JPMorgan Expects Major Reforms in Crypto Industry and Regulation After FTX Collapse


JPMorgan has outlined the key changes it expects to the crypto industry and its regulation after the collapse of crypto exchange FTX. The global investment bank envisions several new regulatory initiatives that will focus on transparency, customer asset protection, custody, and transparency.
JPMorgan Expects Major Industry Changes Post FTX Meltdown
JPMorgan, a global investment bank, published a report Thursday that outlined major changes it expected to see in the crypto industry after the collapse of cryptocurrency exchange FTX.
Nikolaos Panigirtzoglou, global strategist, explained that “not only has the collapse FTX and Alameda Research created a chain of crypto entity collapses and suspensions of withdrawals,” but it also “likely to increase investor pressure and regulatory pressure on cryptocurrency entities to disclose more information about balance sheets.”
Panigirtzoglou then listed the major changes JPMorgan expects to make after the FTX meltdown. He began by writing:
It is possible to bring forward existing regulatory initiatives.
According to JPMorgan’s strategist, the European Union’s Markets in Crypto Assets bill (MiCA) will be approved before the year-end. The regulation is expected to take effect sometime in 2024.
He explained that the U.S. was more interested in regulation initiatives after Terra’s collapse.
We believe that there would be more urgency after the FTX collapse.
Panigirtzoglou said that a key issue facing U.S. regulators is the classification of cryptocurrencies either as securities or commodities.
Gary Gensler (chairman of the U.S. Securities and Exchange Commission) stated that bitcoin is a commodity while most crypto tokens are securities. However, Congress has introduced several bills to make the Commodity Futures Trading Commission the primary regulator for crypto assets.
JPMorgan also envisions:
New regulatory initiatives will likely focus on digital asset protection and custody, just like in traditional financial systems.
The strategist noted that many retail crypto investors have already made the decision to self-custody their cryptocurrencies with hardware wallets.

The JPMorgan report states that next, “New regulatory initiatives will emerge focusing on unbundling broker, trading, lending and clearing activities as in traditional financial systems,” adding:
This unbundling will most impact exchanges like FTX, which combined all these activities, raising questions about customers’ asset protection, market manipulation and conflicts of interests.
The JPMorgan strategist explained that “new regulatory initiatives are likely” to focus on transparency and mandate regular reporting and auditing of assets, reserves, and liabilities across major crypto-entities.
The investment bank also identified another major change as “Crypto derivatives markets will likely see an shift into regulated venues with CME emerging victorious.”
Panigirtzoglou also spoke out about decentralized exchanges (DEX), pointing out that they face many hurdles before decentralized finance (defi), becomes mainstream. The JPMorgan strategist stated that DEXs would not be sufficient for larger institutions due to slow transaction speeds or their trading strategies and order sizes to be traceable onto the blockchain.
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