Are Banks Driving the Next Boom in Crypto?
In the world of crypto there is ‘news’ and ‘big news’. And then there is ‘JP Morgan launching its own crypto-currency’ news, which is massive, inter-galactic, universe sized news!
Why is this important?
1. JP Morgan is the number one bank, by assets, launching into crypto.
2. They are launching their own crypto, even though its only a stable coin.
3. For more than a year, their CEO has been the number one critic of a bank issuing crypto. Read about it here!
Whys is this relevant?
The first thing you need to know is that the number one problem in crypto is not acceptance by the financial world. We don’t need their acceptance as most are dinosaurs, focussed on ownership of the financial system. The number one problem is that main street banks block crypto companies from operating bank accounts. It is a nightmare for everyone from the largest companies to startups, because that conversion from fiat to crypto is at the heart of financial transactions. Banks block this in every country of the world.
Banks are directed by their executives and those executives don’t own the banks, so every decision is driven by self-interest — career-risk and/or career-reward.
Until today, a bank’s involvement in crypto was a definite career-risk. In fact, CEOs win by being negative, as banks consider crypto another threat to their business model (career-reward).
But when leading banks (JP Morgan), brokerages (Fidelity, Ameritrade) and stock exchanges (NASDAQ, NYSE, TSE, DB, SGX, CBOE) launch crypto-coins, crypto-exchanges or platforms, the fact that a bank is not in crypto (or at least has announced their intention to join), makes the leading executives ‘out-of-date’, ‘behind the 8 ball’, etc. Career-risk changes.
I talk about the second crypto boom coming in 2019 driven by financial institutions. This announcement is further proof of the emergence of this next boom. We all know that JP Morgan is a massive, globally complex organisation, where products like crypto-coins take months and months to develop before announcement.
I have had discussions with one of Asia’s leading banks who have been working on their own digital assets platform since May 2018. If they launch it by May 2019, then that is fast action for a massive Asian bank. When they do launch, any bank in Asia that isn’t in digital assets risks losing their big clients to this bank = massive career-risk.
We are hitting the ‘Kodak, EMI’ moment for the banking world, when digital disruption forces changes in their environment and they either evolve rapidly or die, as did Kodak and EMI.
No-one will cry when the banking industry has to dramatically change or when a few of the big banks are eaten in the war as they have to merge to survive. Banking will not die, just change. The big banks will buy their way into the game, just like all industries disrupted by digital. Wait for the headline ‘Bank of America buys Coinbase for $30 billion’. I suspect NASDAQ will buy Gemini. Bitmex will be acquired by some derivatives broker. Bitmain will be split up and the manufacturing bought by Foxconn or Samsung.
The net result for my world is that the stigma over public investment in the crypto world will disappear as banks become involved and super/pension funds start buying them. The second crypto boom will be raging, driving coin prices up, making a fortune for those smart enough to position themselves today.
This JP Morgan announcement is a flag. A message to you. Did you get it? I hope so.