JP Morgan Banking Holding Enters Cryptocurrency Market

JP Morgan Chase, a holding company from the Big Four US banks, will provide its banking services to two Americancryptocurrency exchanges, Coinbase and Gemini.

The Wall Street Banking Center approved the application for exchanges in April 2020.

“In the coming days, JP Morgan will begin processing a variety of services, including bank transfers, deposits and withdrawals, and electronic funds transfers.”, — quotes a Wall Street Journal source familiar with the case.

Fundamental shift

Founded in 2012, Coinbase is currentlytime is one of the leading US cryptocurrency exchanges, serving more than 30 million users. Meanwhile, Gemini is a relatively small competitor owned by the illustrious Facebook Winklevoss twins, but it was this exchange that played an important role in attracting retail and institutional investors in the cryptocurrency sphere.

This partly explains why JP Morgan chosethese are the companies from the apparently crazy cryptocurrency industry. Both Coinbase and Gemini have become benchmarks for the potential marriage between cryptocurrencies and traditional finance. Unlike most of their peers, which operate in the shadows, these two exchanges are registered in the US and strictly comply with the requirements of local regulators.

Both Coinbase and Gemini have received a license tomoney services at the Financial Crimes Enforcement Network, or FinCEN. They also have special permits to work in New York — the notorious BitLicense.

But the most noticeable change remains the changeJP Morgan's views on Bitcoin. Back in 2017, shortly before the cryptocurrency hit a record high of $20,000, JP Morgan CEO Jamie Dimon called Bitcoin a “fraud.”

“It's worse than tulip bulbs, — saidDimon, in an interview with CNBC at the time, referring to the tulip fever in 17th century Holland, — This won't end well. It’s just not a real thing, eventually [bitcoin] will disappear.”

Bitcoin, Halving and Pandemic

Coinbase and Gemini Bank Approval Alsoappears in popular media less than 24 hours after a bitcoin halving took place. A pre-programmed algorithm lowered the daily rate of bitcoin supply from 1800 BTC to 900 BTC.

This was the third halving in the 11 years of Bitcoin's existence. Analysts believe this makes the cryptocurrency more rare — and therefore more expensive due to growing demand.

The story of "deflation" became the main charactermeasures to stimulate inflation by global central banks. Many analysts believe that the value of fiat currency will soon decline due to the "open press". As the coronavirus pandemic grows, more and more central banks are resorting to printing unsecured government currencies to save their economies.

These moves led Wall Street investors to seek hedging opportunities elsewhere. Some of them found Bitcoin due to their conceptual similarities to gold, the oldest safe haven asset.

More recently, billionaire hedge fund manager Paul Tudor Jones decided to allocate 1-2 percent of his $22 billion portfolio to Bitcoin investments.

JP Morgan's decision to enter the crypto space shows the growing presence of interest in cryptocurrency on Wall Street, which can't help but be a positive sign for the entire industry.

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