JP Morgan can create $100,000 stablecoins from nothing, deposit the real money into government debt for risk-free returns, and let the coins circulate in crypto. That's two $100,000s in the system: one as debt, one as spendable money. The bank keeps the yield.
JP Morgan gives you $100,000 of created out of thin air stablecoins, but they're allowed to take your $100,000 and put it into government debt, getting a yield. 2 things happen. The government gets $100 grand. It gives more money in the system for them to do stuff. And not only that, but the bank gets now the yield profit risk-free. If you want to redeem it, they'll just go back, take the money out, and give you the money back. It's not the end of the world. They give you a service, and the service is that you can use the stablecoin in crypto. That's a service. Now, in your case, okay, you could use it in crypto, but the first thing you have to understand is that there was a duplication. There's $100,000 amount that goes in the government, and then you have $100,000. Now, as a person using blockchain technology, you can go on DeFi, you can go buy some altcoins, you could do whatever you want. Or guess what? You could actually use that same $100,000 and buy into tokenized government debt.
