Things are gearing up for an explosion.
I really do not focus upon the markets because they are often misleading. When it comes to crypto, while markets do what they do, I think it is a trailing indicator. The market is actually behind the progress that is taking place.
Whether that assessment is accurate is, naturally, up for debate. What is important is that a lot is taking place. By this, I am not referring to simply market pumps. Instead, there is a fundamental transition occurring which is making crypto a growing portion of the global financial system.
There are a couple things that are hitting. These are what we will focus upon in this article.
Image generated using Ideogram
The first is simply another step forward regarding the long list of decisions by traditional firms regarding Bitcoin.
JPMorgan is headed by noted Bitcoin detractor, Jamie Dimon. They are, in my view, a bit late to the game. That said, Dimon stated that one correction is being made.
Jamie Dimon, the CEO of JPMorgan, said his bank will soon allow its clients to buy Bitcoin, but it won’t custody the cryptocurrency.
“We are going to allow you to buy it,” Dimon said at JPMorgan’s annual investor day on May 19. “We’re not going to custody it. We’re going to put it in statements for clients.”
This is a big move.
According to Grok, here are the largest United States banks based upon assets under management. Guess how is at the top of the list.
| Rank | Firm Name | Assets Under Management (AUM) |
|---|---|---|
| 1 | JPMorgan Chase & Co. | $3.3 trillion |
| 2 | Morgan Stanley | $3.0 trillion |
| 3 | Goldman Sachs | $2.3 trillion |
| 4 | Bank of America | $1.0 trillion |
| 5 | Wells Fargo | $0.496 trillion |
| 6 | Citigroup | $0.158 trillion |
It is a move that comes after the second largest bank did the same.
JPMorgan rival Morgan Stanley has also moved to offer spot Bitcoin ETFs to qualifying clients. Spot Bitcoin ETFs in the US have seen significant adoption, with almost $42 billion in total aggregate inflows since they launched in January 2024.
Here we see how Wall Street works. It builds something on the foundation, in this case spot Bitcoin ETFs, and others jump on board. Like Morgan Stanley, JPMorgan is not going to deal with Bitcoin directly.
JPMorgan will offer clients access to Bitcoin (BTC) exchange-traded funds (ETFs), CNBC reported, citing sources familiar with the situation. Until now, the firm has limited its crypto exposure primarily to futures-based products, not direct ownership of digital assets.
What we see is two banks, with $6.3 trillion in assets under management offering Bitcoin, via the spot ETFs, to their clients. It is simply another center where some buy demand can come from.
Of course, this is financialization. It really has little to do with the core of the financial system. To Wall Street, Bitcoin is a new asset class, one that it can make money on.
Stablecoins are another matter.
After failing to pass a procedural vote two weeks ago, the GENIUS Act, which establishes framework for stablecoins, passed on a second try. This comes after negotiations between the two parties.
The bill now heads to the floor for vote.
Stablecoins are regularly talked about. They are looking at changing the entire monetary framework.
The second draft of the bill addressed some of the concerns outstanding with the first one. It strengthen AML and KYC compliance. Then we have the provision that pushed stablecoins into the hands of the banks.
According to Grok:
Permitted Payment Stablecoin Issuers (PPSIs): Only specific entities can issue stablecoins, including:
- Subsidiaries of insured depository institutions (e.g., banks) approved by their primary federal regulator, such as the Federal Reserve.
- Federal qualified nonbank payment stablecoin issuers, regulated by the Office of the Comptroller of the Currency (OCC).
- State-qualified payment stablecoin issuers, approved by state regulators, for issuers with a market cap below $10 billion. Issuers exceeding $10 billion face federal oversight from the Federal Reserve and OCC.
Technology (non-financial) companies are not excluded. They do, however, have to gain an exception via the Stablecoin Certification Review Committee. This only applies to public companies. Private technology firms can become a stable coin issuer.
This is a radical altering of the money supply. We are seeing the monopoly on US dollar creation (outside of banknotes) moving from the commercial banks. While this bill does put most of it in their hands, the door is open for others to enter.
For example, Epic Games or OpenAI could, if they desired, issue their own stablecoins. This is something that separates them from companies such as Google, Meta, or Apple.
I still stand by more forecast that, once passed, we will see an explosion in the number of stablecoin issuers. Most of the medium and large banks will get involved. The timeline given by some is one year from passage.
The exclusion, at least on the surface, of Big Tech, could slow things. That said, major corporations excel at exploiting loopholes. Do not think for a moment that the aforementioned tech giants will be left out. They will figure out how to manipulate the law for their own ends.
Here we are looking at one of the pillars of the tokenization of everything.
