JP Morgan Chase Fears Crypto Is Disruptive Competitors
Possibly cryptocurrency’s largest institutional nemesis is JP Morgan Chase. Led by the ever-belligerent Jamie Dimon, it and he have taken many opportunities to sandbag bitcoin and its spawn. Theories about why have lengthy circled, but now there seems to be proof the legacy bank is threatened by decentralized currency in digital form, according to an internal annual report.
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In partial fulfilment of its fiduciary duty, JP Morgan Chase filed an Annual Report for 2017, Form 10-K: Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. It’s an exhaustive document largely of interest to shareholders. This year, however, it contained uncommon insight into the institutional mindset of the United States’ biggest bank.
Below the rubric Competitors, deep in the report, the bank worries aloud: “The financial solutions business is hugely competitive, and JPMorgan Chase’s results of operations will endure if it is not a strong and successful competitor. JPMorgan Chase operates in a extremely competitive environment, and expects that competitors in the U.S. and global financial services industry will continue to be intense.”
Exactly where competitors seemed least likely, according to CEO Jamie Dimon, was in the location of cryptos such as bitcoin. Famously, Mr. Dimon chastised those who held or traded bitcoin as “stupid.” Indeed, the very idea, he maintained, was a “fraud.” He’d additional attack his own employees who may well dare dabble as risking their quite job as a result. Though he’d later come off some of these remarks a tad, walking them back and nearly apologizing, the truth of the matter may well be more in line with taking a web page from the Niccolò Machiavelli playbook: ridicule your opponent in an work to reduce his recognition, understanding complete effectively that foe could a single day consume your lunch.
The Annual Report appears to shed light on the concern. It does list the usual suspects of other banks and institutions as competitors, warning ominously how “JPMorgan Chase cannot provide assurance that the important competition in the economic services sector will not materially and adversely impact its future benefits of operations.” This seems, at least in element, due to the fact “New competitors have emerged.”
Right after quick lines about the development of e-commerce, the Report ultimately comes out with it. “These advances have also allowed economic institutions and other businesses to offer electronic and internet-based financial options, such as electronic securities trading, payment processing and on the internet automated algorithmic-based investment tips. Furthermore, each financial institutions and their non-banking competitors face the danger that payment processing and other solutions could be disrupted by technologies, such as cryptocurrencies, that require no intermediation. New technologies have required and could call for JPMorgan Chase to commit much more to modify or adapt its products to attract and retain consumers and buyers or to match goods and services offered by its competitors, including technologies companies.”
And “intermediation” is Wall Street talk for banks. Cryptocurrencies can have the eventual impact of putting “downward stress on rates and charges for JPMorgan Chase’s products and solutions or may possibly lead to JPMorgan Chase to lose industry share,” the bank revealed.
What all this virtually means for the short and long-term relating to the bank and crypto is anyone’s guess, but the following seems to give a rather large hint: “Increased competition also may possibly call for JPMorgan Chase to make additional capital investments in its organizations, or to extend far more of its capital on behalf of its clients in order to stay competitive.” In other words, before it can beat crypto, it just may well have to join crypto.
What do you consider about JP Morgan’s most current admittals? Let us know in the comments section beneath.
Images courtesy of Pixabay. Jamie Redman contributed sourcing for this write-up.
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Published at Fri, 02 Mar 2018 09:30:15 +0000