Americans Will Put Money In Amazon And Walmart Stablecoins

OBSERVATIONS FROM THE FINTECH SNARK TANK

Stablecoins were once a crypto curiosity. With the passing of the GENIUS Act, they’re now a legitimate threat—or opportunity—depending on your perspective. The Act lays the groundwork for a new regulatory regime around these digital assets.

JPMorgan has already filed a trademark for a digital deposit token, possibly signaling its intent to create a bank-issued stablecoin product. For other banks, the Act raises urgent questions: 1) Should it support the regulation? 2) How will stablecoins impact deposits, operations, and financial risk? and 3) Should it issue its own stablecoin?

The GENIUS Act at a Glance

The GENIUS Act aims to bring regulatory clarity to stablecoins by establishing licensing requirements, setting capital and liquidity standards, and placing supervision under the Federal Reserve and other regulators. Key provisions include:

• Only insured depository institutions and approved non-bank entities can issue stablecoins.
• Issuers must back stablecoins 1:1 with high-quality liquid assets like US Treasuries.
• Required audits and disclosure of reserves.
• Prohibition of algorithmic or unbacked.

Amazon and Walmart Stablecoins: Threat to Bank Deposits?

Stablecoins could divert significant transaction volume—and core deposits—away from banks as retailers, fintechs, and Big Techs issue branded stablecoins that lead consumers to move cash into stablecoins for convenience, rewards, or programmability.

In this scenario, stablecoins become functional equivalents of bank deposits—but without the FDIC insurance, relationship ties, or regulatory protections banks provide.

This risk isn’t theoretical: Deposit displacement has been happening for years. A new study from Cornerstone Advisors found that $2.15 trillion has already left banks for fintech investment accounts–65% of which has come from Gen Xers and Baby Boomers. This is on top of the estimated $10 billion that Americans have sitting in merchant mobile apps like Starbucks’ in any given week.

JPMorgan’s GENIUS Act Response: JPMD Deposit Token

JPMD is initially designed for institutional clients and will be issued on Coinbase’s Base blockchain, targeting on‑chain settlements and cross-border B2B transfers. Kinexys, JPMorgan’s blockchain arm, markets it as a “deposit token”—a fully insured, interest‑bearing digital representation of bank deposits—making it easy to reconcile with existing banking operations.

Unlike stablecoins backed by Treasuries, JPMD is a tokenized claim on JPMorgan deposits, integrating deposit insurance and liquidity. Launched just as the GENIUS Act passed the Senate, JPMD highlights JPMorgan’s positioning under the new stablecoin framework: 1) 100% reserve backing; 2) monthly disclosures; and 3) regulated issuance.

By issuing tokenized bank money instead of a traditional stablecoin, JPMorgan safeguards its deposit base, ensuring it remains on‑balance‑sheet and insured. The deposit token effectively blends digital currency innovation with traditional banking strength: insured, interest-bearing, and blockchain-enabled.

Cons of the GENIUS Act for Banks

JPMD positions JPMorgan for future growth in digital settlements and institutional digital asset operations. Other banks are watching closely because JPMD may soon set the standard for what a “bank-issued stablecoin” really looks like. For the rest of the industry, there are pros and cons to the new regulations. The downsides:

• Increased operational burden. The Act imposes strict reserve, audit, and reporting requirements, which may create costly compliance overhead for banks that choose to participate. Many community banks—already resource-constrained—lack the infrastructure to comply efficiently.
• Technology and infrastructure gaps. Speaking of infrastructure, banks’ legacy systems aren’t built to support tokenized assets or blockchain-based ledgers. Issuing a stablecoin will require massive overhauls to core systems, KYC/AML processes, and cybersecurity frameworks–hardly an easy task.
• New non-bank entrants. While banks are allowed to issue stablecoins under the Act, non-bank entities can also participate if approved, potentially introducing new competition. If fintechs–and more importantly, retailers and merchants–are licensed, they could attract deposits and payment volume without the burdens of traditional banking charters.

Pros of the GENIUS Act for Banks

There are positives, however, from a bank perspective:

• Regulatory clarity. One of the biggest pain points for banks interested in digital assets has been the lack of a clear regulatory framework. The GENIUS Act establishes who can issue stablecoins and under what terms. For banks, this reduces compliance risk and provides a sanctioned path to innovate.
• Defense against shadow banking. Without guardrails, stablecoins issued by tech firms or merchants could evolve into unregulated “shadow banks” offering quasi-deposit products. By restricting issuance to regulated entities, the Act helps banks retain their role in money creation and transmission.
• New revenue channel. For banks willing to adapt, the Act opens the door to stablecoin issuance, custodial services, transaction fees, and cross-border payments. Institutions that move early could benefit from new product lines and differentiated digital experiences.

And as payments expert Tom Noyes writes:

“The idea that stablecoins are inherently cost disruptive needs a reality check. Most regulators will likely view a bank’s role in stablecoin issuance and transmission through a lens similar to that of real-time payments. Anyone claiming that stablecoins will operate at a significantly lower cost fundamentally misunderstands the operational and regulatory realities of banking.”

Stablecoins’ Operational and Risk Considerations

The decision on what banks should do about stablecoins can’t be made without assessing various types of risk the cryptocurrency introduces include:

• Infrastructure risk. Implementing stablecoin products introduces new infrastructure dependencies: digital wallets, token issuance platforms, smart contracts, blockchain ledgers. Most banks are not equipped to maintain or monitor these systems at scale, exposing them to new types of operational failures and outages.
• Cybersecurity risk. Despite the popular sentiment, the blockchain doesn’t eliminate cybersecurity concerns—it amplifies them. Banks issuing or supporting stablecoins must be concerned about smart contract vulnerabilities, wallet breaches, and fraudulent transfers.
• Balance sheet and liquidity implications. Stablecoin issuance can change the composition of a bank’s balance sheet, especially if required reserves are held in Treasuries or on-chain equivalents rather than in cash. This could impact liquidity ratios, earnings, and interest income dynamics, depending on how reserve assets are managed.
• Regulatory supervision complexity. Banks entering the stablecoin business may trigger additional oversight from not only their prudential regulator, but also the SEC, FinCEN, and the Federal Reserve—particularly if their tokens are used widely in consumer or wholesale markets.

How Banks Should React to the GENIUS Act

Whether or not a bank chooses to issue its own stablecoin, the adoption of tokenized money is inevitable. The question is no longer if stablecoins will affect deposit bases–it’s how much and who controls them. Here’s how banks can prepare:

• Define a strategic position. Will your institution be a stablecoin issuer, custodian, rails provider, or observer? Decide now–don’t get caught in a wait-and-see posture while others seize the market.
• Invest in infrastructure. Evaluate what infrastructure is needed to participate—whether directly or via partnerships. This includes wallet integrations, digital identity, tokenization platforms, and smart contract capabilities.
• Educate the board and C-suite. Ensure senior leadership understands the implications of stablecoin adoption, from deposit displacement to compliance complexity. Use the GENIUS Act as a conversation starter.
• Partner. Collaborate with fintechs, blockchain infrastructure firms, or consortiums that can provide expertise and reduce implementation risk.
• Advocate for smart regulation. The GENIUS Act isn’t the final word. Banks should continue to advocate for safe, competitive, and innovation-friendly rules that allow traditional institutions to thrive in a tokenized economy.

Banks must weigh the trade-offs: the opportunity to innovate versus the risk of disintermediation. The cost of inaction may not be reputational—it may be financial erosion as tech-native alternatives capture consumer funds.

For banks who act, the GENIUS Act, and Amazon and Walmart stablecoins, aren’t threats–they’re a blueprint.