Cryptocurrencies will be regulated in US, JP Morgan CEO says

JPMorgan Chase & Co chief executive Jamie Dimon has said cryptocurrencies will be regulated because anxiety around stablecoins and the asset class more broadly is growing in Washington.

“Blockchain can be real, stablecoins can be real,” Mr Dimon said at the Institute of International Finance annual membership meeting, held online again this year. “No matter what anyone in the room thinks, nor what any libertarian thinks, nor what anyone thinks about it, government’s going to regulate it.”

A Treasury Department-led effort to regulate stablecoins favours policing them like lenders, Bloomberg News reported this month. Mr Dimon echoed his long-held views on Bitcoin, but differentiated between his personal opinion and how New York-based JPMorgan would deal with it.

“I personally think that Bitcoin is worthless,” Mr Dimon said. “Our clients are adults, they disagree, that’s what makes markets, so if they want to have access to buy yourself Bitcoin, we can’t custody it but we can give them legitimate, as-clean-as-possible access.”

Also in the crypto space, Citigroup chairman John Dugan said it would be appropriate for banks to face high capital requirements for keeping cryptocurrency assets on their balance sheets. Also in the realm of cryptocurrencies, China’s Bank of Communications sees the rise of sovereign digital currencies as providing a fix to defects in the traditional monetary system, its president, Jun Liu, said.

The week-long IIF gathering began on Monday with finance leaders including JPMorgan Chase & Co.’s head Jamie Dimon and Barclays’s boss Jes Staley scheduled to speak.

Mr Dugan said he would consider it “appropriate” for banks to face high capital requirements for holding cryptocurrency assets on their balance sheets.

New York-based Citigroup has begun facilitating cryptocurrency transactions for those clients interested in the space, Mr Dugan said. Even so, the bank, much like many of its large rivals, does not currently hold such assets, he said.

“The bank regulators, the Basel committee, has come out with recommendations to have quite high requirements for any such things, and I think that’s appropriate,” he said. “The role that they’ve played with respect to ransomware has been very significant and very concerning.”

Bank of Communications sees sovereign digital currencies as providing a fix to defects in the traditional monetary system, such as excessive money supply and financial repression, Mr Liu said.

“The traditional way in building public trust in currency has changed,” Mr Liu said, differentiating China’s digital yuan from other cryptocurrencies. “Without sovereignty, digital currency cannot go very far.”

Last month, China banned all crypto transactions and vowed to root out the mining of digital assets. The government has been testing digital yuan. Shanghai-based Bank of Communications will introduce the digital currency to rural commercial banks, especially in the Yangtze River Delta region, and work with insurers to accommodate client needs, Mr Liu said.

Banks have remained resilient and authorities will continue to monitor and stand ready to deploy additional measures if needed, according to Pablo Hernandez de Cos, chairman of the international Basel Committee on Banking Supervision.

Mr De Cos, who is also the head of the Bank of Spain, said he believes there will be a high adoption rate for Basel III, the voluntary standards for bank capital that will be introduced from 2023.

Santander’s Ana Botin said staff could come back to the office most of the time, though the split between home and remote work varied by the needs of the job, with engineers, for instance, needing less face time than bank tellers.

“We’re looking at 60 per cent to 70 per cent in person, 30 per cent to 40 per cent remote. That, I would say, is the range of options we’re considering,” Ms Botin said. “We’re still not back to normal in many places, so we’re taking very much a wait-and-see approach.”

The bank, which employs 190,000 people globally, laid out a hybrid work plan for its US staff in July. “Most people, most of our teams, would like flexibility but part of it, being in the office is also something they value,” Ms Botin said.

“The reshoring story is something which is massively overblown,” Standard Chartered chairman Jose Vinals said at the online meeting.

“The diversification of supply chains in order to make them more resilient, and also some shortening to bring them closer to the region, I think that’s something which is happening,” he said, referring to the shift from north to south Asia.