The bitcoin price has collapsed over the last year, plunging from an all-time high of almost $70,000 per bitcoin to around $20,000. The bitcoin price crash has dragged down the wider crypto market, wiping away around $2 trillion in notional value.
Now, JPMorgan, one of Wall Street’s biggest banks led by outspoken bitcoin and crypto skeptic Jamie Dimon, has completed its first-ever cross-border transaction using blockchain-based decentralized finance (DeFi) in what’s been called “a massive step” for the crypto space.
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This week, JPMorgan completed its first live cross-border transaction on a public blockchain using the ethereum layer-two network Polygon
JPMorgan’s foreign exchange trade of tokenized cash deposits, using the bank’s blockchain division for wholesale payments Onyx, was facilitated by the Monetary Authority of Singapore’s (MAS) as part of a pilot program to “explore potential DeFi applications in wholesale funding markets.”
Developers of the DeFi lending protocol aave posted to Twitter that the pilot is a “huge milestone” for the technology, representing “a massive step towards bridging traditional financial assets into DeFi.”
“Crypto enthusiasts have never doubted that innovation coming out of this space— especially innovation in DeFi—has the potential to make international banking cheaper, faster, and more efficient,” Mikkel Morch, chairman at the digital asset hedge fund ARK36, said in emailed comments. “Now, the giants of traditional finance are starting to confirm that by using DeFi protocols as a viable solution for streamlining international monetary trade.”
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JPMorgan’s interest in crypto, blockchain and DeFi is somewhat at odds with the bank’s chief executive Jamie Dimon, who called crypto a “decentralized Ponzi scheme” in September.
“It’s a bit surprising to see JP Morgan at the forefront of this trend given how critical the bank’s CEO has been of the cryptocurrency space. But as the old adage goes, actions speak louder than words,” Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, said in an emailed note.
In the past, cryptocurrencies have sometimes been unfairly called a solution in search of a problem. But let’s make no mistake—to see a bank like JPMorgan come and make use of open-source solutions developed by cryptocurrency companies is not only a validation of DeFi as a technology but also a vindication of crypto as an industry.