JP Morgan forays into blockchain tech with this new ‘strategic investment’

After becoming the first bank to dive into the metaverse, JPMorgan Chase (JPM) has announced a “strategic investment” in blockchain startup TRM Labs.

On the current investment, Esteban Castaño, Co-Founder and CEO of TRM noted,

“This investment clearly highlights the significance of the growing crypto economy and the importance of building trust and safety in this ecosystem to sustain its growth.”

How TRM will aid JPM’s crypto expansion

TRM’s Transaction Monitoring solution aims to allow financial institutions and cryptocurrency businesses to meet Anti-Money Laundering (AML) regulatory requirements along with operational risk. Before JPM’s investment, the Tiger Global-backed TRM had onboarded names like Circle, FTX US and MoonPay in its clientele.

Having said that, JPM’s strategists have analyzed the crypto space time and again, agreeing that the asset class is highly risky. Especially with chief Jamie Dimon being an outspoken critic of the sector.

However, that has not deterred them from making sky-high price predictions for Bitcoin in the past. Let’s recall that the Wall Street giant had previously set BTC’s long-term price point at $150k before reducing it amid high market volatility.

Umar Farooq, CEO, Onyx by J.P. Morgan explained,

“We’ve spent the last six years exploring the possibilities and applicability of blockchain technology – leading infrastructure companies like TRM will help usher in the future of secure blockchain and crypto use cases.”

Chairman of investment strategy for JPM and crypto skeptic Michael Cembalest had remarked earlier this month that crypto holds potential despite its assumed shortcomings. With that, the bank has called for regulatory clarity to allow banks to safely handle crypto-assets.

Regulatory fix

Debbie Toennies, head of regulatory affairs at JPMorgan Chase’s corporate and investment bank, recently said,

“I do think we need a globally consistent regulatory framework. It’s important that we get to a solution as quickly as possible.”

Considering large institutional players are looking to hedge their exposures to crypto-assets, the $2-3 trillion market remains largely unregulated for that kind of demand. Toennies had also told Reuters that,

“The real risk to all of our economies is that if we don’t get to a solution that allows banks to engage with our clients in a hedged way, this activity will go outside the regulatory perimeter, and I am concerned about financial stability.”