January 29, 2023

JPMorgan: 2023 will be a year of change in the cryptocurrency industry

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JPMorgan: 2023 will be a year of change in the cryptocurrency industry

Analysts at investment bank JPMorgan believe that after the collapse of FTX, the cryptocurrency industry will change significantly. First of all, due to more stringent regulation.

In a special report by Global Markets Strategythe JPMorgan team writes that more transparent regulation could lead to the convergence of cryptocurrency projects and the traditional finance system. As an example, the authors cite a draft law on the regulation of cryptocurrencies in the European Union (MiCA).

JPMorgan analysts expect regulators towill pay close attention to the issues of storing crypto assets and protecting consumers. These areas should lead to the same level of security as in the traditional financial system. At the same time, the researchers noted the growth in popularity of hardware wallets after the collapse of FTX.

Another way to protect consumersbecome a division of roles for cryptocurrency companies. When, for example, a cryptocurrency broker cannot simultaneously be a credit service or provide custodial services.

“It will be important for companies like FTX.It combined all these areas, which made it possible to steal client assets, manipulate the market and create a conflict of interest,” JPMorgan analysts write.

It is important to ensure the transparency of the cryptocurrencybusiness - to oblige companies to provide periodic reporting on assets, encumbrances, amounts of funds and reserves, the authors of the report say. These norms can be borrowed from the sphere of traditional finance.

Researchers do not expect a significant increase in the role of decentralized exchanges due to the many restrictions for such sites:

“We believe that centralized exchanges will continue to play a huge role in the cryptocurrency ecosystem for the foreseeable future. Especially for large institutional investors, even despite the collapse of FTX.”

Formerly Executive Vice President of EuropeanBinance division Martin Bruncko said that the MiCA bill will greatly simplify the work of cryptocurrency firms in Europe.