JPMorgan Chase CEO Jamie Dimon compared cryptocurrencies to “pet rocks” on Tuesday and said that the nascent sector is the recipient of undue attention.
The executive told a panel of CNBC anchors that their outlet spends too much time covering cryptocurrencies, although he acknowledged that the underlying blockchain technology likely has useful applications. “I think crypto is a complete sideshow,” Dimon said during a Tuesday interview. “Crypto tokens are like pet rocks.”
Cryptocurrency, a form of decentralized digital money that can be transferred between users’ virtual wallets, has garnered the skepticism of many regulators and investors over the past several years. Dimon also raised concerns about “terrorism financing, tax avoidance, sex trafficking,” and other ways in which digital assets enable illicit activities. “Why do we allow this stuff to take place?” he asked.
Dimon predicted that officials would “regulate the hell out of” cryptocurrencies during an interview with Axios last year. “If people are using it for tax avoidance and sex trafficking and ransomware, it’s going to be regulated, whether you like it or not,” he said. “So it’s not a moral statement. It’s a factual statement.”
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The recent implosion of FTX, a cryptocurrency exchange based in the Bahamas and formerly led by entrepreneur Sam Bankman-Fried, has indeed drawn attention from regulators. The House Financial Services Committee invited the disgraced founder to testify in a hearing scheduled for next week; members of the Senate Agriculture Committee questioned Commodity Futures Trading Commission Chairman Rostin Behnam last week on further oversight of the industry.
FTX recently filed for bankruptcy after users discovered that trading firm Alameda Research, a company run by former Bankman-Fried love interest Caroline Ellison, had allegedly been using consumer funds from FTX to make investments. Bankman-Fried, a top contributor to Democratic and Republican campaigns, has repeatedly insisted that he did not intentionally commingle funds between the two companies.
New York Times financial columnist Andrew Ross Sorkin pressed Bankman-Fried last week on potential wrongdoing during the outlet’s DealBook summit, noting that he received multiple letters from FTX customers who accused the near-broke former billionaire of stealing their life savings. Bankman-Fried said that he was “deeply sorry about what happened” and claimed that a “failure of oversight” on his part was responsible for the cryptocurrency empire’s implosion rather than any intention to defraud customers.
Many journalists were surprised that Bankman-Fried has been providing comments to media outlets given the ongoing bankruptcy proceedings for his company, which the attorney who once oversaw the fallout from Enron described as the worst case of corporate failure he has ever witnessed. In one message to a Vox reporter, Bankman-Fried admitted that his persona as an “effective altruist” was largely a ruse meant to earn the trust of “woke westerners.”
Lawmakers and regulators have advanced the Digital Commodities Consumer Protection Act, a piece of legislation that would eliminate conflicts of interest in the cryptocurrency sector. “For years many have recognized that a patchwork of federal and state-based regulation is an unsuitable substitute for a comprehensive approach,” Behnam told the Senate Agriculture Committee. “We are here today because many Americans invested in a novel product and will likely lose money because digital asset markets lack the basic protections that we have all come to expect and have made American financial markets the envy of the world.”