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JPMorgan makes its first DeFi transaction

JPMorgan makes its first DeFi transaction

created Simon petersNovember 7 2022

Bitcoin hit above $ 21 for the first time since early September as the gap in correlation with tech stocks widened last week. The cryptocurrency started the week under $ 000, dropping briefly below $ 20 on Wednesday, ahead of the $ 500 rally over the weekend. Currently, BTC is trading again just below $ 20.

Meanwhile Ethereum consolidated a move above $ 1 made in late October. The cryptocurrency stayed above resistance levels for most of last week, only briefly dropping on Wednesday. As with bitcoin, there was a rally over the weekend, peaking above $ 500. It is now back in the range just above $ 1.

JPMorgan makes its first DeFi transaction

JPMorgan's Main Investment Bank has announced the first successful cross-border DeFi deal made in the public sector blockchainie. The trade was conducted through the Monetary Authority of Singapore (MAS) pilot program, which explores the possibilities of DeFi in the wider financial ecosystem.

This trade is a turning point for DeFi. The involvement of such large mainstream institutions is no mean feat and highlights the potential applicability across the financial sector. The transaction was carried out on the Ethereum layer-2 network Polygon with a modified version of the protocols Smart contract Aave. The trade involved tokenized Singapore dollars and Japanese yen, with simulated buying and selling of tokenized government bonds.

While a large chunk of the market has been torn apart by the diffusion of price volatility, this is a kind of quiet but very influential background activity. Major institutions have not stopped their cryptocurrency and DeFi plans despite volatility - in some cases they have followed the blow, with price evaluations at more attractive levels.

A new milestone for Ethereum

Founder of Ethereum, Vitalik Buterin, revealed "The Scourge" - a new milestone in Ethereum's development path. Following the recent completion of The Merge, it now includes The Surge, The Scourge, The Verge, The Purge and The Splurge.

As for the new expansion pack The Scourge - Buterin says it's about bringing decentralization back to the platform. An issue developed on the platform where miners who verify online transactions carry out transactions of other users in order to earn from duplicating winning trades.

This was stopped by The Merge, but led to criticism - it is said the network has become too centralized as a result. While the details of the specific activities of The Scourge are limited, it's clear that development leaders are working to combat network criticism and improve some of the core principles.

Santander will limit crypto transactions

Leading UK retail bank Santander said it plans to put customer transaction limits on crypto platforms. The news is disappointing, but there is good intent to try to protect customers from fraud.

This bank's reaction to the cryptocurrency sector is not surprising. While great progress has been made in the UK on cryptocurrency regulation, banks are still on their own to protect consumers in this regard.

From a risk management perspective, you may find that Santander has simply decided that it is easier to completely restrict transactions than to try to collaborate with the sector. This will be resolved by rules that create a framework within which all parties can function. The bank did not actually ban cryptocurrency transactions - it only set financial limits, which is a more balanced response.

The government really needs to tackle the Financial Services and Financial Markets Act to ensure a crypto-coded place in the wider UK financial system.

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About the Author
Simon peters
eToro analyst. A graduate of the Faculty of Mechanical Engineering at Brunel University in London. He is CFA UK Level 4 certified in Investment Management.

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