JPMorgan Foresees Vital Changes Coming to Crypto Industry

Key Insights

• JPMorgan expects vital changes in the crypto industry after the FTX collapse.
• Nikolaos Panigirtzoglou expects urgent passage of MiCA.
• He also expects that the changes will focus on the custody and protection of customers’ digital assets.

JPMorgan published a report outlining the major changes expected in the crypto industry. Nikolaos Panigirtzoglou, a Global strategist at the Global investment bank, said the changes became imminent due to the FTX collapse. 

The changes will cut across regulatory initiatives and focus on custody, customer asset protection, and transparency. They expect the changes to take effect following the collapse of the FTX exchange. 

He said, “ Not only has the FTX collapse and Alameda Research created a cascade of crypto entity collapse and suspension of withdrawals,” but— it is also “likely to increase investor and regulatory pressure on crypto entities to disclose more information about their balance sheets.” 

JPMorgan Outlines Major Changes 

Nikolaos Panigirtzoglou identifies the issues that need to be addressed and the necessity for changes in the crypto industry. He proceeded to list the changes.

The first change he opined is to fast-track the passage of existing regulatory frameworks. He said, “Existing regulatory initiatives already underway are likely to be brought forward.” 

Similarly, he expects the European MiCA bill to receive final approval before year-end and should take effect by 2024. You would recall that the Markets in Crypto-Assets (MiCA) proposal was submitted to the parliament in September 2020. Since then, the parliament has been making adjustments to the bill. 

He added that they expected the United States to fast-track the regulatory initiatives following the Terra collapse. After that, Nikolaos Panigirtzoglou explained the situation surrounding the crypto industry in the US— and the steps taken so far by the US parliament. 

He identified the different opinions on classifying crypto as a commodity or security. He highlighted that JPMorgan expects the policies to focus on custody and customer protection (instead).

Another highlight of the changes that JPMorgan expects is the emergence of new regulatory initiatives. These regulatory initiatives will focus on transparency mandating regular reporting and auditing of reserves and assets liabilities across major crypto entities. 

 Nikolaos Panigirtzoglou envisaged a shift into regulated venues, with CME emerging as the winner in the crypto derivative markets.