JP MORGAN CHASE INTO CRYPTO WORLD
What is JP Morgan Chase?
JP Morgan Chase is an American multinational investment bank and financial services holding company. The bank, among other functions, provides wealth management services. The bank has its headquarters in New York City, although being incorporated in Delaware. JP Morgan Chase is the largest bank in the United States of America and the fourth largest bank in the world according to assets under management. The company’s total assets amount to $3.386 trillion.
The JP Morgan brand is used for several financial activities such as investment banking, asset management, private banking, private wealth management and treasury services.
Moreover, the bank is listed on the New York Stock Exchange and is a constituent of the Dow Jones Industrial Average as well as the S&P 500.
What was its early stance towards crypto?
JP Morgan Chase, like other major banks, was strictly against cryptocurrencies and Bitcoin in particular. Specifically, it was the bank’s CEO Jamie Dimon who has been against Bitcoin since 2017. The CEO reportedly called Bitcoin a “fraud” and said that he had no interest in it. His idea of a currency involves the intervention of a central regulator, a government. Otherwise, an asset cannot be deemed as a currency.
These statements clearly highlight that the CEO, the management and the bank were not Bitcoin enthusiasts. However, the CEO said that they believe in blockchain technology. In fact, they use blockchain technologies yet they are skeptical about Bitcoin’s future.
Nevertheless, the bank cannot deny its clients their choice of investments. Nor can they force their opinion on Bitcoin on their clients. Thus, JP Morgan Chase recently allowed all its retail wealth management clients access to cryptocurrency funds.
What was the recent announcement?
JP Morgan Chase announced that it has allowed all its retail wealth clients direct access to cryptocurrency funds. JP Morgan Chase’s $630 billion wealth management department will not accept direct buy and sell orders for cryptocurrency funds such as Grayscale’s Bitcoin trust, Bitcoin Cash Trust, Ethereum Trust, Ethereum Classics Product and Osprey Funds’ Bitcoin Trust.
This new wealth management service applies to all retail wealth clients including the ones who use the bank’s official trading app, “Chase”, clients of JP Morgan’s advisory division and high net worth individuals under its private banking division. The advisory department will not provide recommendations from their side and the clients have to place buy and sell orders at their discretion and risk tolerance.
Before this announcement, only selective wealth clients were allowed to invest in cryptocurrency related funds. Owing to the exponential growth in demand from all clients, the bank was more or less obligated to expand this service to all. Even though the cryptocurrency market as a whole fell sharply, the demand for access among clients kept on increasing.
This announcement comes after two major banks, Morgan Stanley and Goldman Sachs entered the crypto market in March, 2021 and June, 2021 respectively. It seems as though the banks can no longer deny their clients access to this developing asset class. With this, all major banks in the USA including Morgan Stanley, JP Morgan Chase, Bank of America and Goldman Sachs have allowed their clients access to the crypto market in the form of funds, futures or direct exposure.
What are the benefits of this announcement?
There are certain benefits to the clients, the bank itself and the cryptocurrency market.
The retail clients will be able to gain exposure to the cryptocurrency market without having to experience its volatility. Since they will not invest in cryptocurrencies directly, rather in crypto funds, their risk will be reduced drastically while diversifications increase. Moreover, they can buy and sell their investments on the same day as the trades are highly liquid. The Chase investment application offers convenience in trading and a hassle-free experience. Furthermore, the bank has taken steps to protect the interests of their clients. They have only allowed clients to invest in funds concentrated around Bitcoin and Ethereum. This restricts the retail clients from investing in illiquid and volatile coins.
There are advantages for the bank itself. JP Morgan Chase will now compete with its rival banks such as Goldman Sachs and Morgan Stanley who entered in the market months back. Moreover, it will boost their revenue from operations as they will charge commissions on every buy and sell order placed.
The cryptocurrency market as a whole will develop on optimistic sentiments. The market has already shown signs of revival with Bitcoin reaching $40,000 yesterday.