Banking giant JPMorgan is reportedly looking to work with a crypto clearinghouse to add liquidity to the market.
Forbes reported the news on Monday, citing a "senior JPMorgan executive," who spoke with the publication "on background." The executive said, "we will fundamentally need a crypto clearinghouse to see that liquidity. Once that exists, banks will move their liquidity to it."
Clearinghouses act as a middleman between buyers and sellers in financial markets. They validate and finalize transactions, ensuring that both buyers and sellers honor their contractual obligations. The JPMorgan executive told Forbes that crypto clearinghouses are needed to avoid "the kind of liquidity problems that trading app Robinhood ran into."
Last month, Robinhood had to limit the buying of stocks such as GameStop, ostensibly due to liquidity issues. Just hours after the restrictions, the firm raised $1 billion from existing investors.
JPMorgan declined to comment to The Block when reached.
JPMorgan's managing director Gary Chan is a "clearing house advisor" for Revolution Populi, which is reportedly raising funds to build a blockchain-based clearinghouse.