JP Morgan - Bitcoin’s Biggest Enemy Now on Board
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Posted 02/06/2020
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JPMorgan, the largest U.S. bank by assets, has been waging a war of words with bitcoin and cryptocurrency for years.
The bitcoin price has swung wildly since JPMorgan chief executive Jamie Dimon called bitcoin a "fraud" in September 2017—rising to around $20,000 per bitcoin before crashing to under $4,000 (twice).
Earlier this month, JPMorgan signed Coinbase and rival bitcoin and crypto exchange Gemini after a lengthy vetting period, it was first reported by the Wall Street Journal.
JPMorgan approved the two bitcoin exchanges' accounts last month and is already processing transactions—potentially signalling the end of the crypto industry's banking woes.
The bitcoin and cryptocurrency community has complained for years that banks including JPMorgan have denied them services and blocked accounts that dealt with crypto businesses.
Meanwhile, it has emerged Jamie Dimon has been hosting secret meetings with Coinbase chief executive Brian Armstrong since 2018, author Jeff Roberts revealed.
"Ironically, Brian Armstrong and Jamie Dimon of JPMorgan—who was the biggest enemy of bitcoin and has p#ssed on it for years—it turns out they were having secret meetings in 2018 at JPMorgan’s headquarters," Roberts told Laura Shin's Unchained podcast.
However, JPMorgan's interest in cryptocurrencies might not extend to bitcoin quite yet.
"We are supportive of cryptocurrencies as long as they are properly controlled and regulated," Umar Farooq, JPMorgan's head of digital treasury services and blockchain, said back in 2017.
JPMorgan launched its answer to bitcoin last year, JPM Coin. Unlike bitcoin, JPM Coin is pegged to the dollar and aimed at speeding up and reducing the costs of global payments.
Meanwhile, some have accused Coinbase's Armstrong as being "sceptical" of bitcoin while working to promote other blockchain networks and cryptocurrencies such as Ethereum.
"I'm sure he would deny it, but it's interesting to me that the CEO of the world's most prominent bitcoin-related company seems so sceptical of bitcoin," said Bloomberg editor and analyst Joe Weisenthal, commenting on a Twitter thread by Armstrong suggesting it might not be bitcoin that pushes the cryptocurrency ecosystem into the mainstream.
Despite JPMorgan's softening attitude toward bitcoin and crypto, the nascent technology is still fighting an uphill battle.
Earlier this year, Treasury Secretary Steven Mnuchin warned "significant" new bitcoin and cryptocurrency regulations are on their way, Minneapolis Federal Reserve President Neel Kashkari branded cryptocurrencies "a giant garbage dumpster," and the Department of Justice called bitcoin mixing "a crime."
Just this week, Goldman Sachs listed five reasons that "cryptocurrencies including bitcoin are not an asset class" in a much-hyped but ultimately disappointing presentation titled "U.S. Economic Outlook and Implications of Current Policies for Inflation, Gold and Bitcoin."
Armstrong’s supposed scepticism, as has been shared by others, likely stems from the belief newer, faster alternatives would prevail. Newer and faster are already there but network effect and market dominance are not. That narrative had some traction if one of the newer faster coins got its dominance before the world needed a currency and financial product alternative. Arguably that time is right now as we see unprecedented monetary debasement prompting more and more people to look for alternatives. New and faster missed the boat. Bitcoin has a market cap of $180 billion. Its allure is that $180 billion is both big and tiny. It’s big in that it commands 65% of the entire crypto space. It is the king with no suitors anywhere near it (ETH is 2nd at just $27 billion). It has futures contracts, it has institutional take up and platforms, it has proven performance over the longest period of time and remains completely decentralised. But as we demonstrated yesterday, in the scheme of all the world’s assets, it is tiny. And that is where the real allure is. When a fraction of those debt blown derivatives look for intrinsic, decentralised value, that same equation of supply, demand and price we spoke of yesterday plays out. You simply cannot just expand the supply of bitcoin quickly. That leaves price as the only other variable….
Ernest Hemingway described going bankrupt as "gradually and then suddenly"—Wall Street's adoption of bitcoin and cryptocurrency could be happening the same way.