Jaime Dimon has been the chairman and CEO of US banking giants JP Morgan since 2005. He made the Time 100 — Time magazine’s yearly list of the 100 most influential people — in 2006, 2008, 2009, and 2011.
Dimon made headlines in 2017 when he declared Bitcoin a scam that would blow up. In a blistering conference speech, he didn’t hold back: “It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed.”
He then went on to say that wouldn’t think twice about firing JP Morgan traders who bought Bitcoin: “It’s against our rules and they are stupid.”
Dimon’s remarks caused a stir, not least because they came at a time when Wall Street was starting to take cryptocurrencies seriously. Indeed, JP Morgan themselves were reportedly involved in some Ethereum blockchain projects at the time.
Just a few days after Dimon’s remarks, Citigroup CFO John Gerspach said,
“We think the area of cryptocurrency and digital currency is an area worthy of exploration.”
And JP Morgan’s CFO Marianne Lake also struck a more measured tone, saying that
“We are open-minded for digital currencies that are properly controlled and regulated.”
Dimon blasted cryptocurrencies on subsequent occasions, too. Answering a question at an Institute of International Finance Conference shortly after he made his infamous remarks, for instance, he repeated his view that
“If you’re stupid enough to buy it, you’ll pay the price for it one day.”
But in 2018, barely a year after his infamous remarks, he expressed his regret and retracted them:
“The blockchain is real. You can have crypto dollars in yen and stuff like that. ICOs… you got to look at every one individually. The bitcoin was always to me what the governments are going to feel about bitcoin when it gets really big. And I just have a different opinion than other people.“
- Dimon’s retraction couldn’t have come at a more convenient time for JP Morgan. Shortly thereafter, the bank launched a blockchain centre of excellence with the aim of “actualize[ing] enterprise-grade blockchain tools” and “drive[ing] industry standards.“
- JP Morgan came full circle in 2020, when their head of U.S. interest rate derivatives strategy hailed cryptocurrencies’ resilience and recommended them as institutional investments.
- ‘…worse than tulip bulbs’ is a reference to a 17th century economic crash brought about by runaway speculation on the price of… tulip bulbs.
When tulips were introduced to Europe in the late 1500s, they were unlike anything grown natively, so they quickly became a sought after luxury item.
At the height of tulipmania, rare bulbs could fetch up to six times the average person’s annual salary. And this is when things went wrong.
Speculators started purchasing future consignments on credit, banking on the fact that they could sell them on at a profit. But once the novelty wore off, prices nosedived and people went bankrupt.
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- Dimon made his negative opinion of Bitcoin known again when he testified in front of congress in 2018 shortly before his much publicised retraction. He was less blunt this time though, repeating the line that “We are supportive of cryptocurrencies as long as they are properly controlled.” Needless to say, Bitcoin supporters didn’t take his comments well and made their opinions very clear in the comments.
- While their 2020 report on Bitcoin isn’t publicly available, this article highlights just how far in the other direction JP Morgan has gone since Dimon’s 2017 remarks. While arguing that Bitcoin is still primarily speculative, the report says that “there is little evidence of run dynamics, or even material quality tiering among cryptocurrencies, even during the throes of the crisis in March.” This, concludes the report, suggests Bitcoin passed its first stress test.
The Metaco view
“JP Morgan’s change in tack from sceptics to endorsers shows we’re well and truly through the hype cycle. Having institutional investors on board can only increase trust in cryptocurrencies as a legitimate asset class. This will allow these assets to start fulfilling their potential.“