Why JP Morgan CEO Calls Bitcoin Regulation a “Serious Problem”






In his annual letter to his shareholders, JP Morgan Chairman and CEO Jamie Dimon addressed the state of regulations on Bitcoin and cryptocurrencies in the United States. At the beginning of the letter, Dimon calls 2020 a “strong” year for the banking institution despite the Covid-19 pandemic.

Dimon appears to have shifted his position, as did other banking industry executives, after speaking out against Bitcoin and cryptocurrencies. In a section devoted to America’s inability to “deal” with its past, he claims that the country has been “distracted” about its future.

In that sense, Dimon points out 3 “serious emerging problems”: shadow banking, financial information management and the legal framework of cryptocurrencies. The JP Morgan executive calls on regulators and financial system players to take a more active stance, Dimon said:

Regulators must decide what they want included in the regulatory system and what they do not want included (…). We need to recognize that if a regulated system has higher capital requirements than the market demands, then the product will move out of the regulated system.

Is the United States Losing its Edge on Bitcoin?

The American banking system has about $ 4 trillion in cash or Treasury securities. The CEO of JP Morgan wonders if the bank should not use that liquidity to “help the economy grow.” However, he asserts that there are many obstacles that prevent this capital from “actually” reaching the banks or the economy “in general”.

Therefore, it reaffirms its argument that regulations in the United States must undergo “calibration.” Dimon wrote:

This calibration will be one of the main factors in determining what ends up in the regulatory system and what doesn’t. It’s a good balance. Too much capital and liquidity could possibly slow down the economy and push the shadow banking system further. Too little capital and liquidity could make banks riskier and more subject to bankruptcy.

When referring to cryptocurrencies, various members of different regulatory bodies in the US, from SEC Commissioner Hester Pierce to former OCC Brian Brook, have recognized that “well” regulated products are a benefit to all players. of the economy.

Dimon agreed, adding that regulated assets “in general” have greater transparency, more scrutiny and support.

In the United States, numerous institutions have requested approval of an Exchange Traded Fund (ETF) for Bitcoin. In that way, institutional investors hope to gain exposure to BTC.

If regulators continue to fail to recognize the growth of the cryptocurrency market, they could deepen the advantage that other countries, such as Canada, appear to be consolidating in the area.

At press time, Bitcoin is trading at $ 56,180 with a 2.8% loss in the last 24 hours.

BTC with small losses on the 24-hour chart. Source: BTCUSD Tradingview