JPMorgan: FTX folding could help move crypto forward


Investment bank JPMorgan sees a silver lining to cryptocurrency in the recent FTX collapse, as it could lead to needed regulatory change. Further, the company states that the crash came from centralized entities, rather than decentralized applications.

The largest bank in the world by market capitalization issued a Report Addressing the recent collapse of FTX, highlighting its causes and potential effects. According to the report, JPMorgan is seeing FTX crash as a “major short-term setback,” but one that could help shake up the industry.

"We see the widely publicized collapse of FTX as potentially dramatically accelerating the timeline to which crypto-related regulation will be ushered in," analysts at JPMorgan wrote.

The regulation is “essential” to bring crypto to the masses

FTX is just one of the recent notable meltdowns in the crypto space. The other two are Singapore-based cryptocurrency hedge fund Three Arrows Capital and stablecoin issuer Terra-Luna.

The breakdown of these players highlights the risks that unregulated centralized entities pose to the crypto industry. Analysts at JPMorgan said this is why regulation is so critical to popularizing crypto.

The bank says that “regulators and politicians agree” that a regulatory framework is needed for cryptocurrencies. However, the collapse of FTX will likely cause them to act much faster than they otherwise would.

They argue that regulation will help the crypto industry for two reasons. First, the regulations will help institutional investors with crypto. The analysts wrote that regulation is a “major catalyst” for “driving a massive slope in institutional adoption”.

Moreover, they believe that regulation is key to “further freeing utility value” from the blockchain. The regulations are the “necessary catalyst” that will help “bring the power of blockchain technology to the masses.”

The failure came from the central entities

JPMorgan also highlighted the fact that issues in the crypto space come from centralized entities.

The bank seems to echo the belief that FTX is not a failure of crypto or blockchain technology. Rather, it is the failure of unregulated centralized financial institutions.

"While the news of the collapse of FTX is empowering crypto skeptics, we would point out that all of the recent collapses in the crypto ecosystem have been from centralized players and not from decentralized protocols," JPMorgan analysts said. Terra-Luna, Three Arrows Capital and FTX are all centralized entities.

In blaming centralized exchanges, JPMorgan echoes recent statements made by both crypto insiders and financial experts.

Ethereum founder Vitalik Buterin advertiser That FTX breakdown shows that “anything centralized is a suspect by default”. He also said that the collapse shows the value of trusting an “open and transparent code of individual superhumans”.

Jenny Johnson, CEO of global investment firm Franklin Templeton, He said That the collapse of FTX will motivate investors to move to decentralized exchanges. She believes that Uniswap-based exchanges could see a boost.

JPMorgan is the largest bank in the United States and the largest bank in the world by market capitalization. They have a significant impact on the market, both directly and through their influence on other institutional players.



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