“Cryptocurrencies are the face of blockchain,” along with “cryptocurrencies are here to stay,” seems to be the verdict of a JPMorgan Chase internal report, obtained by Coindesk.
The report, entitled "Decrypting Cryptocurrencies: Technology, Applications and Challenges" and dated Feb. 9, was drafted by the bank's Global Research unit, and explores a range of subjects related to cryptocurrency and blockchain, notably exploring the implications for investors, financial firms and central banks, among others.
Perhaps most notably, the report states, “If past returns, volatilities and correlations persist, [cryptocurrencies] could potentially have a role in diversifying one's global bond and equity portfolio. But in our view, that is a big if given the astronomic returns and volatilities of the past few years.”
The authors also have a positive view on blockchain as a technology: “The proposed uses a distributed ledger in the financial sector are likely to be based on known participants defined in advance, with appropriate KYC/AML (Know Your Customer/Anti-Money Laundering) documentation with tightly authorized access. Consequently, we believe that distributed ledger technology has the potential to offer regulators greater degrees of transparency, higher levels of resiliency and shorter settlement times, reducing counterparty and market risk.”
The report also analyzes the general problem of anonymity: “On the one hand, privacy has come to be seen as an implicit constitutional right, and that may extend to monetary transactions. On the other hand, there are several laws on the books intended to prevent the financial system from being used to launder money or finance terrorism and other activities.”
Less than two weeks ago, JPMorgan, among others, said they would be halting purchases of Bitcoin and other cryptocurrencies on their credit cards.