JP Morgan’s Dimon Says Crypto Should Be Shut Down

Efthymis Oraiopoulos
By Efthymis Oraiopoulos
December 9, 2023US News
JP Morgan’s Dimon Says Crypto Should Be Shut Down
JPMorgan Chase Chairman and CEO Jamie Dimon (L) and Citigroup CEO Jane Fraser testify during a Wall Street oversight hearing by the Senate Banking, Housing, and Urban Affairs committee on Capitol Hill in Washington, D.C., on Dec. 6, 2023. (SAUL LOEB/AFP)

JP Morgan CEO Jamie Dimon said he would close cryptocurrency if he had the power, during a Senate hearing covering cryptocurrency and its dangers, among other financial topics.

“If I was the government, I’d close it down,” Mr. Dimon said, referring to cryptocurrency. He said that he was “deeply opposed to crypto” from its start and that the “only true case” for its existence is to fund criminals, drug traffickers, and to enable tax avoidance.

The billionaire head of the United States’s largest bank added that money transfers can be done instantaneously with cryptocurrencies, allowing users to avoid all the systems used by the banks for scanning for fraud or money laundering.

Sen. Elizabeth Warren (D-Mass.) said, before asking Mr. Dimon to comment on the issue, that today’s terrorists are using crypto as a new way to get around the Bank Secrecy Act.

“Last year, an estimated $20 billion in illicit crypto transactions funded every kind of dangerous criminal,” Sen. Warren said.

“North Korea has funded at least half its missile program, including nuclear weapons, using the proceeds of crypto-crime,” she added.

She also mentioned that Israel said that Hamas has received millions of dollars through crypto-transactions including “large sums from Iran.”

Forbes estimates Mr. Dimon to be worth $1.8 billion, while the whole crypto industry is estimated at $1.7 trillion.

Sen. Warren, a Wall Street critic, also said, “When it comes to banking policy, I am not usually holding hands for the CEOs of multibillion dollar banks, but this is a matter of national security.”

Mr. Dimon’s comments come as JPMorgan is making a significant move into the use of blockchain, the same technology powering bitcoin and other digital currencies, such as its “JPM Coin” record-keeping service.

The bank has estimated the coin could be handling as much as $10 billion in daily transactions within the next two years, up from around $1 billion now, Bloomberg reported.

This year, Sen. Warren is pushing a bill that would extend existing bank anti-money laundering rules to the crypto industry. When the CEOs testifying at the hearing were asked if they supported the aim of her bill, they all enthusiastically said they did.

Last month, one of the biggest cryptocurrency exchanges, Binance Holdings, agreed to pay over $4.3 billion in fines after pleading guilty to breaking U.S. anti-money laundering and sanctions laws. The company also agreed to make a “complete exit” from the United States.

Despite the fraud seen at the biggest crypto exchanges Binance and FTX, Bitcoin, the world’s biggest and best-known cryptocurrency, is up 66 percent from the year’s low of $26,533. Year over year, it is up more than 165 percent, trading at its highest level since April 2022, Forbes reported.

Mr. Dimon clearly stated his position on cryptocurrencies in 2022 as well, calling them “decentralized Ponzi schemes.”

Hearing Topics

Mr. Dimon and top bosses from Morgan Stanley, Goldman Sachs, and other major banks also warned that capital hikes and other new rules will hurt lending and the economy during a Senate hearing that was otherwise sedate compared to recent years.

The industry has been waging a fierce campaign to kill the “Basel endgame” proposal, which seeks to overhaul how banks must calculate their loss-absorbing capital, and as regulators roll out fair lending and fee cap regulations, among other rules.

The CEOs hoped to use the hearing as an opportunity to convince moderate Democratic senators that the Basel rule, which is being led by the Federal Reserve, could stifle lending, hurting small businesses, and consumers.

The other CEOs appearing were Bank of America’s Brian Moynihan, BNY Mellon’s Robin Vince, Citigroup CEO Jane Fraser, Goldman Sachs’ David Solomon, Morgan Stanley’s James Gorman, State Street’s Ronald O’Hanley, and Wells Fargo’s Charles Scharf.

NTD Photo
Wells Fargo CEO and President Charles W. Scharf, Bank of America Chairman and CEO Brian Thomas Moynihan, JPMorgan Chase Chairman and CEO Jamie Dimon, Citigroup CEO Jane Fraser, State Street CEO Ronald O’Hanley, BNY Mellon CEO Robin Vince, Goldman Sachs CEO David Solomon, and Chairman and CEO of Morgan Stanley James Gorman raise their hands during a U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill on Dec. 6, 2023. (Evelyn Hockstein/Reuters)

Other issues covered included cannabis banking, fair lending, payments, mortgages, and artificial intelligence.

Big bank CEOs have been appearing before Congress since the 2007-2009 financial crisis and subsequent scandals thrust the industry into Washington’s crosshairs.

While they rarely result in legislation, hearings have led banks to make changes. In 2021, Mr. Dimon was drawn into a fiery exchange with Sen. Warren about overdraft fees, while last year, she grilled him over fraud on the bank payment network Zelle. Big banks subsequently reduced overdraft fees and expanded Zelle fraud protections.

Reuters contributed to this report.

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