2022 Could Be The Year Of Financial Tokenization: JPMorgan

Even as nations contemplate regulation and even bans on cryptocurrency, 2022 could turn out to be the year of financial tokenization, according to a report published by JPMorgan Friday.

Kenneth Worthington, the analyst behind the report, sees the cryptocurrency market turn increasingly relevant to financial services.

If 2021 was the year of non-fungible tokens (NFTs), 2022 could be the year of financial tokenization, says the report on the outlook for crypto markets. In the report, Worthington noted that applications from crypto have just begun and 2022 will see greater use of NFTs tokenization and Web3.

JPMorgan sees “the tokenization and fractionalization as holding particularly large promise as transactions speeds in crypto become more competitive with trad-fi networks,” the analyst said.

According to the analyst, the development of crypto technology will continue, driven by the scaling of Layer-1 and the introduction and growth of Layer-2. He added that the introduction of Layer-2 and Ethereum's merge will speed up transactions and could significantly cut energy consumption.

Further, the JPMorgan analyst noted that Coinbase will continue being a leading exchange to buy and sell tokens.

In November, the global investment bank had renewed its prediction for Bitcoin and had said that the top coin will hit the $146,000 mark in the long term. At present, Bitcoin is tumbling and hovering around $42K.

Despite the prediction, JPMorgan CEO Jamie Dimon remains skeptical of cryptocurrency and repeatedly warns about investing, especially in Bitcoin.

Dimon's warnings about investing in crypto are echoed by governments and central banks across the world. While regulators in the U.S are expected to come up with clear guidelines on crypto this year, China, the world's second-largest economy, has imposed a blanket ban on mining and trading in cryptocurrencies.

Even nations that turned crypto hubs following the Chinese ban — Iran and Kosovo — have imposed temporary bans on crypto mining over energy concerns.