A Wall Street financial corporation known as JP Morgan Chase has just published a paper in which it forecasts the developments it anticipates for the cryptocurrency market. According to the most recent study on the company's Global Markets Strategy, the cryptocurrency industry is in for a year of significant upheaval in 2023.

In addition, JP Morgan stated that the alterations will take the form of legislation and would result in a consolidation of the existing financial sector and the cryptocurrency industry. The banking behemoth provided their thoughts on the drama involving Alameda Research and FTX in the aforementioned story.

According to the findings of the analysis, the crypto ecosystem is on the verge of undergoing significant upheaval as a direct result of the recent failure of several crypto businesses. First, the paper looked at the feasibility of accelerating the regulatory processes that are already in motion at the time it was written.

One of these is the Markets in Crypto Assets (MiCA) initiative that is being considered by the European Union. J.P. Morgan believes that the final authorization will be granted prior to the beginning of the year 2023 at the earliest.

This is due to the fact that the European Union has already completed the majority of the necessary legislative processes and is only awaiting the final approval. Additionally, the financial institution forecasted that there may be a period of transition lasting around one year and eighteen months.

Therefore, the implementation of the measure will be put off until 2024. In addition to this, the titan of Wall Street said that nations may introduce brand new legislation.

The securing and safekeeping of customers' cryptocurrency assets would be the primary emphasis of these laws. This operates in a manner not dissimilar to how the traditional financial system does things.

The Convergence Of The Cryptocurrency And Traditional Financial Sectors

In the meanwhile, the paper admitted that keeping one's own private keys is quickly becoming the standard practice. As a direct result of the implosion of FTX, two firms that manufacture hardware wallets, Trezor and Ledger, have seen enormous financial growth.

JP Morgan drew attention to the fact that impending rules will concentrate their attention on lending, clearing, brokering, custody activities, and trading respectively. As a result, the massive company thinks that such rules would have an effect on crypto organizations that supply the majority of these services.

These rules seek to eliminate the potential for conflicts of interest, to safeguard the assets of customers, and to stop market manipulation. In addition, improved openness on the part of crypto organizations would be a primary emphasis of the legislation.

According to the findings of the paper, cryptocurrency companies should frequently disclose and audit their assets, reserves, and liabilities. Stablecoin issuers, custodians, lenders, brokers, and exchanges are all examples of companies in the cryptocurrency industry that fit under this category.

It's interesting to note that JP Morgan thinks these restrictions would be quite comparable to the rules that govern the conventional financial industry. As a result, it is of the opinion that the cryptocurrency industry will eventually become integrated into the traditional financial system.