Positive U.S. Regulatory Environment More Conducive for Crypto Corporate Activity: JPMorgan

Expectations of a more benign regulatory environment in the U.S. is leading to an increase in the number of crypto companies looking to go public and an uplift in venture capital (VC) funding, investment bank JPMorgan (JPM) said in a research report Wednesday.

The GENIUS Act’s progress in the Senate has become a “key factor in anticipating a clearer and more supportive regulatory environment,” analysts led by Nikolaos Panigirtzoglou wrote.

“The anticipation of such a U.S. regulatory environment is conducive to crypto corporate activity such as IPOs and VC funding,” the authors wrote.

The Senate’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act mandates federal regulation for stablecoins with a market cap of over $10 billion with the potential for state regulation if it aligns with federal rules.

Stablecoins are cryptocurrencies whose value is tied to another asset, such as the U.S. dollar or gold. They play a major role in cryptocurrency markets and are also used to transfer money internationally.

The bank noted that the number of crypto IPOs so far this year matches the pace of offerings seen in the bull market of 2021.

Press reports suggest that more crypto companies, including Ripple, Kraken, Consenys and CoinDesk’s owner Bullish are getting ready to IPO this year, the report said.

Venture capital funding is also on the rise, and has exceeded levels seen in 2023/24, on an annualized basis, the bank said.

IPOs give crypto investors a way to diversify their digital asset exposure beyond just bitcoin

and ether

, the two largest cryptocurrencies by market cap. It means they can take advantage of opportunities in areas such as blockchain infrastructure, payments and settlement, custody and tokenization, the report added.