Economist Peter Schiff publicly broke with JPMorgan CEO Jamie Dimon on June 7, arguing that stablecoin issuers should not be held to the same capital and compliance standards as banks.

The comment surprised many, given that Schiff is well-known for being a huge crypto basher.

Schiff Draws a Line Between Banks and Stablecoin Issuers

In a post on X, Schiff stated that Dimon wanted crypto companies offering interest-bearing products to be held to the same capital and compliance requirements as traditional banks, a point he thoroughly disagreed with.

“That’s nonsense,” he wrote. “Banks are FDIC insured and make risky loans under a fractional reserve system. Stablecoin issuers don’t.”

And when a follower pointed out that the position seemed at odds with his history of criticizing crypto’s lack of investor protection, Schiff clarified his reasoning, saying:

“Stablecoins have a use case and issuers are not banks, especially if the tokens are 100% backed by dollars and invested exclusively in Treasuries.”

Journalist Eleanor Terrett also noted the rarity of the moment, posting on X that it was the first time somebody outside of crypto had argued that stablecoins shouldn’t be put under the same regulations as banks.

Dimon’s comments came during a public interview in late May, where he attacked the CLARITY Act, which had been advanced 15-9 by the Senate Banking Committee earlier that month.

His objections centered on stablecoin yield provisions, which he said would let crypto companies effectively pay interest on deposits without the protections that banks are subject to and without adequate anti-money laundering (AML) requirements.

He also didn’t have kind words for Coinbase CEO Brian Armstrong, who has been lobbying hard for the bill, saying “he’s full of shit.” On his part, Armstrong said that he was “a little perplexed” after Dimon’s comments but insisted that he still had “a lot of respect” for the JPMorgan chief executive.

Senator Cynthia Lummis, another strong supporter of the bill, said Dimon had either not read the bill or just wanted to “mislead people.” She pointed out that, contrary to what Dimon was claiming, the CLARITY Act had actually extended provisions of the Bank Secrecy Act to digital assets.

A Fight That Has Been Building for Months

Dimon’s outburst was the public face of a lobbying campaign that’s been running for months, with the American Bankers Association sending over 8,000 letters to Senate offices in the days leading to the committee vote, pushing for changes to the bill’s language on stablecoin yields.

The AML question has also been a real sticking point, with the Bank Policy Institute sharing data showing that last year, illicit crypto flows jumped 162% to hit $154 billion.

That figure, it claimed, was partly driven by a nearly 700% increase in value received by sanctioned entities, with stablecoins, mostly Tether’s USDT, accounting for 84% of all illicit transaction volume.

Schiff, for his part, hasn’t had a change of heart regarding crypto. As recently as this past weekend, he posted a poll on X asking followers how low BTC would have to fall before they admitted that he’d been right all along about the asset.

Additionally, he recently claimed that the flagship cryptocurrency could go as low as $20,000 if it breaks below $50,000. For now, the asset is trading back above $63,000 after a massive price slide that saw it plummet to a 19-month low near $59,000.