In recent years, the financial market has witnessed increasing competition between traditional financial institutions and crypto companies in the blockchain technology space. This article explores the strategies of two key players: JP Morgan and Circle.
Competition for Blockchain Financial Infrastructure
Blockchain technology is becoming the new foundation for global financial infrastructure. Traditional financial institutions and crypto-native companies are competing for leadership in the next-generation financial systems. JP Morgan integrates blockchain into existing financial systems to enhance efficiency. Circle, on the other hand, builds new financial infrastructure on blockchain, offering alternatives to existing structures. The current competitive landscape is significantly different from past approaches, where the focus was solely on improving user experience in the limited financial services.
JP Morgan: Building Blockchain on Traditional Finance
JP Morgan has trademarked a deposit token called 'JPMD' and began pilot operations with deposit tokens on a public blockchain. This step marks a significant shift in approach where traditional financial institutions start providing financial services directly on the public blockchain. JPMD combines characteristics of digital assets and traditional deposits, giving users the ability to exchange tokens for actual dollars at a 1:1 ratio. This token offers higher protection and opportunities for income generation compared to traditional stablecoins.
Circle: Creating Native Finance on Blockchain
Circle has established itself as a key player in on-chain finance through its stablecoin USDC, which is pegged to the dollar. However, Circle's business structure faces constraints, as BNY Mellon holds USDC reserves, and BlackRock manages asset operations. In response to these limitations, Circle has applied for the establishment of a national trust bank, which may allow the company to manage its operations and reserves more effectively. This move represents a strategic step that can help Circle strengthen control over its financial infrastructure.
The competition in blockchain finance between traditional and new players creates new opportunities while also posing risks. The success of this competition depends on the ability to recognize one's strengths and find a balance between technology and institutions.
