Jamie Dimon, JPMorgan’s CEO, discussed the fundamental issues that needed improvement in the financial sector in his annual letter to his shareholders. Dimon described the year 2020 as an “extraordinary year” financially. He further elucidated that because of the Covid-19 pandemic and the economic turbulence the year was wrecked. There are series of things that would bring financial innovation in the U.S. to another level. Moreover, Dimon cited the regulatory clarity requirement for Bitcoin and other cryptocurrencies.
The JPMorgan CEO wrote that “There are serious emerging issues that need to be dealt with – and rather quickly”. It includes the growth of shadow banking and the legal and regulatory status of cryptocurrencies. Furthermore, the proper and improper use of financial data along with the tremendous risk that cybersecurity poses to the system. He also contended that regulators should decide what they want in the regulatory system and what they don’t want to include.
Jamie Dimon Modifies His Stance Towards Cryptocurrencies
Jamie Dimon appears to have adapted his stance towards cryptocurrencies after having called Bitcoin a fraud earlier. With the emerging growth encountered by Bitcoin and other cryptocurrencies, many in the banking sector have identified digital assets’ growth potential as a store of value and a hedge against inflation. Nevertheless, as the cryptocurrency industry is still nascent, regulatory clarity for crypto is still lacking. Also, the way it is regulated appears to change from one region to another.
Dimon also mentioned in the letter that conventional banks are under threat owing to shadow and fintech banks. And JPMorgan was aggressively adapting to new challenges by big tech. The bank called the battle for “digital supremacy” between conventional banks and fintech the “real post-COVID-19 story” in a research note for investors previously this year. As per JPMorgan, banks are required to develop their ideas if they want to contend with the rapidly expanding fintech sector. Otherwise they will become a thing of the past. Dimon replied that “level playing field regulation” was required for banks to combat this tremendous competitive threat in his letter today.
Dimon’s request for a clearer regulatory status for cryptocurrencies mimics that of various industry experts. Lately, institutional giants Square, Fidelity, Paradigm, and Coinbase associated and formulated a cryptocurrency council. Called “The Crypto Council for Innovation,” the board intends to lobby policymakers. It aims to make them understand the promising potential of cryptocurrencies. Additionally, the council attempts to help regulators develop clearer regulations to allow the industry’s innovation to continue.
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