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JPMorgan flags private blockchains as the bigger risk to Bitcoin

JPMorgan points to potential structural de-rating if tokenization, payments and settlement shift from public chains to permissioned rails.

Reported · Written up by our desk · Market Structure

JPMorgan analysts warn that the main long-term risk to Bitcoin may come less from trading strategies tied to companies holding the asset, and more from the growth of private, permissioned blockchains that bypass public networks, according to analysis reported by Bitcoin Magazine.

While Strategy’s recent bitcoin sales have raised short-term selling concerns, JPMorgan said the bigger danger is where tokenization, payments and settlement ultimately occur. If more of that activity settles on permissioned rails rather than public chains, the analysts argue the crypto ecosystem could see thinner liquidity, weaker capital flows and slower on-chain volume, with an eventual drag on bitcoin.

The report says institutions have favored permissioned networks for features such as privacy, know-your-customer and anti-money-laundering controls, governance, throughput, legal accountability and regulatory certainty. It argues that this preference creates a competitive problem for public networks like Ethereum.

JPMorgan also cited the Bank for International Settlements, which has warned against using public permissionless chains for systemic financial infrastructure and has pushed for “unified ledgers” that keep tokenized central bank money, bank deposits and assets inside regulated boundaries. The analysts singled out tokenized deposits as a clear use case, noting that in non-transferable forms favored by regulators they could crowd out stablecoins in institutional payments.

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