JPMorgan believes the United States strategic crypto reserve will not pass through Congress given its current less than 50% approval chance. The bank also believes congressional action limits the reserve idea and that adding lesser-known coins like XRP, Solana, and Cardano would increase instability.
JPMorgan managing director of global market strategy, Nikolaos Panigirtzoglou, explained in a Wednesday report that congressional approval for the initiative would nonetheless be difficult to secure. Although the concept of a national crypto reserve has political momentum, it’s unlikely to be passed, he noted.
JPMorgan Warns of Volatility in Smaller Crypto Tokens
The Block quoted Panigirtzoglou:
“We don’t believe an approval of a U.S. strategic crypto reserve is the most likely scenario (assuming congressional approval would be needed). So the chance is less than 50% in our mind.”
However, he also maintained that even if such a reserve were sanctioned, its scope would most likely be restricted to bitcoin and ethereum because of risk and volatility fears over smaller tokens.
The report argues that if ever a U.S. strategic crypto reserve is formalized, it shall be difficult to include smaller tokens that are not bitcoin and ethereum, if so. However, he added, This is the inclusion of such tokens, which further raises more questions about risk and volatility.
Crypto Reserve Proposal Faces Major Political Hurdles
This skepticism comes after crypto markets saw an initial rise when former President Donald Trump mentioned XRP, SOL and ADA alongside bitcoin and ethereum being included in a potential U.S. crypto reserve.
But enthusiasm soon waned, as analysts pointed out that congressional approval would be difficult and that adding more volatile assets to a government created reserve pose a unachievable challenge.
Along with JPMorgan, the report also noted that there have been failed similar proposals at the state level as lawmakers in several U.S. states have turned down bitcoin reserve plans because of their fear of price swings and state regulatory uncertainty. Still, global central banks are largely hesitant in becoming the first to adopt cryptocurrencies as official reserves, the bank said.
Regulatory Signals Expected at White House Summit
Trump’s plan made on March 2 aligns with his bigger plan to make the US a crypto economy leader on the global stage. White House AI and Crypto Czar David Sacks confirmed that it is included in an executive order to advance the country’s digital asset strategy.
The first virtual White House crypto summit is set to be held March 7, and further discussions on the matter are expected.
There will be a close eye on upcoming summit for regulatory signals and political manouvering over the future of cryptocurrency adoption in U.S. as JPMorgan’s report cast doubt on approval of the reserve.
Conclusion
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The White House will host its initial crypto conference on March 7 and dialogue about organizing the US strategic digital money reserve will carry on. Based on their views JPMorgan remains doubtful about the proposal facing government interventions too. The question about small crypto tokens stays open because people still doubt the market stability risks.
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FAQs
1. What is the U.S. strategic crypto reserve?
A proposed government-held reserve including BTC, ETH, XRP, SOL, and ADA.
2. Why is JPMorgan skeptical about approval?
They cite congressional hurdles and concerns over volatility.
3. How did markets react to Trump’s proposal?
Crypto surged initially but dropped due to skepticism.
4. When will discussions on the reserve happen?
At the White House crypto summit on March 7.
Glossary Of Key Terms
Crypto Reserve – A proposed U.S. government-held crypto fund.
Congressional Approval – Required authorization from U.S. lawmakers.
Volatility – Rapid price swings in crypto markets.
Altcoins – Cryptos other than bitcoin and ethereum.
Crypto Summit – White House meeting on crypto policies.
Reference
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