JPMorgan: Stablecoins “Comparable to The Largest Prime Money Market Funds,” CEO Calls For Crypto Regulation
The banking giant also found the impact of the crypto crash on mainstream markets “limited” and not yet in the same category as the dot-com stocks in the 90s or the subprime mortgage crash in the 2000s “in terms of household/corporate leverage and financial sector infestation.”
Bitcoin experienced a 54% drawdown during the latest deep crypto drop, Ether crashed 61%, and many altcoins went down 80% to 95%.
The banking giant, JPMorgan in its latest report, covered this crash while noting that this pullback occurred in a $2 trillion but that its impact on mainstream markets is “limited” and that it was not yet in the same category as the Nikkei in the 1980s, the dot-com stocks in the 90s, or the subprime mortgage crash in the 2000s “in terms of household/corporate leverage and financial sector infestation.”
“The cross-asset consequences have been mild, with less equity/credit drawdown than occurred during January’s meme-stock frenzy of February’s sell-off in bonds,” it said. “Huge wealth losses are always possible, but not necessarily systemic.”
According to the bank’s report, the magnitude of the correction had “likely” been amplified by a “sharp deterioration in liquidity conditions.” As such, it argues for further de-risking given the absence of buying in BTC fund space and the regulated BTC futures market.
The collapse in BTC, ETH, and other prices has benefited stablecoins as a relative safe haven, says the report. According to the bank, stablecoins constitute a key component of the cryptocurrency market infrastructure and support the majority of turnover in major cryptocurrencies. BTC -4.06% Bitcoin / USD BTCUSD $ 42,256.89
-$1,715.63-4.06% Volume 41.98 b Change -$1,715.63 Open $42,256.89 Circulating 18.82 m Market Cap 795.48 b 56 min Crypto Investors Approaching Large Institutions in Bond Market for Loans Against Digital Assets 1 h Cryptocurrency Market Tanks on the Same Old China Ban News, But Investors Who Sell Here Will End Up “Bummed” 2 h Twitter Chooses “Global, Barrier-Less Option” for Tipping and to Help Creators Join the “Decentralized Internet” ETH -7.31% Ethereum / USD ETHUSD $ 2,888.63
-$211.16-7.31% Volume 25.37 b Change -$211.16 Open $2,888.63 Circulating 117.66 m Market Cap 339.86 b 1 h Cryptocurrency Market Tanks on the Same Old China Ban News, But Investors Who Sell Here Will End Up “Bummed” 2 h JPMorgan says Institutional Investors Have Shown A 'Strong Preference' for Ethereum Over Bitcoin Since August 21 h 1Inch Moves to Arbitrum For Faster Throughput And Lower Gas Fees
Stablecoins further acts as a key contributor to the increase in activity, particularly in offshore exchanges without direct access to the U.S. banking system. At more than $85 billion total market cap, stablecoins “are potentially significant money market investors—comparable to the largest prime money market funds,” it said.
Get the Space Regulated
Meanwhile, Jamie Dimon, the CEO of JPMorgan, has made a pivot from his Bitcoin is a “fraud” to now calling for regulation for the industry.
In an interview with CNBC earlier this month, Dimon discussed the need for more legal framework and tax measures for the fast-growing industry.
“There should be a legal regulatory tax-related framework, AML, around crypto. It’s now worth $2 trillion. When are they going to say, “Oh my god, this is worthy of our attention”?”
He then goes on to say that authorities should pay more attention to the crypto space now because, “when it’s $3 trillion, and $4 trillion, and $5 trillion,” it could see an “uproar” of problems from the surge of scams and other issues. SpartanBlack, a partner at the crypto fund SpartanGroup commented,
“The most bullish thing Jamie Dimon has ever said about crypto. Sounds like he wants the space regulated so JPMorgan can get to play in it.”