Private Blockchains Are Bigger Bitcoin Risk Than Strategy BTC Sales, JPMorgan

JPMorgan analysts have stated that Bitcoin’s main long-term risk may not come from Strategy’s Bitcoin sales, but from banks and large institutions adopting private blockchain systems that do not rely on public crypto networks or tokens.

In a note to clients, analysts led by Nikolaos Panigirtzoulos suggested that Strategy’s Bitcoin sales could introduce periodic selling pressure, but they did not view the company as the primary structural threat for Bitcoin. Strategy holds about 4% of all bitcoins in circulation, and its recent Bitcoin Monetization Program has sparked debate about corporate treasury risk. However, JPMorgan said those sales were “avoidable” and not a primary concern.

The bigger danger, according to the analysts, is the traditional finance sector’s adoption of blockchain technology outside of public permissionless networks like Bitcoin and Ethereum. They pointed to tokenization and payment/settlement processes moving toward “permissioned systems” run by banks, clearing houses, and regulated market operators.

JPMorgan cited its own blockchain platform, Kinexys, as an example of institutional usage not on public networks. The permissioned rail has facilitated over $4 trillion in cumulative transaction volume. The analysts argued that private blockchains are preferred by banks because they provide identity checks, privacy controls, governance, legal accountability, and regulatory certainty.

Tokenized deposits are another area identified as a possible challenge for public blockchain-based stablecoins. These deposits are bank money on blockchain-like platforms, bound by existing banking regulations, deposit security, and customer interactions. The analysts stated that more tokenized deposits could mean less use of stablecoins for institutional payments and settlement. Central bank digital currency projects and SWIFT’s blockchain efforts could also enable regulated options.

The note also raised questions about the direction of institutional capital in the current real-world asset tokenization market, valued at approximately $50 billion. At this point, the use of Ethereum may be “early experimentation” rather than a permanent model.

Regarding the CLARITY Act, JPMorgan analysts said that while it could offer more clarity on digital asset rules, it may not address Bitcoin’s broader structural issues. Regulatory clarity could help banks issue tokenized deposits faster. The analysts wrote that permissioned networks can set the framework for regulated finance, while public chains may be used primarily for distribution, restricted trading, and connectivity. This perspective questions whether public blockchain will fully realize institutional adoption.

JPMorgan said its outlook could change if public and private chains develop side by side, stablecoins grow under clearer rules, or Bitcoin continues to trade mainly as digital gold.

Source: https://coingape.com/private-blockchains-are-bigger-bitcoin-risk-than-strategy-btc-sales-jpmorgan/