JPMorgan: Bitcoin’s main risk is private, permissioned blockchains

JPMorgan analysts, led by managing director Nikolaos Panigirtzoglou, wrote in a report that the principal structural risk to bitcoin stems from blockchain adoption that bypasses public, permissionless networks rather than recent bitcoin sales by Strategy or its BTC monetization program.

The analysts point to institutional preferences for permissioned blockchains. They list stronger privacy controls, know-your-customer and anti-money-laundering features, defined governance, higher transaction throughput, clearer legal accountability and greater regulatory certainty as reasons banks and regulated firms favor private ledgers.

The Bank for International Settlements has advised against using public permissionless networks for systemically important financial infrastructure and has promoted permissioned unified ledgers that can combine tokenized central bank money, commercial bank deposits and tokenized assets within regulated frameworks.

JPMorgan highlights tokenized deposits as a specific example. Tokenized deposits are digital representations of bank deposits that remain backed by existing banking rules, deposit insurance and customer relationships. If regulators favor non-transferable forms, those instruments could reduce the need for stablecoins in institutional payments and settlement. The report also notes industry work such as SWIFT’s blockchain initiative and central bank digital currency projects, including the digital euro and the digital yuan, as developments that could strengthen regulated alternatives to public stablecoins.

Real-world asset tokenization is estimated at about $50 billion, with a notable share currently issued on Ethereum. JPMorgan characterizes that presence as early experimentation rather than a signal of long-term market structure. The analysts expect that as issuance, custody, settlement and lifecycle management scale up, those functions may move to private or permissioned infrastructure that better fits institutional requirements for identity, confidentiality, governance and operational resilience.

The report questions whether settlement on public blockchains is always the most efficient model for regulated institutions. Public networks allow atomic, real-time settlement, but deferred and netted settlement can lower liquidity needs and improve capital efficiency in traditional bank operations.

JPMorgan cites industry examples: the Depository Trust & Clearing Corporation is developing tokenization workflows on permissioned systems while exploring selective links to public networks and has piloted tokenized U.S. Treasuries using ComposerX and the Canton Network. A regulated platform has issued tokenized assets on Solana and Avalanche with eligibility controls.

The analysts wrote, “We do not see Strategy as the main structural threat to bitcoin,” and added, “Permissioned networks anchor the regulated system and public chains are merely used for distribution and connectivity.” They noted the Clarity Act, if enacted, might bring regulatory clarity yet also promote bank-issued tokenized deposits. The report lists scenarios that could alter its view, including a hybrid model where public and private chains both handle important functions, stronger stablecoin adoption supported by favorable regulation, or bitcoin maintaining its role as a store of value.