JPMorgan exploring crypto trading shows banks may dominate retail crypto flow

Crypto exchanges brace for pressure as banks like JPMorgan enter spot trading The national banks regulator OCC released a statement signaling a shift in rules that will have significant crypto market consequences across the United States. What to know: The U.S. federal banking regulator has signaled a shift allowing banks to engage in crypto trading services, potentially reshaping competition in the trading sector. JPMorgan is exploring crypto trading services for institutional investors, following new guidance from the Office of the Comptroller of the Currency. The OCC's guidance allows banks to facilitate 'riskless principal' crypto transactions, enabling them to broker trades without holding inventory or taking market risk. The U.S. federal banking watchdog signaled a regulatory shift that could fundamentally reshape competition in trading services across the United States. A recent OCC letter confirming banks can facilitate riskless crypto trades for customers will reshape the crypto market signficantly. That shift became apparent today, after Bloomberg reported that JPMorgan is exploring crypto trading services for institutional investors, marking one of the clearest indications yet that Wall Street banks are preparing to move beyond experimentation and into execution. CoinDesk contacted JPMorgan and they declined to comment on Bloomberg’s article. The report follows a statement by a JPMorgan spokesperson, who previously told CoinDesk the bank was “digesting and assessing” recent guidance from the Office of the Comptroller of the Currency (OCC), confirming national banks can engage in crypto trading services. The guidance, issued in an OCC Dec. 9 interpretive letter, confirmed that financial institutions may facilitate so-called “riskless principal” crypto-asset transactions, effectively allowing them to broker crypto trades without holding inventory or taking market risk. The OCC statement suggests the regulator is intent on pulling crypto activity deeper into the regulated banking system, and on ensuring banks participate rather than sit on the sidelines, because, as experts say, if they do not move into crypto trading services now, others will. “The market consequences will be significant,” said Burçak Ünsal, ÜNSAL Attorneys at Law managing partner. He said that “armed with regulatory legitimacy and the trust that accompanies it, banks are poised to absorb a meaningful portion of retail order flow." "Stand-alone crypto exchanges that lack banking licenses will feel competitive pressure, particularly at the entry-level consumer segment," Ünsal added Banks are already testing the water Even before the OCC’s latest clarification, several large U.S. banks had begun laying groundwork for crypto execution and distribution, often quietly and through intermediaries. JPMorgan Chase has developed blockchain-based settlement infrastructure via its Kynexis platform and JPM Coin , while also offering crypto-linked products to institutional clients. Goldman Sachs has restarted its crypto trading desk , offering bitcoin and ether derivatives, as well as structured products to hedge funds and asset managers. BNY Mellon launched digital asset custody services for select institutional clients, integrating crypto into its existing custody and settlement stack. More recently, banks, including Fidelity-affiliated entities and regional lenders, have partnered with crypto market makers and exchanges to provide execution, custody, or fiat rails, arrangements that could...

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