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Large American banks are preventing their customers from investing in cryptocurrencies. A wrong facade or a solid recommendation?

May 21, 2020

Crypto space and market cap are a small percentage of the billions invested in the global stock market, or the amount that the Federal Reserve can print. While the promise of blockchain technology and the future of Bitcoin (BTC) has been realized by traditional mainstream players revealing their own versions of the technology, their fluctuating investment advice doesn’t seem to match their actions.

Use in real life

Cointelegraph recently reported that asset manager Adam Pokornicky claimed he had almost lost a client due to the views of the world’s leading financial holdings. Adam said that the customer who would buy a small amount of Bitcoin decided not to continue the purchase as JPMorgan Chase and Goldman Sachs advised against it. The words that have changed the customer’s opinion are unknown, however Adam was confident that they influenced the customer’s choice.

Although the reasons of the banks are not immediately clear, the long-term application of this oppression is enables banks to retain some level of power as early adopters while instructing their customers to wait. Benjamin Boyle, CEO of the investment management company Caipiteal, spoke to Cointelegraph about his own cryptocurrency recommendations to his customers:

“”A cryptocurrency investment should be treated as an investment in a start-up or startup companyTherefore, the company’s metrics should be analyzed as if it were a capital investment. So if a client wants to invest long term, my suggestion is that the client use an advanced portfolio theory to manage their portfolio. In this case, the customer would choose to invest only a small portion of their total assets in cryptocurrencies. “

Large American banks are preventing their customers from investing in cryptocurrencies. A wrong facade or a solid recommendation?
Large American banks are preventing their customers from investing in cryptocurrencies. A wrong facade or a solid recommendation?

Investment advisors who take a data-driven approach could do their clients a bad service by advising against Bitcoin investments as a hedge for an equity portfolio. While investment advisors typically warn of a startup’s risks, you can say that Bitcoin has outgrown a startup’s ranking. As interest in BTC continues to grow, investment advisors can hinder their clients’ investments.

JPM coin and many questions

JPMorgan, the largest bank in the United States, has recently created and tested a digital currency, the JPM. This makes JPMorgan the first bank to create a digital currency that represents fiat money. The creation of a stable coin is not necessarily an investment instrument, but it shows the willingness of the industry to use the distributed general ledger technology at its core. JPM Coin was developed to ensure the speed of cross-border payments and securities transactions between the bank’s institutional clients.

By using digital currencies, the bank wants to ensure that secure transactions are possible through the use of its quorum blockchain platform. This platform was founded in 2016 and is one of the pioneering partners of the Ethereum Enterprise Alliance.

Related: An Ordinary “Stablecoin” Or The Next XRP Killer? What we know about JPMorgan Chase’s new crypto

JPM Coin currently serves as a stable 1: 1 ratio to the US dollar. It is a completely new stable coin for the corporate customer sector, but there have been some well-known predecessors, one of which is Circle’s US dollar currency. started in 2018 with the support of Goldman Sachs.

That being said, the controversy surrounding Jamie Dimon, JPMorgan’s CEO, who has made statements in the past that contradict his institution’s actions. Jamie once expressed his lack of interest in Bitcoin and called it a “scam” in 2017. However, the company he runs has become interested in the crypto space. This could mean that Jamie has decided to change his previous beliefs, or at least make exceptions. Another possibility is that he made these statements because he wanted to distract Bitcoin from the focus of investor attention.

Cointelegraph reported that Jamie Dimon’s answer to one of the questions at the 2019 World Economic Forum in Davos showed this strong against Bitcoin, but not against blockchain technology. At the summit, he called blockchain a “real” technology that will soon replace certain databases. Amid all of these disagreements, Cointelegraph continued to report that JP Morgan approved bank accounts for cryptocurrency exchanges Coinbase and Gemini in April 2020.

Since the CEO of JPMorgan doesn’t seem to have anything against blockchain technology, you could say that Established banks are trying to convince investors to focus on a centralized entity that banks can benefit from, such as stablecoin JPM.

As we continue to investigate this inconsistency, it is obviously important to observe what institutions do, not what they say. For example, in a conversation with Cointelegraph, Michelle Dougherty – one of the members of the Digitbyte awareness team and a prominent lawyer for crypto space with experience in the US State Department and a former lawyer in the United States – He thought about his interactions with investment advisors at one of the largest banking institutions in the United States:

“My financial advisor at Merrill Lynch personally prevented me from buying Bitcoin when I wanted to return in 2014. He said it was a ‘too risky’ investment. As an idiot, I followed his bad advice. Bank of America Merrill Lynch went out and called Bitcoin the best investment in the past decade“”

Dougherty also noted that the U.S. Comptroller of the Currency office recently hired a Coinbase manager. underlines the fact that traditional banks in the industry are turning 180 degrees when trying to control the narrative:

“When these new headlines come to light, I laugh to myself and know the traditional financial systems They are just trying to delay the inevitable and find out how they will get a piece of the cryptocurrency cake“”

Pursue self-interest goals

The dynamics between measures and advice shows great differences in the institutional panorama. JPM’s first announcement to release a stable coin doesn’t seem to have surprised the crypto industryNot everyone likes the idea that the banking sector is interested in the cryptocurrency market.

The fragmentation and true intentions of institutions interested in blockchain technology continue to be discussed. A distant target could be Monopolize the nature of the transaction and interoperability, making institutions relevant to the future digital asset economy.

Related: Central banks are investigating blockchain, but for their own reasons

It’s also important to note how large financial regulators display digital assets and cryptocurrencies. Since 2015, the New York State Treasury Department (DFS) has approved 25 companies to participate in virtual currency business in New York State. In a quote to Cointelegraph, Superintendent Linda Lacewell of the New York State Department of Financial Services commented: “DFS continues to support financial innovation in New York“”

So while there is a continuing dichotomy between banks, regulators and crypto maximumists, The underlying technology is still seen as valuable and transformative for our common future.