
“The growth of these non-interest-bearing stablecoins would depend mostly on their adoption in payment systems and on the overall expansion of the crypto ecosystem,” JPMorgan wrote. Broader use of crypto in areas like DeFi, NFTs, and other blockchain applications could lift stablecoin demand, they added—but not at the scale some are predicting.
While firms like Standard Chartered and Citi have forecast a trillion-dollar stablecoin market in the near future, JPMorgan remains conservative, arguing those expectations may not account for structural limitations in the regulatory proposals.
As traditional stablecoins face yield restrictions, tokenized financial products that do offer returns are seeing increasing interest. JPMorgan highlighted examples like BlackRock’s BUIDL and Figure Markets’ YLDS, which combine blockchain technology with yield-generating assets like treasuries and securitized products. These could capture a larger share of the market as crypto investors seek safer, more profitable places to park idle capital.
The bank’s March forecast suggested yield-bearing stablecoins could grow from just 6% to as much as 50% of the total stablecoin market over time.
If U.S. regulation moves forward, JPMorgan says compliant players—banks, exchanges, and fintech firms—stand to benefit the most. Companies like Bank of America and Stripe are already positioning themselves in the stablecoin ecosystem.
On the flip side, dominant offshore issuers like Tether may face hurdles. The report noted that around 18% of Tether’s reserves are currently non-compliant with the GENIUS Act's proposed requirements. Though Tether holds roughly $5.6 billion in excess reserves, adapting to U.S. regulation may not be straightforward.
Algorithmic and crypto-collateralized stablecoins like DAI are also likely to be affected, with JPMorgan describing them as “the main losers” under the proposed legislation. These models could face outright bans, potentially forcing them to shrink or relocate to more permissive jurisdictions.