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JPMorgan (JPM) to Invest in TRM Labs, Expands Crypto Exposure
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Given that more banks, as well as financial institutions, are now embracing cryptocurrencies, JPMorgan Chase (JPM - Free Report) has decided to make a “strategic investment” in TRM Labs, a leader in blockchain intelligence. JPM announced yesterday that it would invest in the blockchain analysis firm’s crypto compliance and risk management technology.
The co-founder and CEO of TRM, Esteban Castaño, stated, “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. We’re thrilled to build on this opportunity as we work to enable a safer crypto economy for all.”
TRM’s technology is used by financial firms, cryptocurrency businesses, regulators, and law enforcement agencies across the globe to monitor cryptocurrency transactions for suspicious activity and trace the movement of illegally obtained funds.
Financial firms and crypto businesses are able to meet anti-money laundering regulatory requirements and manage reputational and operational risk, using TRM’s Transaction Monitoring solution.
Moreover, TRM’s forensics tool is used by law enforcement agencies to investigate sophisticated crypto-related crimes. Notably, TRM is the only platform that provides cross-chain analytics, allowing for the detection and investigation of high-risk activity across multiple blockchains.
Other Efforts Made by JPMorgan to Expand Crypto Footprint
Last month, JPMorgan announced that it opened a virtual lounge named “Onyx lounge” in Decentraland (a virtual world based on blockchain technology), thus, becoming the first bank in the United States to enter the metaverse.
Within Decentraland, users can acquire virtual plots of land in the form of non-fungible tokens (NFTs), making purchases using cryptocurrency backed by the Ethereum blockchain.
The Onyx lounge will enable JPMorgan to operate as a bank in the virtual world just like it does in the real world. Notably, virtual worlds in the metaverse have their own population, gross domestic product and currencies. Thus, just like its role as a bank in the real world, JPM will be able to facilitate cross-border payments, foreign exchange, financial assets creation, trading and safekeeping in the virtual world.
Yesterday, Umar Farooq, the CEO of Onyx, said, “TRM’s vision to drive security and integrity in crypto ecosystems through sophisticated analytics solutions aligns with our ambitions for building blockchain products at J.P. Morgan that are compliant and secure. 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.”
Apart from the above-mentioned efforts, JPM has been undertaking other initiatives to expand its presence in the emerging market. In July 2021, JPM became the first major bank in the United States to allow its financial advisors to give all its wealth-management clients access to cryptocurrency funds. Next month, it came to light that JPMorgan was offering its Private Bank wealth management customers access to an in-house passively managed bitcoin fund. The offering was being made in partnership with bitcoin powerhouse New York Digital Investment Group.
The Wall Street giant has even launched its own digital currency, JPM Coin.
Our Take
While the relatively low interest rate environment might continue to hurt JPMorgan’s top line to some extent in the near term; opening new branches, strategic acquisitions/investments, global expansion and digitization initiatives, and a robust investment banking pipeline are expected to support the bank's financials.
Over the past year, shares of JPM have lost 5.5% against 14.1% growth recorded by the industry.
Image Source: Zacks Investment Research
Currently, JPMorgan carries a Zacks Rank #5 (Strong Sell).
Until July 2020, the Office of the Comptroller of the Currency did not grant permission to banks in the United States to hold cryptocurrencies. The amendment post-July gave banks the go-ahead to begin exploring cryptocurrency operations.
A few years ago, banks were not that interested in the crypto and digital asset space. But now, after witnessing an increase in demand for the emerging market, banks and financial institutions are embracing cryptocurrencies.
In an effort to strengthen and enhance its presence in the digital asset space, Citigroup (C - Free Report) announced in November 2021 that it would hire 100 additional people in its blockchain and digital assets division.
Last year, Citigroup, which has been long planning to enter the crypto space, began offering digital asset services for its wealthy clients with the launch of the business offshoot — Digital Assets Group. The division, part of Citigroup’s wealth management division, focuses on cryptocurrencies, NFTs, stablecoins and central bank digital currencies.
Among others, Goldman Sachs (GS - Free Report) launched trading with non-deliverable forwards, i.e., derivatives tied to Bitcoin’s price, which are cash-settled. Goldman Sachs is shielding itself from the cryptocurrency fluctuations by trading Bitcoin futures in block trades on CME Group Inc., with Cumberland DRW as its trading partner.
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JPMorgan (JPM) to Invest in TRM Labs, Expands Crypto Exposure
Given that more banks, as well as financial institutions, are now embracing cryptocurrencies, JPMorgan Chase (JPM - Free Report) has decided to make a “strategic investment” in TRM Labs, a leader in blockchain intelligence. JPM announced yesterday that it would invest in the blockchain analysis firm’s crypto compliance and risk management technology.
The co-founder and CEO of TRM, Esteban Castaño, stated, “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. We’re thrilled to build on this opportunity as we work to enable a safer crypto economy for all.”
TRM’s technology is used by financial firms, cryptocurrency businesses, regulators, and law enforcement agencies across the globe to monitor cryptocurrency transactions for suspicious activity and trace the movement of illegally obtained funds.
Financial firms and crypto businesses are able to meet anti-money laundering regulatory requirements and manage reputational and operational risk, using TRM’s Transaction Monitoring solution.
Moreover, TRM’s forensics tool is used by law enforcement agencies to investigate sophisticated crypto-related crimes. Notably, TRM is the only platform that provides cross-chain analytics, allowing for the detection and investigation of high-risk activity across multiple blockchains.
Other Efforts Made by JPMorgan to Expand Crypto Footprint
Last month, JPMorgan announced that it opened a virtual lounge named “Onyx lounge” in Decentraland (a virtual world based on blockchain technology), thus, becoming the first bank in the United States to enter the metaverse.
Within Decentraland, users can acquire virtual plots of land in the form of non-fungible tokens (NFTs), making purchases using cryptocurrency backed by the Ethereum blockchain.
The Onyx lounge will enable JPMorgan to operate as a bank in the virtual world just like it does in the real world. Notably, virtual worlds in the metaverse have their own population, gross domestic product and currencies. Thus, just like its role as a bank in the real world, JPM will be able to facilitate cross-border payments, foreign exchange, financial assets creation, trading and safekeeping in the virtual world.
Yesterday, Umar Farooq, the CEO of Onyx, said, “TRM’s vision to drive security and integrity in crypto ecosystems through sophisticated analytics solutions aligns with our ambitions for building blockchain products at J.P. Morgan that are compliant and secure. 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.”
Apart from the above-mentioned efforts, JPM has been undertaking other initiatives to expand its presence in the emerging market. In July 2021, JPM became the first major bank in the United States to allow its financial advisors to give all its wealth-management clients access to cryptocurrency funds. Next month, it came to light that JPMorgan was offering its Private Bank wealth management customers access to an in-house passively managed bitcoin fund. The offering was being made in partnership with bitcoin powerhouse New York Digital Investment Group.
The Wall Street giant has even launched its own digital currency, JPM Coin.
Our Take
While the relatively low interest rate environment might continue to hurt JPMorgan’s top line to some extent in the near term; opening new branches, strategic acquisitions/investments, global expansion and digitization initiatives, and a robust investment banking pipeline are expected to support the bank's financials.
Over the past year, shares of JPM have lost 5.5% against 14.1% growth recorded by the industry.
Image Source: Zacks Investment Research
Currently, JPMorgan carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Rising Competition in the Digital Asset Space
Until July 2020, the Office of the Comptroller of the Currency did not grant permission to banks in the United States to hold cryptocurrencies. The amendment post-July gave banks the go-ahead to begin exploring cryptocurrency operations.
A few years ago, banks were not that interested in the crypto and digital asset space. But now, after witnessing an increase in demand for the emerging market, banks and financial institutions are embracing cryptocurrencies.
In an effort to strengthen and enhance its presence in the digital asset space, Citigroup (C - Free Report) announced in November 2021 that it would hire 100 additional people in its blockchain and digital assets division.
Last year, Citigroup, which has been long planning to enter the crypto space, began offering digital asset services for its wealthy clients with the launch of the business offshoot — Digital Assets Group. The division, part of Citigroup’s wealth management division, focuses on cryptocurrencies, NFTs, stablecoins and central bank digital currencies.
Among others, Goldman Sachs (GS - Free Report) launched trading with non-deliverable forwards, i.e., derivatives tied to Bitcoin’s price, which are cash-settled. Goldman Sachs is shielding itself from the cryptocurrency fluctuations by trading Bitcoin futures in block trades on CME Group Inc., with Cumberland DRW as its trading partner.