Bangkok Post

Bitcoin a ‘fraud’, says JPMorgan chief

Traders who bet on currency to be fired

- DAVID HENRY ANNA IRRERA

NEW YORK: Bitcoin “is a fraud and will blow up’’, Jamie Dimon, chief executive officer of JPMorgan Chase & Co, said on Tuesday.

Speaking at a bank investor conference in New York, he said, “The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.”

Dimon said that if any JPMorgan traders were trading the crypto-currency, “I would fire them in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous.”

His comments come as the bitcoin, a virtual currency not backed by any government, has more than quadrupled in value since December to more than $4,100.

Bitcoin is a digital currency that enables individual­s to transfer value to each other and pay for goods and services bypassing banks and the mainstream financial system.

While banks have largely steered clear of bitcoin since it emerged following the financial crisis, the virtual currency has a range of people who support it, including technololg­y enthusiast­s, liberteria­ns skeptical of government monetary policy and speculator­s attracted by its price swings.

“Like it or not, people want exposure to bitcoin,” Edward Tilly, chairman and chief executive officer of exchange group CBOE Holdings Inc, said at the same conference.

CBOE has applied with US regulators to launch a bitcoin futures contract and a bitcoin exchange traded fund on its venues.

Any good trade is started with a difference of opinion, Tilly added. “So Jamie can be on the short side and the issuers and those trading in physical can be on the long side, and it sounds like we have a great trade.”

Dimon may also be on the other side of another bitcoin trade closer to home.

At another conference about two hours later, Dimon said that one of his daughters had bought some bitcoin.

“It went up and she thinks she’s a genius now,” he said at the CNBC Institutio­nal Investor Delivering Alpha Conference.

Banks and other financial institutio­ns have been concerned over bitcoin’s early associatio­n with online crime and money laundering.

The supply of bitcoin is meant to be limited to 21 million, but there are clones of the virtual currency in circulatio­n which have made the market for it more volatile.

“It is worse than tulips bulbs,” Dimon said, referring to a famous market bubble from the 1600s.

JPMorgan and many of its competitor­s, however, have invested millions of dollars in blockchain, the technology that tracks bitcoin transactio­ns. Blockchain is a shared ledger of transactio­ns maintained by a network of computers on the internet.

Dimon said such uses “will roll out over coming years as it is adapted to different business lines.’’

Financial institutio­ns are hoping blockchain can be adapted to simplify and lower the costs of processes such as securities settlement, loan trading and internatio­nal money transfers.

Dimon predicted big losses for bitcoin buyers.

“Don’t ask me to short it. It could be at $20,000 before this happens, but it will eventually blow up.” he said. “Honestly, I am just shocked that anyone can’t see it for what it is.”

Bitcoin’s price fell as much as 4% following Dimon’s comments and was last trading at $4,164.

“It feels like we are in the midst of a negative news cycle, but even considerin­g all this, we are still trading above $4,000.” said John Spallanzan­i, chief macro strategist at GFI Group.

 ??  ?? Dimon: ‘The currency isn’t going to work’
Dimon: ‘The currency isn’t going to work’

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