From the desks of Umar Farooq and Peter Muriungi:

Digital assets are no longer an abstract technology discussed on the fringes of finance. They are steadily moving toward the core of the U.S. financial system—intersecting with payments, settlement, trading, and products that increasingly resemble familiar financial services. That evolution brings both promise and risk, which is why the United States must take great care in how it establishes a framework for digital assets.

The promise is clear. Tokenization and programmable money can reduce friction in payments, shorten settlement cycles, and unlock efficiencies that benefit businesses and consumers alike. These technologies have the potential to modernize financial infrastructure in meaningful ways, particularly as commerce and investments become more global and operate around the clock.

But financial innovation that outpaces regulation and risk management can lead to instability that hinders progress. When guardrails are weak or unclear, risk doesn’t disappear—it shifts and concentrates, ultimately landing where consumers and the broader economy can least afford it. That’s why regulatory clarity matters only if paired with durable safeguards. Clarity with gaps or loopholes can push activity into lightly supervised channels and weaken long-standing protections.

Nowhere is this tension more visible than in market structure. Whether an asset is issued or traded on a blockchain does not change its economic function. If something looks and behaves like a security, investors rightly expect that disclosure, custody, and market integrity rules apply. If decentralized trading platforms perform broker or exchange like functions, they should be accountable for the obligations that keep markets fair, transparent, and resilient. Tokenization can improve how markets operate, but it should not become a mechanism for bypassing the responsibilities that have made U.S. capital markets the most trusted in the world.

The same principle applies in payments, one of the most promising use cases for digital assets. Stablecoins and tokenized forms of money may enable faster settlement and greater efficiency, especially in cross border transactions. But payments innovation becomes dangerous when it drifts into shadow banking—offering yield like incentives or balance holding arrangements without the capital, liquidity, consumer protection, and supervision standards that accompany traditional deposit products.

Labeling matters less than substance. When consumers are offered “rewards” or “cashback” simply for holding balances, many reasonably assume the product carries familiar safeguards. If it does not, the result is not just consumer confusion; it is heightened run risk and the potential for destabilizing shifts of funds during periods of stress. A framework that fails to close these gaps risks recreating the very vulnerabilities financial regulation is designed to prevent.

Equally important is ensuring that digital asset markets do not become blind spots for illicit activity. As these technologies become faster and more integrated into mainstream finance, strong anti money laundering and law enforcement tools are not optional—they are foundational. Exemptions that allow core transaction infrastructure to operate without meaningful oversight can enable opaque operations that shield true ownership, raising national security and market manipulation risks. Innovation should strengthen trust in the financial system, not erode it.

Against this backdrop, JPMorganChase is not watching from the sidelines. Across our businesses, we are investing in digital asset capabilities that respond to real client demand while operating within a risk managed, supervised environment. In payments, we have over a decade of experience in this space. Kinexys by J.P. Morgan, our industry leading blockchain business, recently launched JPM Coin, a deposit token designed to enable near instant, 24/7 settlement for institutional clients. We are also providing tokenization and programmable money products to our clients in ways that reinforce reliability, resilience, and compliance and exploring how we can leverage digital assets to improve the consumer and small business financial services experience for our Chase customers.

These efforts reflect a core belief: responsible innovation is already possible within existing guardrails, and it can scale further with the right framework in place. But that framework must be built to last. If policy prioritizes speed over substance—if it codifies clarity while leaving fundamental risks unresolved—it will invite instability, not leadership.

The United States has a genuine opportunity to lead in digital finance. Doing so requires more than enthusiasm for new technology. It requires a clear eyed understanding that innovation and safeguards must advance together, especially as digital assets become more deeply woven into the financial system.

Getting the framework right will enable responsible innovation by closing loopholes, aligning oversight with economic reality, and preserving the protections that underpin financial stability. The goal should not be simply to move fast, but to build a system that Americans can trust—one that allows innovation to thrive without putting consumers, markets, or the broader economy at risk.

This material has not been reviewed, endorsed, or otherwise approved by, and is not a work product of, any research department of JPMorgan Chase & Co. and/or its affiliates. Information contained in this document has been obtained from sources, including those publicly available, believed to be reliable, but no representation or warranty is made by the document’s author or JPMorganChase as to the quality, completeness, accuracy, fitness for a particular purpose or non-infringement of such information. Sources of third-party information referred to herein retain all rights with respect to such data and use of such data by JPMorganChase herein shall not be deemed to grant a license to any third party. All information contained herein is as of the date referenced and is subject to change without notice.