The tide seems to be changing regarding the turbulent relationship between traditional banking and cryptocurrencies. It’s no secret that Jamie Dimon, the CEO of JPMorgan Chase has been one of Bitcoin’s hardest critics. Don’t forget back in 2017 when he blatantly labelled Bitcoin as a ‘fraud’. To soften the stance of USA’s largest bank, Umar Farooq, JP’s Head of Digital Treasury Services & Blockchain, said back then that “We are supportive of cryptocurrencies as long as they are properly controlled and regulated.” In 2020, things seem to be taking a rather surprising turn.
First, there was a move that went slightly under the radar when in February last year, the bank announced the launch of its own dollar-backed cryptocurrency (stablecoin) for institution-to-institution transfers called JPM Coin. Following that, Fortune journalist and author Jeff Roberts revealed information about secret meetings between Dimon and Coinbase CEO, Brian Armstrong, as early as 2018. To cap it all off, came JPMorgan Chase’s announcement of taking on Coinbase and Gemini as its first crypto-exchange customers.
How Did Banking & Crypto Go From ‘Fraud’ to ‘Friends’, in a Couple of Years?
In a nutshell, Bitcoin’s performance and durability has started to become undeniable. For anyone paying attention, the web is flooded with articles pointing out Bitcoin’s notable performance where in some cases, it’s actually outperforming gold and stocks, and all other major asset classes.
To go against it would only undermine the authority and trustworthiness of traditional banking institutions. The major pushback against crypto was regulation and risk management. As the currency matures, it seems that those worries are being put to bed, and the once “outcast” of the banking system, is slowly yet steadily welcomed into the mainstream banking culture.
“Banks not only have the ability, they have an obligation to serve all lawful businesses. They shouldn’t be discriminating because something’s a new technology. As crypto matures, there are increasingly many companies that have perfectly robust risk management systems and do have an ability to comply with those laws, and they shouldn’t have trouble finding bank relationships.”
It should be pointed out that Mr. Brooks was the former Coinbase Chief Legal Officer, was recently appointed as the Chief Operating Officer of the Office of the Comptroller of the Currency (OCC). This is the kind of move that makes you think change is not coming, it’s arrived.
What Does The Future Hold For Crypto?
The wall between traditional banking and crypto seems to be breaking down piece by piece and what will follow is extremely interesting to keep an eye on. Don’t forget that five years ago, Bitcoin traded at about £150/coin, with its value recording a jaw-dropping £15,000 by the end of 2017. It is now worth about £7,000.
The extreme highs and lows of the virtual currency are an investor’s paradise, but what can people expect from cryptocurrencies in general? The Covid situation has caused a seismic shift towards a world where digital assets are primed for success and Bitcoin sits at the very heart of it all. It seems like countries are embracing the move towards digital currencies with China being the first major country to trial one. An electronic renminbi, called Digital Currency Electronic Payment (DCEP), recently piloted in four major areas of the country.
China was the first, but it’s certainly not alone in this pursuit. A study by the Bank of International Settlements found that 70% of central banks participating in the 2019 survey are currently, or are in the process of establishing their own digital currency. Buried in the headlines regarding the Coronavirus pandemic, is a story that would otherwise be frontpage news: the creation of a ‘digital dollar’. Whilst the digital dollar does not fall under the traditional format of a cryptocurrency, the similarity in the technology and framework that would need to be employed still creates a ‘pro-crypto’ sentiment.’