Dimon: $1.7 trillion private credit "won't be bad, but worse than you think," 1,000 institutions have never experienced a recession

On April 28, at the annual forum of Norges Bank Investment Management in Oslo, Norway, JPMorgan CEO Jamie Dimon issued a public warning: over 1,000 private credit firms have never experienced a full credit cycle. He stated bluntly that once a credit recession arrives, the losses for these institutions "will be worse than the market expects," while adding, "not terrible." He pointed out that the $1.7 trillion market size itself is not the problem; the issue lies in the lack of price discovery mechanisms found in public markets, making it difficult to verify borrower quality and actual default rates. (Context: JPMorgan: 99% of clients are more focused on "RWA tokenization" than cryptocurrency) (Background: Can RWA be trusted? Goldfinch lending suffers two consecutive bad debt explosions, $12 million wiped out) On April 28, in Oslo, Norway, standing at the annual forum of the world's largest sovereign wealth fund, Norges Bank Investment Management, Jamie Dimon made a statement that left the private credit industry uneasy: "We haven't had a credit cycle in a long time. When it comes, it will be worse than people expect. Not terrible—just worse than people think." This is not the first time. In early April, in his annual shareholder letter, Jamie Dimon noted that bad debts in private credit were "a little bit higher than they should be in this environment." But this time, he was more direct, the venue was more public, and he targeted the entire industry structure. Jamie Dimon’s core argument is not that "private credit will collapse," but that the market is naive. The modern private credit market has reached $1.7 trillion, and over the past decade, more than 1,000 institutions focused on these assets have emerged—from the credit arms of private equity giants to obscure niche players, all crowding into the same lane. His exact words were: "Some of them may be great, but I guarantee you, not all 1,000 of them are." The root of the problem is structural: traditional banks holding similar loans must reserve over 50% of capital as a buffer; private credit firms do not have the same regulatory requirements. This regulatory arbitrage allows capital to continue flowing out of the banking system into the less transparent "Shadow Banking" sector, piling up increasingly thick implicit risks. Jamie Dimon also admitted that this market "may not be enough to be a systemic risk," but whether it is systemic or not has never been the only measure of pain. Behind the appeal of high returns in private credit (generally between 8–18%) lies a historical blind spot: this market has operated at its modern scale without ever experiencing a full credit recession cycle. During the 2008 financial crisis, the private credit market was much smaller than it is today; the 2020 COVID shock was too short, and the Fed intervened too quickly, leaving no time for bad debts to truly ferment. Jamie Dimon pointed out that because of this, the entire industry's credit assessment standards have continued to loosen—borrower quality has deteriorated, yet lenders are still pricing based on bull market logic. When a recession truly arrives, the triple threat of asset redemption pressure, liquidity shortages, and valuation difficulties will hit simultaneously, and losses could be far higher than current models predict. At the same event, he dropped another bombshell: global government debt continues to climb, which could trigger "some kind of bond crisis." Once risk-free rates fluctuate violently, the floating-rate pricing mechanisms of private credit will bear the brunt. It is worth noting that in the same speech, Jamie Dimon also mentioned the competitive pressure from the crypto market: "A whole new set of competitors is rising based on blockchain, including stablecoins, smart contracts, and various forms of tokenization." This statement hits the most contradictory point of the RWA sector. Over the past two years, the crypto community has continuously promoted "private credit tokenization," with the core argument being: moving opaque private lending on-chain provides real-time transparency, programmable liquidation, and participation for global investors. Protocols like Maple Finance, Goldfinch, and Centrifuge have accumulated hundreds of millions of dollars in private credit TVL on-chain. As of September 2025, the total scale of on-chain RWA has exceeded $30 billion, with private credit accounting for a significant portion. But the problem is: tokenization solves the "transparency" issue, not the "credit quality" issue. Goldfinch's own cautionary tale illustrates this—two bad debt explosions occurred; while on-chain liquidation is faster than traditional channels, the losses themselves were not reduced as a result. If Jamie Dimon's warning comes true and the private credit sector faces a recession, the challenges faced by