Strategy Inc.’s (NASDAQ:MSTR) Bitcoin (CRYPTO: BTC) sales create periodic selling pressure but are not the main structural threat to Bitcoin, according to a JP Morgan note published on Thursday.
The Real Threat Is Banks Building Their Own Blockchains
Analysts led by managing director Nikolaos Panigirtzoglou argued the bigger danger comes from financial institutions adopting blockchain technology in ways that bypass public networks entirely.
If tokenization, payments, and settlement move to permissioned infrastructure controlled by banks rather than public chains, the broader crypto ecosystem faces slower activity, lower liquidity, and weaker capital flows over time.
“The more important risk stems from blockchain adoption within traditional finance continuing to develop in ways that bypass public permissionless networks,” the analysts wrote.
Why Institutions Keep Choosing Private Blockchains
JPMorgan said institutional adoption has consistently favored permissioned blockchains because they offer better privacy controls, KYC compliance, clearer governance, and greater regulatory certainty.
The Bank for International Settlements has explicitly warned against using public blockchains for systemically important financial infrastructure, instead promoting permissioned ledgers that combine tokenized central bank money with commercial bank deposits.
Banks are already building their own blockchain infrastructure through tokenized deposits, which are digital versions of regular bank deposits backed by existing regulation.
If these become widely adopted, they reduce the need for stablecoins in institutional payments.
SWIFT’s blockchain initiative and central bank digital currency projects like the digital euro and digital yuan would strengthen that trend further.
Real World Assets May Never Move To Public Chains
The tokenized RWA market sits at around $50 billion, with a meaningful share hosted on Ethereum (CRYPTO: ETH).
JPMorgan said that likely reflects early experimentation rather than the long-term structure.
As institutional adoption grows, issuance, custody, and settlement could increasingly move to private infrastructure. Public blockchains may still handle distribution but become less central to how institutions actually process transactions.
DTCC is already developing tokenization workflows on permissioned infrastructure while only selectively connecting to public networks.
“Permissioned networks anchor the regulated system and public chains are merely used for distribution and connectivity,” the analysts said.
Even The CLARITY Act May Not Fix This
The analysts noted that even if the CLARITY Act passes this year, it may not eliminate these risks.
Regulatory clarity could accelerate bank-issued tokenized deposits, strengthening incumbents while limiting the role of public blockchain stablecoins.
Three scenarios could challenge JPMorgan’s view: a hybrid model where both blockchain types play meaningful roles, stronger stablecoin adoption from favorable regulation, or Bitcoin continuing to trade as digital gold regardless of how value accrues across the broader ecosystem.
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