JPMorgan Chase, the largest bank in the US, has formally acknowledged that cryptocurrencies and blockchain technology could disrupt banks.
The firm made this admission in its annual report, which was dated Feb. 27 and filed with the US Securities and Exchange Commission (SEC).
Deep in the 301-page document, JPMorgan — which manages $2.53 trillion in assets according to recent estimates — listed cryptocurrencies and peer-to-peer technology as potential disruptors to financial institutions and payment processors.
“Furthermore, 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,” the bank wrote in the filing. “New technologies have required and could require JPMorgan Chase to spend more to modify or adapt its products to attract and retain clients and customers or to match products and services offered by its competitors, including technology companies.”
Notably, the report was signed by JPMorgan CEO Jamie Dimon, a noted Bitcoin skeptic who has repeatedly lambasted the flagship cryptocurrency as a “fraud” and once threatened to fire any employees caught trading cryptoassets, although he recently walked back some of these comments.
JPMorgan is at least the third major financial institution to cite cryptocurrencies as a business risk in its annual report for 2017.
Last week, Bank of America — the second-largest US bank — admitted that cryptocurrencies and other blockchain-based financial services present a threat to its business model, adding that it fears it anti-money laundering systems will need a facelift to account for cryptocurrency-related transactions.
Both JPMorgan and Bank of America noted that increasing adoption of cryptocurrencies could force them to make significant expenditures to ensure their products and services remain competitive.
Goldman Sachs — whose $917 billion in assets rank fifth among US institutions — also listed cryptocurrency as a business risk. The report said that Goldman’s concerns were primarily related the firm’s investment in startups that operate in the nascent cryptoasset space, such as Circle, which owns one of the most profitable cryptocurrency trading desks and recently acquired cryptocurrency exchange Poloniex. If flaws are exposed in the underlying technology, those firms could suffer losses, reducing the value of Goldman’s ownership stakes.
Featured image from Flickr.