Capital is flooding into digital assets at a record pace this year, according to Wall Street bank JPMorgan (JPM), marking a sharp contrast with declining flows into private equity and private credit markets.
JPMorgan estimates that net capital inflows into digital assets have hit $60 billion year-to-date, a nearly 50% jump since the firm’s last update at the end of May, the bank said in a report on Wednesday.
That figure includes crypto fund flows, Chicago Mercantile Exchange (CME) futures activity, and crypto venture funding, and puts 2024 on track to eclipse last year’s record.
“The surge of capital inflows into digital assets over the past couple of months has likely been supported by favorable U.S. regulations,” analysts led by Nikolaos Panigirtzoglou wrote.
Notably, the passage of the GENIUS Act in Congress provided long-awaited regulatory clarity around stablecoins, establishing global standards for dollar-backed tokens and triggering competitive responses abroad, the authors wrote.
China is pressing ahead with its digital yuan rollout, and a yuan-backed stablecoin is now in the works in Hong Kong.
Meanwhile, the CLARITY Act, currently moving through Congress, aims to define whether digital assets are securities or commodities, potentially making the U.S. more attractive for crypto-native companies compared to the EU’s Markets in Crypto-Assets (MiCA) framework, the report said.
This friendlier regulatory climate is fueling a resurgence in both private and public crypto markets.
Crypto venture capital (VC) funding has picked up, while public market interest is growing following Circle’s (CRCL) initial public offering (IPO) and a flurry of new filings with the Securities and Exchange Commission (SEC), the bank noted.
Altcoins are also experiencing renewed investor attention, the report said, and ether (ETH), in particular, has benefited from its central role in decentralized finance (DeFi) and smart contracts, and is increasingly being added to corporate treasuries alongside bitcoin.
Asset managers have begun exploring new altcoin-based crypto exchange-traded funds (ETFs), some with staking features, signaling rising institutional appetite beyond bitcoin (BTC), the report added.
Read more: CLARITY Act Could be a Game Changer for Institutional Adoption of Crypto: Benchmark