Blockchain, seemingly calm, always has its share of fresh developments.
Recently, Morgan Chase launched its first blockchain-based collateral settlement service, marking a new experiment in traditional Wall Street institutions' blockchain applications. During bullish markets, this might have been just another easily overlooked corporate announcement. However, amid this year's ongoing market turbulence and uncertain expectations, with crypto industry narratives visibly dwindling, digital assets have once again captured Wall Street's attention.
What are institutions up to? A closer look reveals that traditional players like Morgan Chase, Wells Fargo, and Citigroup are integrating blockchain into internal processes or financial transactions. Yet, these non-trading movements largely go unnoticed by the average user.
From an industry perspective, Wall Street institutions and retail users exist in parallel universes. While institutions advance technology or experiment with emerging applications, these efforts often fail to translate into tangible value for retail investors—rendering them irrelevant or even overshadowed by the fleeting allure of Ponzi schemes.
Amid this chasm of diverging consensus, blockchain trudges forward alone.
01 What Are Institutions Doing?
On October 10, global banking giant Morgan Chase announced the launch of its blockchain-based collateral settlement network, TCN. The inaugural transaction involved BlackRock and Barclays, where BlackRock tokenized shares from a money market fund (MMF) and transferred them as collateral for an over-the-counter derivatives trade with Barclays.
While this marked the first real-world application, rumors had surfaced in September about Morgan Chase exploring a blockchain-based digital payment and settlement system. Insider reports suggested a nearly complete infrastructure design, hinging on digital deposit tokens—a digitized version of client deposits. However, regulatory hurdles in the U.S. stalled progress.
Morgan Chase’s blockchain journey runs deep. Among traditional institutions, it was an early believer in blockchain’s potential. In 2015, the bank formed a team to evaluate emerging technologies, where blockchain stood out. After assessing projects like Ethereum, Ripple, and Hyperledger, Morgan Chase concluded none met banking’s complex needs. Within six months, it built Juno, a private chain demo, but shelved it in 2016 due to technical immaturity, later open-sourcing it to Hyperledger.
Next came Quorum, a permissioned blockchain integrating Ethereum’s EVM and Solidity. While technically robust, its complexity deterred bank developers, relegating it to Morgan’s backend. In 2019, JPM Coin emerged—a dollar-pegged stablecoin for instant wholesale settlements, processing $300 billion in transactions.
By 2020, Morgan doubled down, creating Onyx, a blockchain subsidiary. Leveraging Quorum, Onyx introduced Link (payment info exchange), Coin Systems (DLT clearing), and a digital asset platform, completing Morgan’s blockchain ecosystem.
👉 Discover how institutions are reshaping finance with blockchain
02 What Do Retail Investors Care About?
This year’s crypto market has been eerily stagnant.
Externally, wars, inflation, and soaring U.S. interest rates (5.25%–5.50%) drained liquidity from risk assets, propelling gold to $2,085/oz. Meanwhile, AI’s resurgence overshadowed Web3 funding.
Internally, few standout applications emerged. Hong Kong’s crypto hub ambitions fizzled, and BlackRock’s ETF rumors recycled for months. Projects shuttered at record rates—27 in 2023 alone, up from 9 in 2021.
BTC hovered near $27,261, down 58% from peaks. Stablecoin market caps hit a 19-month low ($1.209B), with USDC, BUSD, and TUSD losing $500M weekly.
Amid this, memecoins and Friend.Tech’s "social token" frenzy captivated users. For retail, Layer 2s, ZKPs, and AA wallets pale against price swings—a casino mentality reigns.
03 The Great Divide: Institutional vs. Retail Consensus
Twitter debates highlight stark divides. Institutions obsess over infrastructure, often dismissive of retail’s price focus. Retail, burned by vaporware, gravitates toward speculative plays. The result? A fractured ecosystem where institutions ignore market needs, and retail scoffs at "unproven" tech.
Even crypto-friendly institutions like Paradigm and a16z are outliers. Jamie Dimon, Morgan Chase’s CEO, calls Bitcoin "worthless," while BlackRock’s ETF push treats crypto as a portfolio checkbox—never engaging deeply. FTX’s collapse laid bare institutional disregard for retail, with client funds treated as playthings.
👉 Why the institutional-retail gap threatens crypto’s future
This duality defines crypto: Wall Street’s elite tout blockchain’s promise while sidelining retail. Retail, in turn, chases gains, indifferent to Ponzi risks. Bridging this gap requires institutions to listen—and build tools that matter.
FAQ
Q: Why do institutions focus on blockchain’s backend?
A: Efficiency gains in settlements, compliance, and liquidity management drive adoption—benefits not immediately visible to retail.
Q: Will BlackRock’s ETF help retail investors?
A: Indirectly. ETFs offer exposure but don’t address crypto’s utility or governance gaps.
Q: Is crypto’s retail era ending?
A: Not yet, but institutions are seizing more influence—forcing retail to adapt or exit.
References:
- Stuart Popejoy & Will Martino: Morgan Chase’s Blockchain Blueprint
- CNBC: Why Big Banks Bet on Blockchain
- Decrypt: JPMorgan’s Crypto Shift: Tokenization Over Coins
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