No matter what Jamie Dimon may say, bitcoin’s durability can be expressed by one simple fact: With a market cap of $100 billion, digital currencies have become too big for banks to ignore.
As Bloomberg recalls in a story about how banks are preparing to confront the thorny regulatory issues related to dealing in bitcoin and other digital currencies, on the same day Dimon trashed bitcoin, calling it a “fraud,” his firm’s private bank hosted a panel featuring cryptocurrency investors, and even helped some wealthy clients transact in a bitcoin exchange-traded product listed in Stockholm, raising questions about whether the bank violated its fiduciary duty in doing so.
Dimon isn’t the only one of his peers to harbor reservations about bitcoin. Bridgewater Associates’ Ray Dalio and BlackRock’s Larry Fink have criticized it as a “bubble” and a “a tool used by criminals.” Morgan Stanley CEO James Gorman defended bitcoin, arguing that it is “more than just a fad.”
But with clients demanding bitcoin exposure in greater numbers, banks have little choice but to assent to their demands, like JPM did. Goldman’s tentative embrace of bitcoin has so far also been the most ambitious, with the firm saying it is considering opening a bitcoin-trading business that would function like an interdealer broker for exchanges and large players.
Two days ago, Goldman CEO Lloyd Blankfein tweeted that he’s still on the fence about bitcoin, and that he’s “not endorsing or rejecting” the digital currency.
Still thinking about #Bitcoin. No conclusion – not endorsing/rejecting. Know that folks also were skeptical when paper money displaced gold.
— Lloyd Blankfein (@lloydblankfein) October 3, 2017
But for banks hoping to enter the bitcoin business, many unanswered questions remain. For example, how do banks that are required by law to prevent money-laundering handle a currency that’s not issued by a government and that keeps its users anonymous?
