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JP Morgan joins Decentraland

09.02.2024

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JPMorgan Chase & Co. the largest bank in the United States, has taken a groundbreaking step in the financial market by entering the metaverse through the opening of a virtual lounge in Decentraland. The initiative signals the growing interest of traditional financial institutions in virtual worlds and the economic potential that the metaverse offers. The Onyx lounge, named after JPMorgan's blockchain unit, is located in the Metajuku virtual mall, inspired by Tokyo's Harajuku district, known for its Japanese street fashion.

Decentraland is a blockchain-based platform that allows users to create and explore virtual worlds, purchase virtual plots of land and interact with a variety of applications and services. JPMorgan's entry into this environment underlines the bank's belief in the huge economic potential of the metaverse, which it estimates could generate annual revenues of $1 trillion.

JPMorgan's investment in the metaverse is a sign of a shift in attitude towards blockchain technology and cryptocurrencies. The bank's CEO Jamie Dimon, previously known for his sceptical attitude towards cryptocurrencies, now recognises through the bank's actions the potential that this new technology brings. The Onyx showroom is not only indicative of the bank's openness to new technologies, but also of its strategic pursuit of new business opportunities and innovative financial service delivery models.

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Growing popularity of the Metaverse

Interest in the metaverse is also linked to the rising price of virtual plots of land and predictions of an increase in in-game advertising spending to $18.4 billion by 2027. The bank stresses that while the metaverse space is growing rapidly and it is difficult to base a long-term business strategy on it, the risk of falling behind is reason enough to start investing and exploring the new opportunities the technology offers.

J.P. Morgan, with its expertise in cross-border payments, trading, asset creation, currency exchange and custody of funds, is well placed to be a significant player in the new virtual economy.

In short, the banking firm is beginning to appreciate the potential of blockchain. J.P. Morgan is creating new technologies that can be scaled to help modernise business models and infrastructure to meet new challenges such as digital identity and tokenisation. The aim is to prepare for continuous innovation and new ways of organising financial transactions in a decentralised network that will eventually evolve into a metaverse.

Banking sector interested in cryptocurrencies

The evolution of banks into cryptocurrencies represents one of the most exciting developments in the financial sector in recent years. Initially, many involved in the development of cryptocurrencies hoped that a new form of currency would replace the need for banks. Banking institutions, on the other hand, initially ignored or disregarded cryptocurrencies and later, when cryptocurrencies became a greater competitive threat, strongly condemned them.

A change came in July 2020, when the US Office of the Comptroller of the Currency (OCC) allowed banks to store cryptocurrencies. This decision opened the door for banks to start exploring this new area. Increasing customer demand prompted banks to look for ways to get involved in the cryptocurrency sector.

Interestingly, Onyx Lounge is not J.P. Morgan's first venture into the cryptocurrency space:

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The bank launched its blockchain unit in 2020.

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In July 2021, J.P. Morgan became the first major US bank to offer its wealth management clients access to cryptocurrency funds.

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A month later, J.P. Morgan began offering its private banking clients access to a bitcoin fund in partnership with New York Digital Investment Group.

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Eventually, the bank launched a digital currency called JPM Coin.

These moves show how J.P. Morgan has evolved from scepticism about cryptocurrencies to acceptance and integration of the technology into its offering, highlighting the changing dynamic between traditional financial institutions and the growing cryptocurrency ecosystem.

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Grzegorz Mróz

Business Developer

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