Stablecoin Issuers Risk Disrupting Funding Markets, JPMorgan Says
- Threatens disrupting ‘already-soft floor’ for short rates: JPM
- Fed in April opted to prohibit stablecoins from accessing RRP
As the number of stablecoin issuers grow and enter short-term funding markets, there’s increasing exposure to turbulence of the crypto space in the traditional financial system.
Photographer: Dan Kitwood/Getty ImagesStablecoin issuers vying for assets in the short-term funding space risk disrupting the market after the Federal Reserve limited access to a key facility, according to JPMorgan Chase & Co.
The central bank decided in April that money funds created for the sole purpose of accessing its overnight reverse repo facility, or ON RRP, were deemed ineligible as a counterparty. That means stablecoins, seeking to park cash in liquid assets and unable to access the Fed facility, will likely have to compete with the $5.64 trillion money-market fund industry for assets like Treasury bills, potentially pushing those rates below the offering level on the RRP — currently 5.3%.