The head of the nation’s largest bank by assets on Tuesday predicted that the market for bitcoin is on the verge of crashing.
JPMorgan Chase CEO Jamie Dimon described bitcoin as a currency that’s popular among criminals and warned that investors who stay in the market could take a significant hit.
“Eventually it will blow up,” Dimon said at an industry conference in New York. “It’s a fraud.”
Dimon compared the frenzy among investors for the cryptocurrency to the famous 17th-century Dutch Tulip bubble. “It’s worse than tulip bulb,” he said. “It won’t end well.”
His comments come as the price of bitcoin has skyrocketed over the past year to more than $4,000 from about $600, according to CoinDesk.
“If we had a trader who traded bitcoin, I’d fire them in a second,” Dimon said. Not only would doing so be against company rules, but it would also simply be “stupid,” he added.
Dimon said one reason bitcoin will fail is that when a crash comes, "the government is going to come down" on the crytptocurrency.
During his presentation, Dimon also touched on a range of other hot-button issues in retail banking.
Asked whether JPMorgan will open retail bank branches in new states — something that Gordon Smith, head of community and consumer banking, alluded to this summer— Dimon said that plans are in the works.
“There are a bunch of regulatory hurdles, but one day you will see us in de novo markets,” he said. He declined to provide details about which markets the New York company is eyeing. JPMorgan, which operates its retail unit under the Chase brand, has about 5,300 branches in 25 states and the District of Columbia.
One factor that Chase is considering in its retail expansion plans, he said, is how to balance the placement of brick-and-mortar branches with developments in mobile banking, Dimon said.
“I think you’ll have more mobile banking, and some kind of physical footprint over time that accommodates that,” he said.
While most big-bank CEOs who presented at the conference, sponsored by Barclays, provided investors with glimpses of their third-quarter results, Dimon, in characteristically blunt fashion, reiterated his dislike of the custom.
“We’re considering not giving any guidance on trading anymore,” he said. “I personally think it’s a waste of time.”
Still, he said, trading revenue would be down roughly 20% compared with last year's third quarter.
Dimon last year led a group of CEOs in publishing a list of corporate governance principles that included scrapping earnings guidance, saying that it diverts attention from long-term company goals. Some analysts, however, questioned the effort, saying that it raises transparency concerns for a large, publicly traded company.
Dimon said that while the recent Equifax hack will not significantly affect JPMorgan's business, it does demonstrate the importance of cybersecurity. After the revelations last week that the breach at the credit reporting agency potentially exposed the personal information from as many as 143 million consumers, public officials have urged consumers to put a freeze on their accounts. That could have an impact on a bank’s ability to open new accounts.
Dimon said data security is an issue the industry will be dealing with for decades to come.
“It’s just starting, with the intersection of cyber and stealing,” he said.