Some major investment banks are re-examining how blockchain technology and asset tokens can make their operations more efficient. However, to some in the crypto community, these developments seem similar to those seen before.
Banks that have taken steps towards blockchain adoption include JP Morganwhich since December 2021 has attracted more than $300 billion in partnerships for its network, the Financial Times reported on Monday.
His French rival has now joined the US bank BNP Paribas Both banks use digital tokens for short-term transactions in the markets. According to the Financial Times article, the project involves the use of tokens for “repo” transactions in the market, when institutions borrow assets for short-term financing needs.
These efforts have been described as the first step in the use of digital tokens “in a critical component of the global financial system”. The article adds that JPMorgan is exploring the possibility of serving as a gateway to decentralized finance (DeFi) for financial institutions, and notes that other banks are expected to join the network in the future.
JPMorgan operates its Liink enterprise blockchain under a separate arm of the company known asonyx. The major investment bank also earlier launched a central digital token known as JPM Coin.
It should be noted that the JP Morgan blockchain is not a blockchain in the traditional sense, but rather a centralized and licensed type network intended for internal use. CEO of JPMorgan, Jimmy DamonHe previously said of blockchains as “real new technologies that can be deployed publicly or privately, with or without permission.”
Linkk has been described by JPMorgan as an “on-chain commercial banking payment solution.” On its website, the bank claims to be the first blockchain-based network to offer repo transactions “through the exchange of cash with token collateral.”
The ‘red flag’ of a bear market
While some would argue that banks’ reliance on the blockchain is a positive sign, those who have been in the crypto community for a while are less impressed.
A lot of similar moves were also seen in 2018 when the crypto market was in a bear market. Among the companies making headlines at the time was JPMorgan, but also other traditional financial institutions arguably plagued by FOMO (Fear of losing).
This coincidence has been confirmed by Maya Zahavia blockchain entrepreneur and a founding member of the Israeli Blockchain Industry Forum.
On Twitter, Zahavi has writing This news is a “signal” that we are in a bear market. Despite this, she wanted to acknowledge the contribution of JPMorgan, one of the few companies that has really developed something, “instead of endless calls, [preuves de concepts] and standards”.
“[…] Most international banks have embarked on projects that do not go beyond LinkedIn posts on innovation.”
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