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JPMorgan has questioned the possibility of a U.S. strategic cryptocurrency reserve being approved, putting the chances at below 50%. The banking giant cites congressional challenges and fears over the volatility of some digital assets as major barriers to adoption.
The Challenges of a Crypto Reserve
The concept of a strategic crypto reserve is finding favor, with proponents claiming it would serve to make the U.S. financial system stronger. But JPMorgan strategists think that obtaining congressional support would prove to be challenging.
Nikolaos Panigirtzoglou, a JPMorgan Managing Director, said:
“We don’t think an approval of a U.S. strategic crypto reserve is most probable (assuming congressional approval would be required). So the probability is below 50% in our opinion.”
High Volatility and Risk in Crypto
One of the primary concerns is the addition of cryptocurrencies other than Bitcoin (BTC) and Ethereum (ETH). Although these two are the most recognized and utilized, other tokens like XRP, Solana (SOL), and Cardano (ADA) also carry extra risks with their greater volatility.
Panigirtzoglou also added:
“If there is a future approval of a U.S. strategic crypto reserve, it will be challenging to include smaller coins beyond Bitcoin and Ethereum since. adding such tokens would increase issues related to risk and volatility.”
Global Hesitation on Crypto Reserves
The doubts over an American crypto reserve are a reflection of worldwide reservations about taking up cryptocurrencies as state reserves. States like Singapore and Switzerland have shown reluctance to introduce digital currencies to their official reserves on grounds of stability and sustainability in the long run.
Similarly, earlier attempts to establish state-level Bitcoin reserves in America, in states like Montana and Wyoming, have made little headway due to these same reasons.
The Future of Crypto in U.S. Reserves
While there is increasing interest in digital assets, JPMorgan’s vision indicates that regulatory and financial stability issues will continue to be significant hurdles. Bitcoin and Ethereum could have a stronger chance of being part of future reserve considerations, but the future for other cryptocurrencies is not yet clear.
Would you like to see more breakdown on how crypto might integrate into national reserves? Let us know in the comments!
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