Stablecoins are a type of cryptocurrency whose value is fixed to another asset, such as the US dollar or gold
They continue to play a significant role in the development of the monetary system, despite the recent collapse in cryptocurrency markets, according to JPMorgan
The paper stated that the technologies, including tokenization of stocks and assets, smart contracts, and cryptography, will "change the future of financial systems."
JPMorgan noted that, as with any novel concept, "the challenge is to find the right balance between fostering innovation and ensuring financial stability and security for customers and investors."
According to the memo, further clarification is still required about the public and private sectors' respective duties.
Improved investor and consumer protection, enhanced know-your-customer (KYC) and "identity problem legislation,"
Measures to halt money laundering and terrorist funding are all necessary for policymakers to address the dangers to financial stability.
The note stated that "a blue sky regulatory framework is difficult to accomplish in light of political and technological realities."
The recent drop in the value of cryptocurrencies has brought these regulatory flaws' hazards into sharp relief, it was added.
An investor study done by the bank found that 28% of respondents predicted crypto will be the worst-performing asset class in 2023,