JPMorgan Expects Major Changes Coming to Crypto Industry and Regulation Post FTX Collapse

JPMorgan has outlined cardinal changes it expects successful the crypto manufacture and its regularisation pursuing the illness of crypto speech FTX. The planetary concern slope envisages respective caller regulatory initiatives, including those focusing connected custody, lawsuit plus protection, and transparency.

JPMorgan Expects Major Changes successful Crypto Industry Post FTX Meltdown

Global concern slope JPMorgan published a study Thursday outlining large changes it expects to hap successful the crypto manufacture pursuing the illness of cryptocurrency speech FTX.

Global strategist Nikolaos Panigirtzoglou explained that “Not lone has the illness of FTX and its sister institution Alameda Research created a cascade of crypto entity illness and suspension of withdrawals,” but it is besides “likely to summation capitalist and regulatory unit connected crypto entities to disclose much accusation astir their equilibrium sheets.”

Panigirtzoglou proceeded to database the main changes JPMorgan expects aft the FTX meltdown. Firstly, helium wrote:

Existing regulatory initiatives already underway are apt to beryllium brought forward.

The JPMorgan strategist expects the European Union’s Markets successful Crypto Assets (MiCA) measure to person last support earlier year-end and the regularisation to instrumentality effect astatine immoderate constituent successful 2024.

As for the U.S., helium explained that “regulatory initiatives attracted much involvement pursuing Terra’s collapse,” adding:

Our conjecture is that determination would beryllium adjacent much urgency pursuing the FTX collapse.

“A cardinal statement among U.S. regulators centers astir the classification of cryptocurrencies arsenic either securities oregon commodities,” Panigirtzoglou continued.

The president of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has said that bitcoin is simply a commodity whereas astir different crypto tokens are securities. However, several bills person been introduced successful Congress to marque the Commodity Futures Trading Commission (CFTC) the superior regulator of crypto assets.

JPMorgan besides envisages:

New regulatory initiatives are apt to look focusing connected custody and extortion of customers’ integer assets arsenic successful the accepted fiscal system.

Noting that galore retail crypto investors person already moved to self-custody their cryptocurrencies utilizing hardware wallets, the strategist described: “The main beneficiaries station FTX illness are organization crypto custodians … Over clip these trusted custodians volition apt predominate implicit comparatively smaller crypto-native custodians oregon crypto exchanges.”

Next, “New regulatory initiatives are apt to look focusing connected unbundling of broker, trading, lending, clearing, and custody activities arsenic successful the accepted fiscal system,” the JPMorgan study adds, noting:

This unbundling volition person astir implications for exchanges which similar FTX combined each these activities raising issues astir customers’ plus protection, marketplace manipulation, and conflicts of interest.

Furthermore, “New regulatory initiatives are apt to look focusing connected transparency mandating regular reporting and auditing of reserves, assets, and liabilities crossed large crypto entities,” the JPMorgan strategist detailed.

Another large alteration identified by the concern slope is that “Crypto derivative markets volition apt spot a displacement into regulated venues with CME emerging arsenic a winner.”

Panigirtzoglou besides discussed decentralized exchanges (DEX), noting that they look respective hurdles until decentralized concern (defi) becomes mainstream. “For larger institutions, DEXs typically would not suffice for their larger orders owed to slower transaction velocity oregon their trading strategies and bid size to beryllium traceable connected the blockchain,” the JPMorgan strategist opined.

Do you hold with JPMorgan’s analysis? Let america cognize successful the comments conception below.

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