JPMorgan chief: Trading in bitcoin? You're fired

MR JAMIE DIMON, JPMorgan Chase chief executive officer,
MR JAMIE DIMON, JPMorgan Chase chief executive officer,

Bank employees warned off cryptocurrency that's dubbed 'a fraud' worse than tulip mania

NEW YORK • JPMorgan Chase chief executive officer Jamie Dimon said he would fire any employee trading in bitcoin for being "stupid".

The cryptocurrency "won't end well", he told an investor conference on Tuesday, predicting it will eventually blow up. "It's a fraud" and "worse than tulip bulbs".

He was referring to the mania that swept Holland in the 17th century, with speculators driving up prices of virtually worthless tulip bulbs to exorbitant levels. That did not end well.

If JPMorgan traders began trading in bitcoin, Mr Dimon said: "I'd fire them in a second. For two reasons - it's against our rules, and they're stupid. And both are dangerous."

Bitcoin has soared in recent months, spurred by greater acceptance of the blockchain technology that underpins the exchange method and optimism that faster transaction times will encourage broader use of the cryptocurrency.

Prices have climbed over fourfold this year - a run that has drawn debate over whether that is a bubble.

Bitcoin initially slipped after Mr Dimon's remarks. It was down as much as 2.7 per cent before recovering. Last week, it slumped after reports that China plans to ban trading of virtual currencies on domestic exchanges, dealing another blow to the US$150 billion (S$202 billion) cryptocurrency market.

PLAYING WITH FIRE

I'd fire them in a second. For two reasons - it's against our rules, and they're stupid. And both are dangerous.

MR JAMIE DIMON, JPMorgan Chase chief executive officer, on what he would do if he found any of his traders dealing in bitcoin.

In bitcoin's case, Mr Dimon said he is sceptical the authorities will allow a currency to exist without state oversight, especially if something goes wrong.

"Someone's going to get killed and then the government's going to come down," he said. "You just saw in China, governments like to control their money supply."

Mr Dimon differentiated between the bitcoin currency and the underlying blockchain technology, which he said can be useful.

Still, he said banks' application of blockchain "won't be overnight".

The bank chief said he would not short bitcoin because there is no telling how high it will go before it collapses.

The best argument he has heard, he said, is that it can be useful to people in places with no other options - so long as the supply of coins does not surge.

"If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that, or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than US dollars," he said.

"So there may be a market for that, but it'd be a limited market."

One place where cryptocurrencies and traditional finance are coming together is at CBOE Holdings, the owner of the Chicago Board Options Exchange.

Last month, the firm teamed up with Gemini Trust - the start-up created by the Winklevoss twins made famous by the 2010 Facebook film The Social Network - with a plan to offer bitcoin futures.

CBOE's chairman and CEO, Mr Ed Tilly, defended such efforts after Mr Dimon's remarks.

"Like it or not, people want exposure to bitcoin," Mr Tilly said.

Believers can bet on its rise, and Mr Dimon is welcome to take the other side, he said.

"We're happy to be the ones in the middle."

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 14, 2017, with the headline 'JPMorgan chief: Trading in bitcoin? You're fired'. Print Edition | Subscribe