JPMorgan (JPM) Enters Metaverse, Unveils Virtual Onyx Lounge

JPMorgan Chase JPM became the first bank in the United States to enter the metaverse. The biggest U.S. bank by assets has opened a virtual lounge named “Onyx lounge” in Decentraland, a virtual world based on blockchain technology.

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.

Christine Moy, JPMorgan’s head of cryptocurrency and the metaverse, stated, “There is a lot of client interest to learn more about the metaverse. We put together our white paper to help clients cut through the noise and highlight what the current reality is, and what needs to be built next in technology, commercial infrastructure, privacy/identity and workforce, in order to maximize the full potential of our lives in the metaverse.”

Per the JPMorgan report, “In time, the virtual real estate market could start seeing services much like in the physical world, including credit, mortgages and rental agreements.”

JPM also said that decentralized finance collateral management has a chance to come into play, and rather than traditional finance companies, this could be done by decentralized autonomous organizations.

Notably, the Onyx lounge will enable JPMorgan to operate like a bank in the virtual world just like it does in the real world.

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.

This will help JPMorgan tackle issues like account validation, transaction status and fraud prevention, much like it does with real clients.

In addition to opening the virtual lounge (which will provide a foothold for JPMorgan to explore its role in the digital world), the bank released a paper pointing out the opportunities that businesses can explore in the metaverse.

Over the past year, shares of JPM have rallied 6.6% compared with 23.3% 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.

Cryptocurrencies and 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 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.

Likewise, in an effort to strengthen and enhance its presence in the digital asset space, Citigroup C 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 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’s fluctuations by trading Bitcoin futures in block trades on CME Group Inc., with Cumberland DRW as its trading partner.

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