US Rates: Stablecoins – they’re only getting started

In this episode of J.P. Morgan's global research podcast, P.J. Vohra and Teresa Ho discuss the stablecoin market, highlighting recent developments like the Genius Act and the Clarity Act. Teresa Ho clarifies that stablecoins, while similar to money market funds in liquidity and asset backing, differ in yield payout and guaranteed par redemption. The Genius Act establishes regulatory guidelines for stablecoin issuers, promoting market legitimacy and adoption. Key aspects of the bill include allowing only payment stablecoins, requiring one-to-one backing by high-quality liquid assets, and maintaining neutrality regarding access to the Fed's balance sheet. They also explore the potential for stablecoins to drive Treasury demand, the current use cases of stablecoins, particularly in crypto trading and cross-border payments, and the emergence of tokenized money market funds. The discussion concludes with the potential impact of the Clarity Act on mainstreaming digital assets and a request for listeners to support J.P. Morgan in the annual EXTEL survey.