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Why JPMorgan, Barclays And Citi-Bank Can't Play Crypto

09 August 2018 22:08, UTC
Why JPMorgan, Barclays And Citi-Bank Can't Play Crypto
By Oleg Koldayev

The largest banking conglomerates cannot decide whether they should work with crypto or not. The situation on the financial field is extremely strange, because certainty in investment issues is one of the basic features of banking business. Why do the largest players of this market give contradictory information and are not afraid of reputational losses?

Not so long ago English bank Barclays and American financial conglomerate JPMorgan applied to the US Patent and Trademark Office (USPTO) for blockchain technologies, which allow managing virtual active assets. Then the information appeared that the companies were planning to launch their own blockchain-platforms.

However, after a while, Jamie Damon, JP Morgan CEO, said that he considered bitcoin to be a scam, and the credit institution was not interested in cryptocurrencies.

The same is with Barclays. At first in the LinkedIn profile of Chris Tayrer, one of the bank’s top-managers, the information appears that “he is hired to develop a business-plan for the integration of a trading table for digital assets into the marketing business”. Then announcement disappears from the LinkedIn profile, and the bank rebuts data. And Barclays’s spokesperson gave a meaning nothing comment on the question, whether the bank was going to develop “a digital line of action”: We are constantly following the events in the digital currency space. And we will continue the dialogue with our customers about their needs and intentions in this market.

Citi-Bank published a report of bitcoin danger at first, and then released its own digital coin, but didn’t send it to free sailing. Citicoin is used only to transfer money between branches.

Goldman Sachs and Morgan Stanley announced their intentions to develop blockchain and work with digital assets. But beyond the words it did not go.

The list of inconsistent actions and announcements of world leaders of financial industry can be continued.

But if we look at the situation ironically, global banks are like “three wise men in one in one basin”, trying to survive in the stormy sea. New digital economy has broken into the business world so quickly that captains of financial business had no time to adapt to different conditions. On one hand, they have to meet modern realities and possibly master crypto market, as many investors require. On the other hand – the usual mechanisms of assets management and financial decision making do not allow them to integrate into super-fast virtual economy.

At the same time cryptocurrency is sensitive to such range of opinions. When the announcement about the interest in crypto market of such financial giants as JPMorgan with its own amount of finance of $2.5 trillion or Barclays ($1.5 trillion) is published, the value of digital assets inevitably changes.

Instability of digital financial market is the consequence of a lack of trust. Therefore, when someone of the financial conglomerates’ management announces increased risks, associated with high volatility of cryptocurrencies, one should be aware of the hypocrisy of these claims. Banks cannot admit their inability to meet new realities. Weakness and unwillingness to change – are the main reputational risk that conglomerates aim to avoid.

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