Governments around the world will “crush” bitcoin before long, according to two of the most powerful men on Wall Street, who argue that the only real value in the fast-rising virtual currency is as a tool for criminals and money launderers.
At a conference in Washington on Friday afternoon, Jamie Dimon, the chairman and chief executive of JPMorgan Chase, noted recent moves to curb the circulation of bitcoin in China and an initiative in Japan to launch an electronic currency pegged to the yen.
These were signs of authorities getting a proper grip on virtual currencies, he said, because “they like to know where the money is, who has it, and what you’re doing with it”.
“A fiat currency is when a government says, this is your legal tender, you have to give it and accept it, and of course the central bank can misuse it and inflate it,” said Mr Dimon, who has sat atop the largest US bank by assets for a decade.
“But what is the use case for bitcoin? You’re in Venezuela, North Korea, you’re a criminal. Great product!” he said, to gales of laughter from a room full of bankers, gathered for an annual meeting of the Institute of International Finance.
Mr. Dimon’s stance was endorsed on stage by Larry Fink, chairman and chief executive of BlackRock, the world’s largest asset manager, who likened the price of bitcoin to an “index of money laundering”.
"But what is the use case for bitcoin? You’re in Venezuela, North Korea, you’re a criminal. Great product!"
- Jamie Dimon, JPMorgan Chase
The price of the virtual currency, up about 7 per cent within the past 24 hours to a new high of about $5,690, “just shows how much demand for money laundering there is in the world”, Mr Fink said.
The remarks are likely to stir anger, and some amusement, among some bitcoin aficionados, who have argued that rapid price rises in bitcoin and other virtual currencies are symptoms of a broad collapse of faith in paper currencies.
The exchanges drew instant scorn from Marco Santori, head of the fintech practice at Cooley, a New York law firm, who described alleged links between bitcoin and criminal activity as a “demonstrably false narrative, long disproven, driven mostly by ignorance and wilful blindness, held by financial intermediaries losing their grasp on the market”.
“Is bitcoin used by criminals? Of course, just like the US dollar,” he said. He noted that the 2013 shutdown of Silk Road, a bitcoin marketplace thought to be a hotspot for criminal activity, had almost no effect on overall trading volumes. He also cited a 2015 report by the UK Treasury, which put bitcoin “dead last” on a list of vectors for money-laundering, behind “every other payment method known to man”.
“There is literally zero data supporting the position that bitcoin is especially widely used for, or especially well-suited to, criminal activity,” said Mr Santori.
Mr Dimon began his rant mock-wearily, drawing a distinction between bitcoin and blockchain — the technology underpinning the virtual currency — which his bank continues to explore as a means of cutting the cost of routine, sometimes paper-intensive transactions. A day earlier, JPMorgan’s finance chief Marianne Lake had made similar noises, saying blockchain could “become very transformational for the financial services industry”.
Bitcoin then received the broadside from Mr Dimon, who appeared with his arm in a sling, following surgery on his shoulder two weeks ago.
“I don’t personally understand the value of something that has no actual value,” he said. “If you’re stupid enough to buy it, you’ll pay a price for it one day.”
The bank chief executive wrapped up by talking about his daughter — “my formerly smart daughter” — who told him recently that she owned two bitcoins. “This is the last time I’m ever going to comment on it,” he said. “I don’t care.”
Source: https://www.ft.com/content/1925f1ee-b04c-11e7-aab9-abaa44b1e130