Jamie Dimon's View That Crypto Companies Offering Stablecoin Rewards Should Be Treated As Banks Is Nonsense, Says Peter Schiff

Economist Peter Schiff lashed out on Sunday at JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon‘s push to treat cryptocurrency firms offering interest-bearing products as traditional banks.

Schiff Contrasts Banks With Stablecoin Issuers

Schiff dismissed Dimon’s position as “nonsense” in an X post, arguing that banks uniquely benefit from Federal Deposit Insurance Corporation insurance while operating on fractional reserves and “risky loans.” Stablecoin issuers, he said, operate without this protection.

Being FDIC-insured means that the federal government protects bank deposits up to $250,000 per depositor in the event of bank failure. Fractional reserve banking means banks hold only a specific percentage of their deposits in liquid reserves and are allowed to use the remaining to extend credit.

JPMorgan didn’t immediately return Benzinga’s request for comment.

‘Stablecoins Have A Use Case’

Schiff, who is a fierce critic of Bitcoin (CRYPTO: BTC), said dollar-backed stablecoins “have a use case” and their issuers shouldn't be confused with banks.

Notably, Tether (CRYPTO: USDT), the issuer of the world’s largest stablecoin, backs its reserves with cash and cash equivalents, such as U.S. treasuries. When a user or institution wants to buy USDT, they deposit dollars into a Tether bank account. Tether then invests these dollars to buy treasury bills, earning billions in interest income.

A Bitter Showdown

Schiff has largely been in favor of stablecoins, though he has expressed doubts about their ability to sustain the dollar's global dominance. Instead, he prefers the idea of a gold-backed stablecoin and has occasionally expressed his intention to launch one.

His remarks come amid policy disagreements on provisions that could allow cryptocurrency companies to offer rewards on stablecoin holdings.

Dimon argues that the structure would create direct competition with banks without imposing equivalent safeguards, warning lawmakers to move cautiously on the clause.

Cryptocurrency executives have argued that lawmakers—not financial institutions—should determine the future framework for cryptocurrency in the U.S.

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