JPMorgan and Bitcoin
Bitcoin has had an exciting year. It has split in two, become more accepted as a form of payment, and soared in value, now resting above $8,000. There’s also that small matter of the Chicago Mercantile Exchange (CME), the world’s leading derivatives marketplace, announcing plans to introduce bitcoin futures in 2017 — an announcement that some credit with pushing the cryptocurrency above the $8,000 threshold.
The bitcoin developments continued on November 21 when The Wall Street Journal reported that JPMorgan Chase is considering giving their clients access to CME’s bitcoin future via their own futures-brokerage unit.
As the WSJ explains, the move would enable JPMorgan customers to bet on bitcoin’s prices — specifically, whether they increase or decrease. JPMorgan, meanwhile, would charge a fee for providing access to CME’s service, presumably in the hopes of profiting from it.
This would be a somewhat ironic development for JPMorgan because CEO James Dimon has criticized bitcoin in the past, telling attendees at September’s Delivering Alpha conference that the crypto is a “fraud” and “just not a real thing.” At another event, he said that anyone trading bitcoin is “stupid” and that any JPMorgan traders caught doing so would be fired. That said, no employees have claimed to have lost their jobs for such reasons just yet.
CME is expected to launch their bitcoin futures contract before the end of 2017, though that launch could be delayed or put on hold by the Commodity Futures Trading Commission, which has to grant approval. As for JPMorgan’s reported service, its launch largely depends on demand, according to the WSJ’s source — if enough JPMorgan customers aren’t clamoring for bitcoin futures, it probably won’t happen.
The actions of other companies, such as Goldman Sachs Group Inc., Bank of America Merrill Lynch, and Morgan Stanley, could influence JPMorgan’s decision as well.
Goldman Sachs is currently exploring ways to trade cryptocurrencies, while Morgan Stanley — according to the WSJ’s source — is contemplating a move similar to JPMorgan’s. JPMorgan likely wouldn’t want to be left out if the majority of other companies were involved in bitcoin trading.
Only time will tell how this situation plays out, but bitcoin’s growing popularity and continually increasing prices suggest the crypto is not going away anytime soon. JPMorgan CEO James Dimon may soon find himself forced to acknowledge that bitcoin is “a real thing.” Many others certainly have.
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.