As massive banks like JPMorgan and Wells Fargo prepare to release their Q2 earnings report next week, a growing threat to traditional finance, cryptocurrencies, are becoming too disruptive to ignore.
While many of these banks have resisted the coming changes, the smart ones are starting to change their tune.
Just this week, the German Central Bank released a statement acknowledging the need to adapt.
“While no one can predict the future with certainty, we know one thing for sure. Digital transformation is here, it’s now and it’s big. It changes the way we live and work.”
“We are not talking about “evolution”, about banking adapting to the wants and needs of a digital generation. We are talking about a true “disruption” that may change the financial sector for good.”
The statement comes less than two months after Bundesbank President Jens Weidmann ridiculed blockchain technology for being slow and expensive. As recently as June, Weidmann said that central bank crypto could have “serious consequences.”
While no one would accuse corporate bankers of sending consistent messages, such a sharp turnaround in such a short time points to a technology that cannot be ignored.
JPMorgan is a Trendsetter in Crypto Contradiction
JPMorgan has made blatant contradictions with their statements and actions. In 2017, JPMorgan Chase CEO Jamie Dimon infamously said “Bitcoin will eventually blow up,” and “it’s a fraud worse than tulip bulbs.”
It took him less than 5 months to renege on his original comments. He went on Fox to announce he “regrets” making those comments about bitcoin and that the “blockchain is real.”
As recently as January 2019, JPMorgan took another shot at bitcoin, saying the mining isn’t worth the value of the coin. This time, however, the dig should not be looked at as an institution challenging the concept of crypto, but rather as a competitor looking to knock down a rival.
In a stunning turn of events, the $2.5 trillion company is now gearing up to release its own digital currency, JPM Coin. To recap: the leader of the largest US bank has gone from calling bitcoin a fraud, to apologizing for the comment, to developing its very own digital currency. The full cycle was completed in less than two years. Technology moves fast.
Will Others Follow Suit?
America’s second-largest bank behind Chase has already planted seeds in the crypto space. Bank of America won a patent to offer large-scale crypto custody services. Citigroup is also offering a crypto custody service for institutional investors.
Who’s still resisting the coming shifts? Probably the one major bank who’s doing the worst. Wells Fargo is still negative on crypto but they’ve already given us plenty of reasons to distrust their opinion. The same company that has to pay a $575 million fine for scamming its customers has banned them from purchasing bitcoin because it’s “too risky.”
Wells Fargo to Pay States About $575 Million to Settle Customer Harm Claims; Latest settlement covers retail sales practices and auto-loan, mortgage charges https://t.co/xrY4jaAXy5 pic.twitter.com/xKveGD6eKD
— Barry Ritholtz (@ritholtz) December 28, 2018
Will the country’s third-largest bank become a victim to its stubborn resistance or will we see a WF Coin by 2020? With other major institutions such as Morgan Stanley, Fidelity, and Goldman Sachs entering the cryptosphere, it’s safe to say the smart bet is a digital one.