JP Morgan Chase became the first bank in the United States to enter into the metaverse. The bank launched an “Onyx lounge” in the metaverse, which is a virtual lounge in the blockchain-based world of Decentraland.
In the Decentraland, users have the ability to buy virtual land in the form of NFTs and make purchases within the ecosystem using cryptocurrencies backed by the Ethereum blockchain. JP Morgan is the largest bank in the United States, it has the ability to shift market sentiment towards the cryptocurrency ecosystem through the steps it takes. So, the launch of the Onyx lounge is a pivotal step in many ways.
Let us understand what the bank aims to achieve with this move and what is it that makes the Onyx lounge quite a quantifiable development in the blockchain space.
What’s there in the Onyx Lounge?
Many users have reported a review of their experience in the Onyx lounge. One of the major attractions of the virtual world is a free roaming tiger lurking around the space and a picture of the JP Morgan CEO Jamie Dimon.
JP Morgan’s lounge lies in the Metajuku mall, which is a virtual version of Tokyo’s Harajuku shopping district
Along with the launch of their version of the metaverse, the bank launched a report citing the opportunities and possibilities they are exploring in the metaverse. The paper released by the bank clearly mentions how JP Morgan as a bank can efficiently operate in the metaverse, as efficiently it operates in the real world. This is because the virtual worlds tend to have their own population, demographics, GDP, and currencies in place.
It mentions that similar to the bank’s physical role as a facilitator of cross-border transactions, foreign exchange, financial assets creation, trading, and safekeeping, its virtual avatar can conduct all these operations as well.
The bank wrote in its paper “When you think about the economics of the metaverse — or metanomics — there are opportunities in almost every market area. We are not here to suggest the metaverse, as we know it today, will take over all human interactions, but rather, to explore the many exciting opportunities it presents for consumers and brands alike.”
Christine Moy, who heads the cryptocurrency and metaverse operations at JP Morgan said in a statement, “There is a lot of client interest to learn more about the metaverse. We put together our white paper to help clients cut through the noise and highlight what the current reality is, and what needs to be built next in technology, commercial infrastructure, privacy/identity, and workforce, in order to maximize the full potential of our lives in the metaverse.”
An Opportunity for Businesses?
The report released by JP Morgan stresses how businesses and brands can come on board and create their own versions of NFTs or metaverse. The metaverse has a market opportunity worth $1 trillion in yearly revenue as Web3 gathers pace and creators join the force to monetize their work.
“This democratic ownership economy coupled with the possibility of interoperability could unlock immense economic opportunities, whereby digital goods and services are no longer captive to a singular gaming platform or brand,” the report by JP Morgan further states. The bank mentions names such as Nike, Adidas, Hulu, Walmart, and more as the first movers in the blockchain ecosystem.
In the six months of 2021, the average price of a virtual piece of land in the metaverse rose to $12,000 across The Sandbox, Decentraland, Cryptovoxels, and Somnium Space from $6,000.
About Onyx: What does it involve?
Let us look at Onyx a bit more closely now.
According to the official website by JP Morgan, Onyx is touted to be at the “forefront of a major shift in the financial services industry.”
Onyx is a platform providing users the ability to conduct wholesale payment transactions, helping to re-architect the way that money, information, and assets are moving- around the world.
The platform has been developed to accelerate trade and commerce flows, facilitating payments and correspondent banking, providing insights into liquidity, and helping businesses automate clearing statements and resolution of payments-related information inquiries on a global scale.
Onyx offers a list of services in the blockchain ecosystem.
- Liink: It is a platform that allows businesses to redefine the way they exchange payment-related information quickly and securely, hence further reducing costs and delays. The functionalities include payment conversion confirmation, streamlining payment-related payment inquiries, validating account information, and streamlining check processing.
- Coin Systems: The Coin Systems by JP Morgan focuses on digital solutions for the transfer and clearing of money, which can be applied to a variety of systems including multi-bank and multi-currency ledgers.
- Blockchain Launch: Blockchain Launch is a team focusing on developing and commercializing applications, networks, and applications shared platform technology. It facilitates assistance towards businesses to create a blockchain solution pertaining to their use case and pain points.
Banks in the Crypto Space
It wasn’t until July 2020 that banks in the United States had permission to hold cryptocurrencies with themselves. Post July 2020, the Office of the Comptroller of the Currency granted permission to banks in the United States to hold cryptocurrencies and explore operations in the space.
In July 2021, JP Morgan took the baton as the first bank in the United States to allow its financial advisors to give all its wealth-management clients access to cryptocurrency funds. Adding to the development was the fact that JP Morgan was offering its exclusive bunch of customers, access to an in-house passively managed bitcoin fund. This was in partnership with New York Digital Investment Group.
Similarly, Citibank announced that to strengthen its position in the blockchain space, it’ll add 100 more people to its blockchain and digital assets division. Last year Citigroup launched Digital Assets Group, an arm of the bank focusing on cryptocurrencies, central bank digital currencies, NFTs, and stablecoins.
Key Takeaways: What lies ahead for Metaverse?
While the launch of the Onyx Lounge seems like a welcome move from both- investors’ and businesses’ points of view, there’s a lot that the metaverse ecosystem needs.
The entry of JP Morgan in the metaverse can turn tides for how the other bigger banks and corporations perceive the metaverse. While Facebook’s rebranding as ‘Meta’ brought an ample amount of attention towards the virtual world, the next wave of spotlights and conversations will depend on how central banks, companies, and individual investors look at the metaverse.
Although, one thing that seems certain is that as more big fishes enter space, there are chances that make regulations by the government likely. Is the blockchain ecosystem ready for that? Once again, depends on how the bigger players adapt to it.
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