Today, cryptocurrencies are back in the red. The Senate Agriculture Committee released a draft of the long-awaited crypto market structure bill, and Visa's Mark Nelson breaks down the payment giant's latest step forward in stable coin adoption. Welcome to CNBC's Crypto World.I'm Talia Kaplan. Cryptocurrencies are back in the red this morning with Bitcoin falling to the $11,000 level by noon Eastern. Ether's also headed lower, falling below $3,400 and XRP dropped to $2.34%.And taking a look at stablecoin iss ...

Core Viewpoint - JP Morgan is beginning to allow clients to use Bitcoin and Ether as collateral for loans, although this service is currently limited to its trading business and is still in early stages [1][2][4]. Group 1: Service Expansion - The firm has been accepting IBID, an ETF, as collateral for a few months, which is considered less volatile than the underlying cryptocurrencies [2]. - There is increasing demand from hedge fund managers and asset managers for more crypto-related services, indicating a potential market shift [2][5]. - JP Morgan's approach is customer-driven, with the firm willing to explore crypto services if regulations permit [5]. Group 2: Risk Management - Bitcoin and Ether are recognized as more volatile than traditional collateral, necessitating a risk management strategy that includes a "haircut" on the collateral value [5][6]. - The firm is currently assessing how much additional collateral is required to accommodate the volatility of these cryptocurrencies [6]. Group 3: Market Implications - The entry of JP Morgan into the crypto collateral space may influence other financial institutions and crypto banks, as clients often seek similar services across different banks [4]. - The firm's evolving stance on cryptocurrencies reflects a broader trend in the financial services industry, where traditional banks are increasingly engaging with digital assets [3][4].

Core Viewpoint - JPMorgan Chase & Co. plans to allow institutional clients to use Bitcoin and Ethereum as collateral for loans by the end of 2025, marking a significant step in integrating cryptocurrencies into traditional banking services [1][3]. Group 1: Loan Program Details - The program will enable clients to borrow against their Bitcoin (BTC) and Ethereum (ETH) holdings, with a third-party custodian securing the pledged tokens [1]. - This initiative follows a previous announcement where JPMorgan intended to test crypto collateral loans with BlackRock's iShares Bitcoin Trust (IBIT) [2]. - The new program allows clients to pledge cryptocurrencies directly rather than ETF shares, enhancing the flexibility of collateral options [4]. Group 2: Integration of Crypto in Banking - JPMorgan has begun integrating cryptocurrencies into its core lending operations, including the use of its Kinexys Digital Payments network for commercial real estate loan servicing [3]. - The Kinexys system improves payment workflows, reducing processing times from two days to minutes [4]. - Additionally, JPMorgan launched its digital deposit token, "JPMD," which is fully backed by U.S. dollars and available exclusively to institutional clients [5]. Group 3: Regulatory Environment - Recent regulatory changes have enabled firms like BlackRock to accept Bitcoin and swap it for ETF shares, indicating a shift towards broader acceptance of crypto assets in financial markets [6]. - The U.S. Commodity Futures Trading Commission (CFTC) has initiated a program to allow stablecoins like USDT and USDC to serve as tokenized collateral in derivatives markets [6]. - Acting CFTC chair Caroline Pham emphasized the importance of adopting non-cash collateral to modernize markets [7].

Market Trends & Growth - Tokenized Real World Asset (RWA) value increased by 105% [1] - Stablecoin value increased by almost 5% reaching approximately $294 billion [1] - RWA value on public networks increased by over 12% in the last 30 days [1] - RWA 30-day transfer volume increased by almost 38% to approximately $1096 billion [2] - Stablecoin 30-day transfer volume increased by nearly 14% to $359 trillion [2] - Monthly stablecoin transfer volume is almost over $37 trillion [4] - ROUSD adoption is rapidly increasing, with over $839 million tied to it, up over 15% in the last 30 days, and monthly transfer volume up almost 64% at almost $6 billion [8] Stablecoin Adoption & Usage - Stablecoins are experiencing significant growth, especially on public networks [7] - USDC is up over 24% in the last 30 days [8] - Transfer volume is a crucial indicator of stablecoin market activity [6] Institutional Involvement & Tokenization - Major banks are announcing significant stablecoin initiatives, embracing both stablecoins and public networks [9] - Every major bank is expected to tokenize their reserves, with JP Morgan already making moves with JPMD [10][11] - Tokenization is expanding to various assets, including stocks, institutional funds, commodities, and bonds [13] - US Treasury Secretary encourages community banks to embrace blockchain and stablecoins to compete with larger institutions [15][16] - Major US banks are increasingly involved in crypto and digital assets due to favorable regulations [22] - Big banks are exploring launching a stablecoin linked to G7 currencies [23] Ripple's Role & Influence - Ripple has a significant presence and influence in the stablecoin and blockchain space [29] - Some major banks exploring stablecoins are already confirmed partners of Ripple [24] - Ripple is involved in discussions and initiatives related to digital assets in both the US and the UK [25][26][27]

Group 1: Consortium Formation - Nine major global banks, including Goldman Sachs and Deutsche Bank, are collaborating to develop a stablecoin focused on G7 currencies [1] - The consortium aims to issue a reserve-backed digital payment asset on public blockchains, pegged one-to-one against traditional fiat currencies [1] Group 2: Regulatory Engagement - The coalition is in contact with regulators to assess the potential for enhancing competition in the digital payments sector [2] - Traditional financial institutions are increasing blockchain experimentation due to clearer regulatory frameworks in the U.S. and EU [2] Group 3: Market Potential - Bloomberg Intelligence estimates that stablecoin technology could facilitate over $50 trillion in annual payments by 2030 [3] - Existing stablecoin issuers are generating substantial yields from the Treasury securities and cash equivalents backing their tokens [3] Group 4: Competitive Landscape - Tether Holdings, the largest stablecoin issuer, is raising up to $20 billion, potentially making it one of the most valuable private companies [4] - The banking consortium's initiative follows other blockchain payment projects, such as JPMorgan's token pilot and HSBC's tokenized deposit service [5][6] Group 5: Strategic Importance - Financial firms view blockchain-based payment systems as crucial for their goals to tokenize traditional assets like stocks and bonds [6] - Standard Chartered warns that stablecoin adoption could lead to over $1 trillion being withdrawn from emerging market banks by 2028 [7]

Core Insights - Citi, the third-largest bank in the US, has strategically invested in BVNK, a London-based stablecoin infrastructure firm, amid clearer regulations and increasing demand for stablecoins among US banks [1][2] - BVNK operates a payments platform facilitating global transactions using stablecoins, with a valuation exceeding $750 million from its previous funding round [2] - The stablecoin market is experiencing significant growth, with nearly $9 trillion in transactions over the past year and a total market cap of $314 billion [4] Company Developments - Citi is expanding its cross-border payments capabilities and targeting digital-only banks and neobanks for stablecoin integration [3] - Citi's CEO has indicated the bank's exploration of issuing its own stablecoin [3] - Other US banks, including JPMorgan and Bank of America, are also entering the stablecoin market with their own blockchain-based solutions [7] Market Trends - The demand for dollar-based stablecoins is projected to increase by $1.4 trillion by 2027, reflecting their expanding role in global finance [5] - Stablecoins are seen as safer, inflation-resistant digital alternatives, with estimates suggesting they could draw around $1 trillion from emerging-market banks in the next three years [5] - The passage of the GENIUS Act has provided regulatory clarity for stablecoins, encouraging more US banks to explore blockchain technology [6]

Core Insights - Bank of New York Mellon Corp. is testing tokenized deposits to modernize its payments infrastructure and expand blockchain use in global finance [1] - The initiative aims to facilitate blockchain-based payments using tokenized versions of traditional deposits [1][3] Group 1: Project Overview - The project supports real-time, instant, and cross-border transactions across BNY Mellon's global network [2] - BNY Mellon's treasury services division processes approximately $2.5 trillion in payments daily [3] Group 2: Technology and Benefits - Tokenized deposits serve as digital representations of cash held at commercial banks, enabling instant transfers and real-time transaction settlements [4] - This technology is expected to make payments cheaper, faster, and available 24/7 [4] Group 3: Industry Context - BNY Mellon's move aligns with growing blockchain adoption among major financial institutions, with JPMorgan and HSBC also launching similar initiatives [5] - Several European banks are exploring fiat-linked stablecoins, indicating a trend towards modernizing the global payments ecosystem [6] Group 4: Regulatory Environment - The acceleration of blockchain adoption in traditional finance is influenced by emerging regulatory clarity in the U.S. and Europe [7]

Core Insights - Bank of New York Mellon (BNY) is exploring tokenized deposits to facilitate client payments using blockchain technology [1][2] - The bank is modernizing its infrastructure, particularly its treasury services, which processes $2.5 trillion in payments daily [2] - Tokenized deposits are seen as a solution to overcome legacy technology constraints, enhancing the movement of deposits and payments within banking ecosystems [3] Group 1: BNY's Initiatives - BNY launched a tokenization project in collaboration with Goldman Sachs to utilize blockchain for tracking ownership of money market funds [3] - The project aims to improve the utility and transferability of existing money market fund shares [4] Group 2: Industry Developments - JPMorgan Chase announced plans to launch a "deposit token" for institutional clients, representing commercial bank money [5] - HSBC expanded its tokenized deposit service to include cross-border transactions, successfully conducting its first U.S. dollar transactions between Hong Kong and Singapore [6]

Core Thesis - JPMorgan Chase & Co. is well-positioned to capitalize on the emerging stablecoin market, providing a regulated alternative to traditional cryptocurrencies, which mitigates speculative risks for investors [2][4]. Group 1: Market Position and Innovations - JPMorgan's recent launch of its deposit token, JPMD, on Coinbase's Base blockchain gives it a first-mover advantage among major U.S. banks, enabling 24/7 settlement and institutional-scale adoption [2]. - Unlike traditional stablecoins, JPMD operates as a regulated deposit token under fractional banking rules, allowing the bank to maintain capital requirements while generating revenue from blockchain-enabled deposits [3]. Group 2: Financial Impact and Regulatory Environment - The broader stablecoin market facilitated $35 trillion in transfers in 2024, surpassing Visa and Mastercard in transaction volume, indicating significant potential for revenue expansion and operational efficiency for JPMorgan [3]. - By issuing stablecoins, TBTF banks can deploy deposits into high-quality liquid assets like U.S. Treasuries, unlocking up to $6.8 trillion in purchasing power, which boosts net interest margins and reduces compliance costs through AI-driven blockchain transparency [4]. Group 3: Historical Performance and Future Outlook - JPMorgan's stock price has appreciated approximately 27% since March 2025, reflecting the bank's strong deposit base, profitable lending model, and resilience during crises [5]. - The stablecoin initiative and favorable regulatory developments, such as the GENIUS Act, enhance JPMorgan's positioning by creating a federal framework that supports regulated bank-issued stablecoins while limiting competition from FinTechs and tech giants [3][4].

Market Trends & Regulatory Landscape - Bitcoin stabilized above $113,000 after a slight dip of approximately 033% [2] - Ether rose above $4,200, while XRP dipped to $2.90 [2] - The Genius Act, a stablecoin regulation bill, was signed into law last month, marking a significant step in US crypto regulation [5][8] - The House passed the Clarity Act market structure bill, which now heads to the Senate [5] - Institutions are showing increased interest in digital assets due to growing regulatory clarity [30][31] JP Morgan's Blockchain Initiatives (Kexus) - JP Morgan's blockchain unit, Kexus, focuses on payments, information, and assets, with a 10-year history in the space and 5 years of live payment products [10][11][12] - Kexus launched a deposit token called JPMD, designed as a digital representation of commercial bank money, primarily targeting institutional clients [17][20] - JP Morgan's blockchain deposit account facilitates 24/7 treasury settlement and liquidity movement, such as from Singapore to New York in 2 minutes [18][19] - JP Morgan is exploring the potential of stablecoins, driven by client needs and regulatory developments like the Genius Act [27][28] - JP Morgan aims to provide institutional clients with convenient access to digital asset markets without fragmenting their liquidity [32]