Days after JPMorgan Chase & Co. CEO Jamie Dimon labeled Bitcoin a “fraud” and threatened to fire any employees caught trading cryptocurrency, it has emerged JPMorgan Securities made a number of trades on the Swedish stock exchange. Someone at the company bought and sold an instrument called Bitcoin XBT that tracks the bitcoin price.
The trades were published on Sweden’s Nordbank website, detailing the “Bitcoin Tracker One” product, which is the first bitcoin tracking product to operate on a regulated exchange. The instrument is provided by XBT Provider AB.
Nordbank’s data shows that JPMorgan holds over 9,000 XBT shares. XBT Provider says all share certificates are backed by real bitcoin holdings.
Let us take a close look at what was said, and what “they bought”.
The fact that JPMorgan has purchased shares in a regulated bitcoin tracking product highlights the hypocrisy of both Dimon and banking industry. While Dimon labeled Bitcoin a “scam” and a “fraud”, his company is quite happy to profit from the dip in prices that Dimon’s statement helped create.
When we look at Dimon’s historic statements concerning Bitcoin, they seem to be almost the ultimate contra-indicator — or at least a projection of what his firm has actually been fined for doing. JPMorgan has paid out over $26 billion USD in fines for bribery, fraud, perjury, and conning homeowners, among other indiscretions.
What is XBT exactly and how does it relate to Bitcoin?
That’s where things get fuzzy. XBT is a Bitcoin Price Tracker Stock, so it is publicly traded and regulated and said to be backed by Bitcoins (such as the USD used to be fulled backed by gold). The problem here is they didn’t buy BTC, they did not go on CoinBase and make a purchase.
They did what banks do and trade stocks, usually the ones that will profit them the most. By buying XBT, they may have found a loophole where they are not buying cryptocurrency, but they are buying the stock that represents it.
What exactly is JP Brokerage?
Actually, JP Brokerage is what they use to buy stocks for their customers. So all of this could be nothing and the Crypto Community is just up in arms with JP Morgan (and banks in general) because it seems they are specifically trying to undermine the Cryptocurrency Markets and make a profit from it.
However, for an industry so willing to kick ethics to the curb in pursuit of profit, admonishing the trading of bitcoin and cryptocurrencies seems counterintuitive. That’s especially when acknowledging the labels given to bitcoin by the financial industry are, at best, outdated.
This is because trading desks exist to make profits. While regulated stock markets have far superior liquidity and the potential for good profits, they do not hold a candle to the cryptocurrency markets.
Even though bitcoin and other cryptocurrencies are immature markets, it is the very fact they are developing that both provides the opportunity for life-changing returns and obstacles for institution-sized entries.
Where else can many hundreds of percent gains be made in such short periods of time?
Bitcoin Just Too Tempting for Financial Industry
The astronomical gains that can be achieved compared to traditional investments like gold is almost a running gag within Bitcoin. Where financial TV programs regularly invite talking heads on-air to talk about gold when prices rise by $50 to $100, gains of 100 percent per day in altcoins or 20-30 percent daily swings in coins with bigger market caps is not considered unusual.
The lack of liquidity in some markets produces volatility. This provides the ultimate conditions for professional traders. So looking at trading through this prism, it would seem highly unlikely that professional traders would not be looking to enter markets with such high potential returns and volatility.
So, as the cryptocurrency market cap is still relatively small for multi-billion dollar assets-under-management institutions, and the security protocols surrounding crypto not yet refined or established enough, it’s believed cryptocurrency investments cannot be sanctioned by the major institutions.
In the end, human nature repeats, and the same impulses that con men and scammers use to bait naive investors are the same ones that Jamie Dimon uses to scare markets. They’re also the same ones that allow banks to turn a blind eye to illegal transactions: fear and greed.
Before we jump the gun and put JP Morgan in the stockades, we have to remember one thing: Banks do not officially post their trades until weeks/months after they have done it. This is just one person’s perception on the matter, seeing JP Morgan’s Brokerage Account buying XBT; it’s all rumors right now.
There is one thing I think everyone can agree on, and that is never listen to Jamie Dimon. No matter what they case is: if their brokers bought it for their customers or if they bought it for themselves, it doesn’t matter. Major banks are in it for the money. And if history is any indicator, Major Banks will do exactly the opposite of what they say, even to the point of committing fraud and other illegal acts – All in the name of money