JPMorgan has warned that weak digital asset rules could allow stablecoins and decentralized platforms to operate like banks, brokers and exchanges without facing the same regulatory requirements.

In a statement published Monday, JPMorgan executives Umar Farooq and Peter Muriungi said the United States must close regulatory loopholes as digital assets move deeper into payments, trading and settlement.

The executives argued that blockchain technology should not change how a financial product is regulated.

Assets that behave like securities should remain subject to disclosure, custody and market integrity requirements, while decentralized platforms performing broker or exchange functions should face comparable obligations.

“Labeling matters less than substance,” Farooq and Muriungi wrote.

The warning focused heavily on stablecoin rewards and other incentives offered to users who hold digital balances.

JPMorgan said these products can resemble traditional deposits while operating without equivalent capital, liquidity, supervision and consumer protection standards.

The bank warned that rewards or cashback offered simply for holding stablecoins could confuse consumers and increase run risks during periods of financial stress.

Large movements from bank deposits into lightly regulated stablecoin products could also reduce the funding available for lending and create destabilizing shifts across the financial system.

The position reflects a broader dispute between banks and crypto companies over stablecoin rewards, which has become one of the main obstacles facing US digital asset market structure legislation.

Crypto companies argue that rewards increase competition and allow consumers to earn more on their money. Banks say the products effectively offer interest without deposit insurance or the regulatory costs imposed on traditional financial institutions.

JPMorgan also called for stronger anti money laundering requirements across decentralized finance.

The executives warned that exemptions for core transaction infrastructure could conceal ownership and create blind spots for law enforcement, national security agencies and market regulators.

Despite its call for tougher oversight, JPMorgan continues to expand its own digital asset operations.

The bank recently launched JPM Coin through Kinexys, its blockchain division, allowing institutional clients to complete near instant settlement at any time of day.

JPMorgan is also developing tokenization and programmable money products and exploring additional digital asset services for Chase consumers and small businesses.

The bank said those projects show that blockchain innovation can expand inside a regulated and supervised environment.

Its position is not that digital assets should be blocked, but that companies offering economically similar services should operate under similar rules.

JPMorgan warned that legislation focused primarily on providing regulatory clarity could create new risks if that clarity includes exemptions or weak safeguards.

“If policy prioritizes speed over substance, it will invite instability, not leadership,” the executives wrote.

The statement places JPMorgan firmly behind a regulatory framework that supports tokenization and digital payments while preserving the role of banks and existing financial regulations.

It also increases pressure on lawmakers to resolve whether stablecoin rewards should be treated as payment incentives or as unregulated alternatives to interest bearing deposits.