While traditional finance (tradfi) looks at the cryptography loans, community members have explained how decentralized financial loan protocols (DEFI) can compete with what traditional financial institutions bring to the table.
On Tuesday, Jpmorgan Chase, the largest bank in the United States, would have explored loans directly against cryptographic assets like Bitcoin (BTC) and Ether (ETH), according to the Financial Times. An unidentified source said that the bank could launch the offer from 2026, although the plan is still in its infancy.
With a great tradfi player looking at the cryptography loans, the pressure on the DEFI lenders to stay competitive increases. However, the co-founder of 1Inch, Sergej Kunz, told Cintelegraph that cryptographic loans in Defi had undeniable advantages compared to traditional financial institutions.
Kunz has highlighted the user experience, wider collateral support and the optimization of market -oriented costs like certain DEFI advantages compared to Tradfi.
DEFI supports more collateral options and better costs
“Defi loan platforms offer a simpler and simpler user experience,” Kunz told Cointelegraph. “Unlike tradfi counterparts, they take care of a wider range of collateral options, and their liquidation processes generally occur later than those of Tradfi.”
He added that the Tradfi services generally charge higher costs, while the DEFI platforms could benefit from an optimization of market-oriented costs.
Gadi Chait, head of investments in Xapo Bank, agreed that DEFI and Tradfi will probably serve different audiences, although interest rates could become a competition point.
Chait told Cointtelegraph that if tradfi giants could offer cryptocurrency loans with lower rates, it does not expect rates considerably.
“It is important to remember that DEFI generally has lower costs, which helps compensate for rate differences,” said Chait in Cointelegraph, adding that DEFI and Tradfi are generally used different markets.
Chait also said that if the JPMorgan account base is significant, it represents only a limited part of the total addressable market:
“The crypto loan space is vast, and there is room for several players with different forces.”
Access without authorization remains the DEFI force
While the entry of Tradfi Selle cryptography loans, access without authorization remains the determining advantage of Defi, according to Abdul Rafay Gadit, co-founder and director of the Social Investment Platform Crypto Zignaly.
“Although the main tradfi institutions can currently offer lower loan rates, they do it in closely controlled executives,” said Gadit in Cointelegraph, highlighting the risks of childcare, know the requirements of your customer and your geographic restrictions.
On the other hand, the design of DEFI allows anyone with an internet connection and a portfolio to participate, without any paperwork or central approval.
GADIT said that DEFI should not try to compete alone on interest rates, but should rely on what makes it unique. This includes composability, resistance to censorship and world access without friction.
George Mandres, the main trader of the institutional platform for XBTO digital assets, said that specialization is important.
Mandres told Cointtelegraph that traditional lenders would probably dominate the regulated loan markets for large capitalization assets such as BTC, ETH and Stablecoins.
However, the merchant said that Defi’s Edge lies in his ability to provide access to long -tailed assets and use cases that large institutions do not support:
“In the end, DEFI may have to evolve in two tracks. One for retail, one for institutions.”
In relation: Loans supported by Bitcoin next step – next step – CEO of Xapo Bank
JPMorgan entry “net positive” for crypto
Michael Carbonara, co-founder and CEO of Ibanera, a platform designed to reject traditional finance and Web3 infrastructure, told Cintelelegraph that JPMorgan’s potential entry into cryptographic loans could only be a “net net” for cryptographic space.
Carbonara said that institutional participation tends to provide better liquidity, infrastructure and legitimacy to emerging markets. These could now be extended to digital asset space.
“It acts as a validation of the wider digital asset space,” said Carbonara, stressing that the movement signals the crypto transition to a more mature financial sector.
He said these developments report that traditional financing players are no longer passive observers but are already active in the web3 economy.
“Although it can increase the regulatory and competitive pressure for native cryptography players, increased legitimacy and the effect of the network provided by such participants tend to benefit the ecosystem as a whole,” added Carbonara.
While Jpmorgan Eswing Crypto Lending can be an interesting development, Tom Spiller, a legal crypto expert by Rosenblatt Law, told Cointelegraph that he was “not significant”.
Spiller said JPMorgan “only played with a business line that already has years of history”. He also said that the potential range of products that materializes next year means that they are always subject to breeding – doing so only because others do it – which caused the subprime crisis.
“They are too slow to adapt to changing times,” Spiller told Cointelegraph.
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