JPMorgan warns that competition among U.S. stablecoin issuers could turn into a zero-sum game, where one player’s gains come at another’s expense. The issue is critical for issuers, institutional treasuries, and traders operating with digital dollars. Competitive pressure, the trading-focused use case, and regulatory uncertainty set the pace of the market, while the sector continues to attract attention from global banks, fintech innovators, and policymakers seeking clarity.
Current Situation
The stablecoin market relies almost entirely on crypto trading activity, with limited use in everyday payments, which restricts mass adoption and weakens the case for mainstream utility. According to JPMorgan, unless the sector expands beyond trading, additional demand will not be enough for all issuers to grow simultaneously, leading to a zero-sum scenario.
Circle (USDC) faces direct pressure from Tether (USAT), Hyperliquid’s USDH, and other rivals, limiting its growth potential. At the same time, JPMorgan is testing its institutional deposit token (JPMD) on Coinbase’s Base network, positioning itself against fintechs and private issuers and signaling the potential role of banks in redefining digital money infrastructure.
What Could Happen
The high competition and trading concentration increase risks for treasuries and traders:
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Depegging risk from the reference asset.
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Liquidity strains if funds migrate from one issuer to another.
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Heightened operational and custody risks when selecting counterparties.
JPMorgan stresses the need for large reserves, transparency, and strong operational practices, factors that can reinforce confidence in each stablecoin and encourage institutional adoption.
Key Points
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Direct competition: Circle faces pressure from Tether (USAT), Hyperliquid (USDH), and others.
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Bank’s position: JPMorgan is promoting JPMD as an institutional token on Base.
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Current use: most funds are tied to trading, not small-scale payments.
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Forecasts: JPMorgan projects $500 billion by 2028; Coinbase, $1.2 trillion (2028); Citi, $1.6 trillion (2030); State Street, over $3 trillion (2030).
Key Implication
The report serves as a warning: the fight for market share may simply shift capital among issuers without expanding the total market size unless usage grows beyond trading. A decisive factor will be the implementation of federal laws, such as the GENIUS Act of 2025, which will define reserve requirements and compliance rules, reshaping issuance costs and incentives while also influencing how global investors perceive U.S. regulatory leadership in digital assets.
