JPMorgan’s (JPM) reported plan to offer cryptocurrency trading to institutional clients could reshape the competitive landscape, but not necessarily at the expense of its rivals.
According to analysts, the Wall Street giant’s entry may benefit existing players such as Coinbase (COIN), Bullish (BLSH), and Galaxy Digital (GLXY), even as it signals tougher competition ahead.
“If JPMorgan offers cryptocurrency trading to institutional clients, it will be a big positive for the space,” said ClearStreet analyst Owen Lau. “It will further legitimize cryptocurrencies and increase distribution channels,” he continued. “The ripple effect will likely cascade to other banks. Coinbase and Bullish are well positioned to benefit from the aggregation and matching of institutional orders from this large distribution channel.”
“JPMorgan is a broker, they potentially use exchanges to match orders,” Lau continued. That opens the door for platforms like Coinbase Prime and Bullish, which already offer institutional-grade crypto execution, to play a key role in settling those transactions.
Read more: JPMorgan evaluates cryptocurrency trading for institutions amid growing demand
Still, the move adds new pressure to the incumbents. In a note last week, Compass Point’s Ed Engel wrote that while Wall Street’s growing involvement in cryptocurrencies “broadens the addressable market for digital assets,” it also intensifies competition.
“Companies like GLXY and BLSH benefit from increased institutional participation, while COIN and Circle Financial (CRCL) face risks of margin pressure,” Engel wrote.
As institutional crypto activity increases, Engel said trading volumes in both spot and derivatives markets are likely to increase, along with demand for lending and custody services, areas where crypto-native companies have already built infrastructure. However, lower-touch services, such as basic spot trading, may face downward pressure on rates.
“We believe GLXY is a major beneficiary of Wall Street’s adoption of cryptocurrencies, given its focus on core trading, derivatives, and high-end brokerage services,” Engel wrote. “BLSH can also benefit from Wall Street adoption as it already offers some of the lowest spot rates in the world.”
In short, the analyst thinks that JPMorgan’s possible entry could attract more traditional institutions to the cryptocurrency market. But rather than displacing existing platforms, it can push them deeper into institutional finance: matching trades, providing custody, and offering risk management tools.
In practice, that could look like a pension fund running a cryptocurrency trade through a traditional Wall Street bank, only to run it on Coinbase Prime or Bullish. The more demand JPMorgan and any major lenders following the funnels come into the system, the more liquidity those platforms will be able to capture.
To this point, JPMorgan has not confirmed the launch of cryptocurrency trading for institutional clients, but the move seems more likely as the bank has gradually moved closer to the sector, including launching its own stablecoin and exploring blockchain settlement tools.
