JPMorgan Chase has, for the first time, acknowledged that cryptocurrencies are a ‘risk’ to its business as they present new forms of competition.
The Wall Street bank released its annual report on Tuesday, in which it stated that digital currencies such as bitcoin and ethereum are a threat to its future, reports Fortune.
The bank said:
Both financial institutions and their non-banking competitors face the risk that payment processing and other services could be disrupted by technologies, such as cryptocurrencies, that require no intermediation.
This news follows previous comments from the bank’s CEO, Jamie Dimon, who called bitcoin ‘a fraud’ and that it was ‘worth nothing’ last September. Since then, however, Dimon has said that he regretted calling bitcoin a fraud, claiming to ‘have a different opinion than other people,’ according to an interview with Fox Business at the beginning of the year.
Yet, despite his lack of interest in the crypto market, it seems that JPMorgan has been watching developments very closely indeed. So much so, that according to Fortune, new technologies have meant that the bank has had to adapt or modify its products in order to attract and retain its customers. Notably, though, it expects this trend to continue.
The report added:
Ongoing or increased competition may put downward pressure on prices and fees for JPMorgan Chase’s products and services or may cause JPMorgan Chase to lose market share.
At the time of publishing, the bank’s market share amounts to over $400 billion, according to Yahoo Finance. The market share of the entire crypto market is currently worth $450 billion, figures from CoinMarketCap show. Of that fiture, bitcoin accounts for $180 billion.
It’s not known why JPMorgan has decided to say that cryptocurrencies present a risk to its future now, but it has been bullish on the blockchain’s developments. This can be seen by the fact that it has launched its own payments network using the distributed ledger.
In October, it was reported that the bank had teamed up with the Royal Bank of Canada and Australia and New Zealand Banking Group to launch the Interbank Information Network (IIN). Powered by Quorum, a blockchain technology developed by JPMorgan the aim is to allow payments to reach beneficiaries faster with less steps and improved security.
The Bank of America released a report last week following similar feelings to the threat that cryptocurrencies may play. At the time it said:
Clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies. Increased competition may negatively affect our earnings by creating pressure to lower prices or credit standards on our products and services requiring additional investment to improve the quality and delivery of our technology and/or reducing our market share, or affecting the willingness of our clients to do business with us.