A fault line is forming in the digital asset industry between crypto products resembling financial institutions and traditional banks warning of potential risks. JPMorgan cautions yield-bearing stablecoins could replicate core banking functions without proper regulation. Wall Street’s engagement with crypto deepens, with Morgan Stanley’s ETF filings driving institutional adoption.

JPMorgan warns yield-bearing stablecoins could pose significant risks to the financial system, replicating core banking functions without regulatory safeguards. Chief financial officer Jeremy Barnum raised concerns during the fourth-quarter earnings call, stressing the dangers of creating a parallel banking system without established prudential standards.

Crypto enters the next phase of institutional adoption, led by Morgan Stanley, amid debates over the four-year market cycle. Binance Research highlights a structural pivot in digital asset markets following Morgan Stanley’s ETF filings, which could pressure other major banks to accelerate their own crypto strategies to remain competitive.

World Liberty Financial expands into crypto lending with its $3.4 billion USD1 stablecoin, launching a new lending and borrowing platform called World Liberty Markets. Users can post collateral in various cryptocurrencies, with loans denominated in USD1. The move follows the company’s application for a national trust bank charter to support broader adoption of USD1.

Figure Technology Solutions introduces a new system for stock lending, allowing investors to lend shares directly to each other using its On-Chain Public Equity Network (OPEN). The platform enables companies to issue real equity on the Provenance blockchain, representing actual ownership. Several companies have shown interest in issuing shares on OPEN.

Read more at Cointelegraph: Banks, Stablecoins and ETFs Collide in Crypto’s Next Phase