Core Thesis - JPMorgan Chase & Co. is well-positioned to capitalize on the emerging stablecoin market, providing a regulated alternative to traditional cryptocurrencies, which mitigates speculative risks for investors [2][4]. Group 1: Market Position and Innovations - JPMorgan's recent launch of its deposit token, JPMD, on Coinbase's Base blockchain gives it a first-mover advantage among major U.S. banks, enabling 24/7 settlement and institutional-scale adoption [2]. - Unlike traditional stablecoins, JPMD operates as a regulated deposit token under fractional banking rules, allowing the bank to maintain capital requirements while generating revenue from blockchain-enabled deposits [3]. Group 2: Financial Impact and Regulatory Environment - The broader stablecoin market facilitated $35 trillion in transfers in 2024, surpassing Visa and Mastercard in transaction volume, indicating significant potential for revenue expansion and operational efficiency for JPMorgan [3]. - By issuing stablecoins, TBTF banks can deploy deposits into high-quality liquid assets like U.S. Treasuries, unlocking up to $6.8 trillion in purchasing power, which boosts net interest margins and reduces compliance costs through AI-driven blockchain transparency [4]. Group 3: Historical Performance and Future Outlook - JPMorgan's stock price has appreciated approximately 27% since March 2025, reflecting the bank's strong deposit base, profitable lending model, and resilience during crises [5]. - The stablecoin initiative and favorable regulatory developments, such as the GENIUS Act, enhance JPMorgan's positioning by creating a federal framework that supports regulated bank-issued stablecoins while limiting competition from FinTechs and tech giants [3][4].

Today, Bitcoin stabilizes after yesterday's pullback while Ether's on the rise. And Nellie's Ultimate of Kexus, JP Morgan's blockchain business unit, joins us from the Wyoming Blockchain Symposium to discuss the bank's deposit token. Welcome to CBC's Crypto World.I'm Talia Kaplan here in Wyoming for the second full day of the Wyoming Blockchain Symposium. Let's get a quick check on crypto prices before we dive into our coverage here in Jackson Hole. Digital currencies are mixed this morning coming off yeste ...

Group 1: Macro Impact of Stablecoins - Stablecoins are evolving from mere crypto assets to key financial variables with macroeconomic influence, impacting money supply, credit creation, and the U.S. Treasury market[1] - Full reserve requirements are crucial for preventing net expansion of M2; as long as stablecoins maintain a 1:1 full reserve, they represent structural changes within existing M2 rather than an increase in total money supply[1] - The demand for U.S. Treasury securities, particularly short-term bonds, is significantly bolstered by stablecoins, which have reached a reserve scale of hundreds of billions, positioning them as a potential "new cornerstone" for the Treasury market[7] Group 2: Financial Institutions' Adaptation - Financial institutions are shifting from passive defense to proactive positioning in response to stablecoin impacts; commercial banks are issuing on-chain deposits to mitigate deposit outflows and provide reserve custody services[3] - Asset management companies are seizing opportunities by managing reserve assets for stablecoin issuers, particularly U.S. Treasury securities, as stablecoin reserves reach trillion-dollar levels[3] - Payment companies are leveraging their networks to create closed ecosystems by issuing proprietary stablecoins or integrating third-party stablecoins, aiming to reduce payment costs and enhance transaction efficiency[3] Group 3: Regulatory Landscape - Global jurisdictions are rapidly developing regulatory frameworks for stablecoins, with the U.S. establishing clear licensing and reserve requirements through the GENIUS Act, mandating 1:1 reserves and regular disclosures[2] - Hong Kong and Singapore have implemented detailed regulations for stablecoin reserves and redemption, reflecting a growing trend towards regulatory clarity in the stablecoin space[2] Group 4: Risks and Challenges - The potential shift to a fractional reserve system for stablecoins could lead to significant monetary expansion, posing challenges to monetary sovereignty and financial stability, reminiscent of the Nixon shock that ended the gold standard[6] - Stablecoins may become a "fragile fulcrum" in the U.S. Treasury market, with risks of liquidity mismatches and potential market disruptions during extreme conditions, such as large-scale redemptions[7]

Group 1 - Morgan Stanley has appointed Kara Kennedy as the new co-head of its blockchain division Kinexys, alongside Naveen Mallela [1] - Kara Kennedy will focus on Kinexys' digital asset business and asset tokenization, while Naveen Mallela will continue to lead payment-related operations [1] - The appointment comes as the U.S. has passed significant stablecoin legislation, prompting global banks and multinational companies to ramp up blockchain initiatives [1] Group 2 - Morgan Stanley is piloting its JPMD project, a type of stablecoin launched on Coinbase's public blockchain Base, designed as a digital representation of commercial bank deposits [2] - JPMD will offer clients 24-hour settlement services and interest payments, and is classified as a "permissioned token," available only to institutional clients [2] - The bank emphasizes that the advantage of launching a deposit token instead of a stablecoin is to provide a faster and more convenient way for institutional clients to manage funds while maintaining close ties to the traditional banking system [2]

Core Insights - JPMorgan Chase is partnering with Coinbase to enable Chase customers to link their accounts directly to the Coinbase platform, facilitating secure and compliant crypto transactions [2][4] - The partnership reflects a shift towards a bank-first infrastructure, integrating identity verification and transaction monitoring within JPMorgan's internal systems [1][10] - JPMorgan is piloting its on-chain deposit token (JPMD) on Coinbase's Base blockchain, indicating a convergence of traditional banking and cryptocurrency [15][16] Integration and Compliance - The integration allows customers to authorize direct funding transfers from Chase accounts to Coinbase wallets, eliminating the need for third-party data aggregators [10][12] - By embedding compliance measures directly into the transaction process, JPMorgan can enforce KYC standards and real-time risk assessments [11][12] - The partnership aims to streamline user onboarding and reduce payment failure rates for Coinbase, enhancing its legitimacy amid regulatory scrutiny [14] Future Developments - The direct-to-wallet funding feature and Chase Ultimate Rewards conversions are expected to launch in 2026, while credit card funding options will be available this fall [13] - The collaboration signifies a broader strategy where bank money and cryptocurrencies may coexist, laying the groundwork for future financial ecosystems [17]

Investment Rating - The report maintains an "Outperform" rating for the industry [1]. Core Insights - The report highlights the rapid growth and adoption of stablecoins, with their transaction volumes surpassing those of traditional financial systems like Visa and PayPal [7]. - It emphasizes the regulatory advancements in Hong Kong, particularly the introduction of the "Stablecoin Regulation Draft," which is expected to enhance compliance and foster innovation in the virtual asset market [23]. - The report anticipates an influx of institutional players into the virtual asset trading services, driven by regulatory clarity and the expansion of service offerings by Chinese brokerage firms [60]. Summary by Sections Section 1: Industry Chain, Application Scenarios, and Profit Models - Stablecoins have emerged as a more efficient medium for on-chain transactions compared to fiat currencies, significantly simplifying the process of trading cryptocurrencies [4]. - As of May 2025, the total market size of stablecoins is approximately $247.2 billion, with an average rolling transaction volume of $2.29 trillion, which is 1.7 times that of Visa [7]. - The most popular stablecoins are fiat-backed, such as USDT and USDC, which account for 64% and 25% of the market share, respectively [13]. - The report outlines the different types of stablecoins, including fiat-collateralized, crypto-collateralized, algorithmic, and commodity-backed stablecoins, each with its own advantages and disadvantages [10][12]. - The profitability of stablecoin issuers primarily comes from interest income generated from reserve assets, with Tether's interest income reaching $4 billion in 2023 [16]. Section 2: Institutions Expected to Accelerate Entry into Virtual Asset Trading Services - Chinese brokerage firms are rapidly expanding into virtual currency services, with Guotai Junan International being the first to obtain a Virtual Asset Service Provider (VASP) license [60]. - The report notes that as of July 2025, 43 brokerages and one bank have upgraded their licenses to provide virtual asset trading services, indicating a growing trend in the market [64]. - The report identifies 11 licensed Virtual Asset Trading Platforms (VATPs) in Hong Kong, which are crucial for retail investors to access virtual asset investments [66]. Section 3: Investment Recommendations - The report maintains a positive outlook on the development of the virtual asset trading market in Hong Kong, driven by government policies and the anticipated expansion of market participants [83]. - It suggests that the ongoing regulatory framework will facilitate the tokenization of real-world assets, providing new avenues for revenue generation for brokerages [83].

Stablecoin & Payment Industry Trends - Coinbase partnered with Stripe and Shopify to integrate USDC payments for global merchants [1] - JP Morgan launched JPMD, a stablecoin-like payment product [1] - Fiserv plans to issue its own stablecoin to support its network of 90 billion annual transactions [1] - Walmart and Amazon are reportedly developing their own tokens [1] Market Potential - U S Treasury Secretary suggests U S dollar stablecoins could unlock a 2 trillion dollar market potential [1]

Core Viewpoint - The article discusses the emerging competition between the U.S. and China regarding Real World Assets (RWA) and stablecoins, highlighting the significance of the "Genius Act" signed by former President Trump, which aims to solidify the dollar's status as the world's reserve currency and regulate the stablecoin market [3][4][32]. Group 1: RWA and Stablecoins - RWA stands for Real World Asset, which refers to the process of tokenizing physical assets like real estate, commodities, and bonds using blockchain technology [13][14]. - The RWA market is projected to reach $16.1 trillion by 2030, accounting for 10% of global GDP, with current RWA assets (excluding stablecoins) amounting to $245.5 billion [18][20]. - The introduction of RWA technology allows for the digitization and fragmentation of physical assets, enhancing liquidity and accessibility for ordinary investors [22][27]. Group 2: Regulatory Developments - The "Genius Act" marks a significant step in U.S. stablecoin regulation, aiming to maintain the dollar's dominance in the global financial system [7][32]. - Hong Kong's "Stablecoin Ordinance," effective August 1, represents a competing regulatory framework that could challenge U.S. dominance in the stablecoin space [8][30]. - The U.S. Treasury Secretary has projected that the stablecoin market could grow to $3.7 trillion by 2030, emphasizing the economic benefits of stablecoins [31][32]. Group 3: Market Dynamics and Challenges - Robinhood's introduction of stock tokenization has garnered attention, but it faces challenges such as liquidity issues and potential market manipulation [17][41]. - Regulatory bodies are scrutinizing Robinhood's practices, raising concerns about the distinction between real equity and derivatives in tokenized stocks [42][46]. - The article warns that while RWA technology offers efficiency, it also opens the door to potential illegal activities due to regulatory gaps [47]. Group 4: Future Outlook - Financial institutions in mainland China are accelerating their efforts to engage with the RWA and stablecoin markets, with many obtaining licenses to provide related services [48]. - The competition between the U.S. and China in the RWA space is intensifying, with the potential for significant shifts in the global financial landscape [50][51].

Core Viewpoint - The signing of the "Genius Act" by President Trump marks the beginning of a federal regulatory framework for stablecoins in the U.S., enhancing the legitimacy of the cryptocurrency industry and providing clearer rules for its development [2][4]. Regulatory Framework - The "Genius Act" establishes a legal framework for the issuance and regulation of stablecoins, including requirements for reserve assets, information disclosure, and auditing mechanisms [4][5]. - The act allows stablecoin issuers to hold reserve assets such as fiat currency, government bonds, and central bank reserves, aiming to ensure stable redemption of stablecoins [4][5]. Market Impact - Following the announcement of the act, the cryptocurrency market experienced a collective downturn, with Bitcoin dropping from $120,000 to around $117,000, reflecting a 1.85% decline within 24 hours [2]. - The total market capitalization of stablecoins has surpassed $260 billion, with Tether's USDT leading at over $160 billion, followed by Circle's USDC at over $64 billion [5]. Competitive Landscape - Circle's USDC is positioned to benefit significantly from the new regulations, as 80% of its reserves are in U.S. government bonds, aligning with compliance requirements [5]. - Tether's USDT faces challenges due to its lack of compliance in the U.S. market, despite controlling over 60% of the stablecoin market [6]. Banking Sector Response - Major U.S. banks are increasingly entering the stablecoin space, with Bank of America and Citibank planning to launch stablecoin products, viewing them as crucial for future international payments [8][9]. - JPMorgan has already initiated a pilot for a deposit token named JPMD, which is pegged to U.S. dollar deposits and supports real-time transfers [8]. Systemic Risks - The rise of stablecoins may pose systemic financial risks similar to those of shadow banking, as issuers lack traditional banking constraints, potentially leading to vulnerabilities during market stress [9]. - The issuance of stablecoins by banks is seen as a strategy to maintain control over payment systems and mitigate the impact of financial technology disruptions [9].

Group 1 - Standard Chartered Group has announced the launch of spot trading services for Bitcoin (XBT/USD) and Ethereum (XET/USD) through its UK branch, becoming the first global systemically important bank to offer such services [1] - Major global systemically important banks (G-SIBs) including Citigroup, JPMorgan, Morgan Stanley, and others are actively engaging in the cryptocurrency sector, with JPMorgan recently introducing a stablecoin-like token named JPMD for institutional clients [1][2] - The U.S. Congress has passed three bills related to stablecoins and cryptocurrencies, indicating a move towards more favorable regulatory policies for the cryptocurrency market [3] Group 2 - European banks such as UBS, Deutsche Bank, and HSBC are also entering the cryptocurrency space, with UBS successfully piloting a blockchain-based cross-border payment solution and Société Générale issuing a euro-based stablecoin [4] - Several international banks are forming partnerships with Chinese institutions, with HSBC launching a tokenized deposit management solution in Hong Kong and Deutsche Bank collaborating with Ant Group to explore tokenized deposits and stablecoin solutions [4] - The establishment of more platforms and subsidiaries by major banks aims to build a cryptocurrency ecosystem, with JPMorgan, Citigroup, and Société Générale creating dedicated digital asset platforms [5] Group 3 - The behavior of stablecoin users is seen as a threat to traditional banking operations, as businesses increasingly prefer to hold stablecoins for payments and liquidity management, which could weaken banks' control over funds [6] - Banks are responding by seeking to create "tokenized deposits" to enhance liquidity and customer engagement while maintaining regulatory compliance [6]