Jamie Dimon, Chief Executive of JP Morgan, has voiced concerns about bitcoin, essentially calling it a scam. Dimon made the remarks at an investor conference held in New York yesterday. Dimon also said he would fire any trader who dealt in bitcoin.

“I would fire them in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous.”

In an apparent response to his comments, cryptocurrency prices have tumbled, with bitcoin losing almost 10%. Dimon had in 2015, called investing in bitcoin a waste of time.

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What may have prompted Dimon’s statement

Banks have expressed concerns about the possibility of cryptocurrencies encroaching into their areas of operation, as blockchain technology cuts of the need of a middleman for transactions.   Individuals and businesses have also piled billions of dollars into cryptocurrencies, and Initial Coin Offerings that are largely unregulated.

In response to this, several countries and regulators have taken a tough stand. China has essentially banned trading of cryptocurrencies and ICOs by its citizens. The UK Financial Conduct Authority (FCA) has also asked individuals to report any ICO they feel is fraudulent.

The worries may be overstated

Despite the inherent risks, several banking giants (including JP Morgan) have invested in research about blockchain technology. Russia recently gave approval for a stock exchange to deal in cryptocurrencies. China, is reportedly working on its own cryptocurrency through which its citizens will be allowed to trade.

 

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