From the market point of view of the Crypto lending market as traditional finance (tradfi), community members, as per their choice, can compete decentralized finance (Defi) borrowed protocols, which can compete with mainstream financial institutions.
According to the Financial Times, on Tuesday, the United States’s largest bank, JP Morgan Chase was reported to lend directly against crypto assets such as Bitcoin (BTC) and Ether (ETH). An unnamed source said that the bank may start offering as soon as 2026, although the plan is still in the initial stages.
The pressure on DEFI lenders, with a prominent tradefi player, is increasing the pressure on the Crypto Lending Market. However, 1-inch co-founder Sergez Kunj told Cointelagraph that Crypto Lending has undisputed benefits on traditional finance institutions in Defee.
Kunj highlighted user experience, comprehensive collateral support and market-operated fee optimization, as DEFI has some advantages on trade.
Defi supports more collateral options and better fees
“The Defi Lending Platforms provide a simple and more direct user experience,” Kunaj told Contelegraph. “Unlike tradfi counterparts, they support a wide range of collateral options, and their liquidation process usually occurs in tradefit later than them.”
He said that tradfi services usually charge high fees, while Defi platforms may benefit from market-powered fees optimization.
Gadi Chait, head of investment in XAPO bank, agreed that Defi and Tradfi would possibly serve various audiences, although interest rates could become a point of competition.
Chait told cointelegraph that while Tradfi legends can offer crypto-cololetral loans with low rates, he does not expect the rates to vary dramatically.
“It is important to remember that DEFI usually features low fees, which helps to offset any rate difference,” Chat told the coinlagraph, saying that DEFIs and trades usually serve various markets.
Chait also said that while JP Morgan’s account base is important, it only represents a limited part of the total addressable market.
“Crypto Lending Space is huge, and place for many players with different strengths,” said Chait.
Permitted access to deafi remains the strength
According to Abdul Rafa Gadit, co-founder and Chief Financial Officer of Social Crypto Investment Platform Zignal, Crypto lending entry of Tradefi’s Crypto is protecting the defined benefit of the permitted access to Defee.
“While major tradfi institutes can currently offer low lending rates, they do so tightly within the controlled structure,” Gadit told cointelegraph, pointing to custodial risks, stringing your customer requirements and geographical restrictions.
In contrast, the design of the defi allows anyone to participate with internet connection and a wallet, without any paperwork or centralized approval.
Gadit said that Defee should not attempt to compete on interest rates alone, but one who makes it unique should be bent over it. This includes compositeness, sensorship resistance and global access without friction.
George Mandresh, senior businessman at the institutional digital-asset platform XBTO, said that expertise is important.
Mandres told Cointelegraph that traditional lenders would dominate the markets regulated for high-cap assets such as BTC, ETH and Stabelcoin.
However, the businessman stated that Defee’s growth lies in providing access to long-talked assets and using cases that are unlikely to support large institutions.
“Ultimately, Defee may need to be developed in two tracks. For one retail, for an institution,” Mandres said.
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JP Morgan Entry “Net Positive” for Crypto
A platform designed to bridge the traditional finance and web 3 infrastructure, Michael Carbonra, co-founder and CEO of Ibanara, said that JP Morgan’s possible entry in Crypto Landing can only be “pure positive” for Crypto Space.
Carbonra said that institutional participation motivates better liquidity, infrastructure and validity to emerging markets. These can now be extended to digital asset space.
“This acts as a verification of the broader digital asset location,” said that the step indicates the infection of the crypto in a more mature financial sector, stressing that the step.
He said that these developments indicate that traditional finance players are no longer passive observers, but are already an active partner in the web 3 economy.
“While Carbonra said,” While it can increase regulatory and competitive pressure for native crypto players, the validity and network effects brought by entry is to benefit the ecosystem as a whole. “
While JP Morgan can have an interesting growth of Crypto Lending, Tom Spiler, a legal crypto expert at Rousnbat Law, said it is “not important.”
Spiler said that JP Morgan is only “being with a commercial line which is already worth history.” He also said that next year a possible product line means that they are still prone to manipulation – just because others are doing so – which was brought to the subprime crisis.
“They are very slow to be favorable to the changing times,” Spiler told cointelegraph.
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