JPMorgan's Dimon warns private credit decline is "worse than you think": $1.7 trillion black box market faces collapse

On April 28th in Oslo, Norway, at the annual meeting of the Sovereign Wealth Fund, Morgan Stanley CEO Jamie Dimon issued a public warning: over 1,000 financial institutions engaged in credit fundraising have grown wildly in an environment that has never experienced a recession. When a credit storm hits, losses will be “worse than market expectations.” He straightforwardly stated that the market, now at $1.7 trillion in size, is not about the scale but about no one knowing where the landmines are buried.
(Background: Morgan Stanley: 99% of clients are more concerned about “RWA real asset tokenization” than cryptocurrencies)
(Additional context: RWA not trustworthy? Goldfinch lending has failed twice, losing $12 million)

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• More than 1,000 institutions, not all of them are geniuses
• The core weakness of this market: never tested
• RWA tokenization: solution or just moving the problem on-chain?
• Transparency is necessary but not sufficient

On April 28th, in Oslo, Norway, Jamie Dimon stood at the annual forum of Norges Bank Investment Management, the world’s largest sovereign wealth fund, and said something that made private credit industry players uneasy:

“We haven’t experienced a credit downturn in too long. When it comes, the results will be worse than people expect. It won’t be terrible — just worse than everyone thinks.”

This is not the first time. In early April, in Morgan Stanley’s annual shareholder letter, he pointed out that private credit bad debts are “slightly above what the current environment should have.” But this time, he spoke more bluntly and publicly, targeting the entire industry structure.

More than 1,000 institutions, not all of them are geniuses

Dimon’s core argument is not that “private credit will collapse,” but that the market is naive. The modern private credit market has a size of $1.7 trillion, with over 1,000 institutions focused on these assets accumulated over the past decade — from the credit departments of private equity giants to obscure niche players, all racing on the same track.

His exact words were: “Some institutions may perform outstandingly, but I guarantee not all of these 1,000 are like that.”

The root problem is structural: traditional banks hold similar loans and must reserve over 50% of capital as a buffer; but private credit firms are not subject to the same regulatory requirements. This regulatory arbitrage allows capital to continue flowing out of the banking system into the less transparent “shadow banking,” building up increasing hidden risks.

Dimon also admits that this market “may not pose a systemic risk,” but whether it is systemic or not has never been the only measure of pain.

The core weakness of this market: never tested

The high returns of private credit (generally between 8–18%) hide a historical blind spot: this market operates at a modern scale but has never experienced a full credit recession cycle.

During the 2008 financial crisis, private credit was much smaller than today; in 2020, the COVID shock was too short, and the Federal Reserve intervened too quickly, leaving no time for bad debts to truly ferment.

Dimon points out that because of this, the entire industry has continued to relax its credit assessment standards — borrowers’ quality deteriorates, yet lenders still price loans based on bull market logic. When a recession finally hits, asset redemption pressures, liquidity shortages, and valuation difficulties will hit simultaneously, and losses could far exceed current models’ predictions.

He also threw another landmine: global government debt continues to rise, potentially triggering “some kind of bond crisis.” Once risk-free rates fluctuate violently, the valuation mechanisms of private credit will be the first to be affected.

RWA tokenization: solution or just moving the problem on-chain?

It’s worth noting that Dimon also mentioned the competitive pressure from the crypto market during his speech: “A whole set of new competitors is emerging based on blockchain, including stablecoins, smart contracts, and various forms of tokenization.”

This statement hits the most contradictory point in the RWA track. Over the past two years, the crypto community has been promoting “private credit tokenization,” with the core argument being: moving opaque private lending onto the blockchain, providing real-time transparency, programmable settlement, and global investor participation.

Protocols like Maple Finance, Goldfinch, and Centrifuge have accumulated hundreds of millions of dollars in private credit TVL on-chain. By September 2025, the total on-chain RWA scale will surpass $30 billion, with private credit making up a significant portion.

But the problem is: tokenization addresses “transparency” issues, not “credit quality” issues. Goldfinch’s own past failures illustrate this — two bad debt explosions, faster on-chain liquidation than traditional channels, but losses did not shrink as a result.

If Dimon’s warning proves true and the private credit track experiences a downturn, on-chain protocols may face challenges more complex than traditional institutions: when borrowers default on-chain, will liquidation mechanisms execute smoothly? Are cross-border asset legal enforceability measures in place? Can liquidity providers (LPs) exit orderly without causing a crash?

Transparency is necessary but not sufficient

Dimon is not saying “private credit will collapse,” but that “people are too optimistic about it.”

This logic also applies to the narrative of RWA tokenization. Moving assets on-chain indeed enhances transparency and accessibility; but if the underlying assets are mispriced due to a bull market, blockchain just makes this problem appear faster and clearer to everyone, not solve it.

The crypto community has long regarded “transparency” as a core advantage in RWA narratives, but Dimon reminds us of a more fundamental point: in a downturn, transparency makes losses visible faster, but does not reduce those losses.

For players like Maple, Goldfinch, Apollo Digital Assets, and others involved in on-chain private credit, the next test may not be “how to put more assets on-chain,” but “when the first credit downturn truly arrives, can your liquidation mechanisms withstand it?”