On Wednesday (November 18), JPMorgan Chase Chairman and CEO Jamie Dimon made some interesting comments about blockchain technology and Bitcoin at The New York Times’ DealBook conference.
Dimon’s comments were delivered during an interview with CNBC’s Andrew Ross Sorkin at this year’s online summit (November 17-18, 2020).
But before we examine some of Dimon’s most interesting comments, it is worth pointing out that JPMorgan Chase’s stance on cryptocurrency has softened in the past couple of years.
Jamie Dimon, JP Morgan’s Chairman and CEO, has long been a fan of blockchain technology but not cryptocurrencies. In fact, he called Bitcoin a “fraud” as early as September 2017.
According to a report by Bloomberg, on 13 September 2017, after calling Bitcoin “a fraud”, Dimon went on to say that Bitcoin was “worse than tulip bulbs.” And if a JPMorgan trader began trading in Bitcoin, the J.P. Morgan CEO said that he would “fire them in a second.”
He went on to say that:
“If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than U.S. dollars. So there may be a market for that, but it’d be a limited market.”
On January 2018, in an interview with FOX Business’s Maria Bartiromo, Dimon said that he regretted his previous comments about Bitcoin, and expressed his faith in blockchain technology: “The blockchain is real. You can have crypto yen and dollars and stuff like that. ICO’s you have to look at individually. The bitcoin to me was always what the governments are gonna feel about bitcoin as it gets really big, and I just have a different opinion than other people. I’m not interested that much in the subject at all.”
In an interview with the Harvard Business Review (July–August 2018 Issue), here is what Dimon had to say about crypto: “I probably shouldn’t say any more about cryptocurrency. But it’s not the same as gold or fiat currencies. Those are supported by law, police, courts. They’re not replicable, and there are strictures on them. Blockchain, on the other hand, is real. We’re testing it and will use it for a whole lot of things.”
Then, on 14 February 2019, CNBC reported that JP Morgan had created its own stablecoin — JPM Coin — “a digital token that will be used to instantly settle transactions between clients of its wholesale payments business.”
On February 21 2020, Bloomberg reported that the bank’s Global Research team had released its annual “J.P. Morgan Perspectives” report; this year’s report was titled “Blockchain, digital currency and cryptocurrency: Moving into the mainstream?”.
Here are a few interesting highlights from what the report’s Executive Summary had to say about distributed ledger and blockchain technologies:
- “While blockchain technology has not yet emerged into the mainstream, it has moved beyond experimentation and use in payments, with stock exchanges embracing the efficiency around settlement/clearing and collateral management.”
- “Trade Finance and Payments blockchain solutions offer the most incremental efficiencies in the banking sector relative to other use cases, but widespread implementation is at least three to five years away.”
- “We see the long-term potential for Distributed Ledger Technology (DLT) to transform banks’ business models by providing efficient and resilient information transfer and storage once scale has been achieved…”
- “The crypto market continues to mature with the increased participation by financial institutions and the introduction of new contracts on regulated exchanges.”
And on October 3, Nikolaos Panigirtzoglou, a Managing Director at J.P. Morgan who works on Global Market Strategy, published a report that talked about the long-term potential of Bitcoin.
Here are a few highlights from this report:
- “… Bitcoin could compete more intensely with gold as an ‘alternative’ currency over the coming years given that millennials will become over time a more important component of investors’ universe.”
- “… given how big is the financial investment into gold at the moment, a crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term.”
- “… the market cap of bitcoin would have to rise 10 times from here to match the total private sector investment to gold via ETFs or bars and coins.”
- “Millennials and corporates endorsement of bitcoin have also induced greater interest by institutional investors as evidenced by the spike in activity across both bitcoin futures and options at CME, and that was before PayPal’s endorsement this week.”
As Daniel Tapiero noted on Twitter, this report seems like the most bullish analysis of Bitcoin that J.P. Morgan has ever published:
On State of U.S. Economy and Need for Fiscal Stimulus
“The word ‘unprecedented’ is used properly for one of the rare times. It was the biggest downturn ever in two months, the biggest upturn ever in three months, and we’re kind of in this phase now we don’t really know it’s going to continue to get better, get worse, and thank God we have these vaccines coming…
“We’re still in the middle of Covid. We have to get through it. We need to help the unemployed in some of these smaller businesses, in particular, get through to April and May… to maximize growth and jobs…
“We need some of that fiscal stimulus… I know we have this big the big debate: is it $2.2 trillion, $1.5 trillion? You got to be kidding me. I mean, just split the baby, and move on. I mean this this is childish behavior on the part of our politicians. We need to help the citizens of America.”
Is There a Market Bubble?
“The market is always wrong and always right.
“So to give you some big numbers, I think the value all securities in the world is like $275 trillion.The central banks of the world did more than $10 trillion of QE and fiscal stimulus in the world was more than $10 trillion. That’s a huge amount that filters into spending and investing and stuff like that, clearly elevates asset prices, even though it’s hard for me to say which ones… And the thing you got to always understand the stock market is it is a forecast of the future but it doesn’t know the future.
“You have to understand — that amount of fiscal monetary stimulation has an effect on asset prices, and so there will be a counter-effect if they have to do the reverse, and they might one day have to do that.”
On Blockchain Technology and Bitcoin
“I don’t know if it changed my mind. We use the blockchain. We have the JPM Coin, which is a dollar-backed blockchain… We are a believer in that.
“We’re a believer in cryptocurrency properly regulated and properly backed.
“Bitcoin is kind of different, and that’s not my cup of tea, and I don’t want to make news in this particular thing.
“I’m not really interested in Bitcoin. I’m interested in properly structured AML or KYC, helping people do things safely. The blockchain itself will be critical to letting people move money around the world cheaper… that will aptly be critical, and we’re at the forefront of that. We have always supported the blockchain. It was never part of the Bitcoin comment…
“My experience with the government is that they could regulate whatever they want when they feel like it, and you know bitcoin is worth $200 billion or something like that. If it gets bigger and bigger and bigger, it will be regulated. And, by the way, around the world, it’s already started to happen, and doesn’t mean you can’t buy yourself Bitcoin out there.
“[There are] a lot of very smart people who think that $200 billion will be worth more than gold, you know appreciate more than gold and the U.S. dollar and U.S. Treasuries. Let them do that. That’s just not my cup of tea.”
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