Banks' Fear of Crypto Turns To FOMO

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From Wall Street to Capitol Hill, executives, banks and financiers have been singing a different tune on cryptocurrencies and blockchain technology: their fear of crypto is rapidly turning to a fear of missing out, or FOMO as it’s known in the industry.

Traditional banks have been among the last to acknowledge the dynamic changes that are coming to their corner of the market. In the past, banks have had a complicated relationship with cryptocurrencies and the disruptive underlying financial tech. From denouncement to implementation and partnerships, major players in the finance industry seem to be finally coming to terms with the new innovations affecting them.

Banks Are Finally Voicing Their Fear of Crypto

Deep in the depths of regulatory filings, and limited to a few choice words in a sea of financial initiatives and company performance, at least one banks has disclosed its realization that crypto is more than a passing fad.

JPMorgan Chase & Co. chief executive Jamie Dimon, who infamously and regrettably called Bitcoin a fraud, could be feeling the brevity of the technology now. Or. in his own words:    

“The blockchain is real. You can have crypto yen and dollars and stuff like that.”

This type of ‘stuff’ seems to be on the company’s radar now. In their annual regulatory filing, the company expressed concern about potential competition heating up in their space. In one of its first admissions, the bank considered mainstay cryptos like Bitcoin and Ethereum as specific risk factors. Cryptos could end up affecting their bottom line as these digital currencies will be competing against the fundamentals of their business.

“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.”

Already we’re seeing the bank adding new technologies to counteract and compete with the rising tides of change – in direct opposition to their earlier stated stance. JPMorgan Chase has already begun to develop its own Ethereum based blockchain and has started creating the cryptos on top of it. They’re aware that with increased competition in both the service and product market; they may be at risk for losing significant market share. Their fear of crypto appears to be fading.

This similar sentiment was echoed in the Bank of America filing earlier this week as well. As many banks have been cracking down on card transactions with exchanges and crypto companies, there was some promising information here.

“Further, clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies.”

While this is not an outright endorsement of cryptocurrency investing – it isn’t a condemnation of it either.

Goldman Sachs’ Acquisition Of Poloniex Suggests Major FOMO

Goldman Sachs also has a complex relationship within the industry. After the recent Poloniex acquisition by Circle – a Goldman backed venture, they have a lot more skin in the game. In a recent interview with Business Insider, Sharmin Mossavar-Rahmani, Chief Investment Officer for Goldman’s Private Wealth Management, spoke about the current valuation of Bitcoin – believing it to be a bubble – and about the role of central bank-backed cryptocurrency.

‘These ones’, in Mossavar-Rahmani’s quote, refers to Ethereum and Bitcoin, which she described as having “astronomical” valuations which “do not make sense to us”. One could easily interpret her comments to mean that distributed ledger technology certainly has value – so long as that value is dictated by banks, and not private citizens.

JPMorgan Chase, on the other hand, released what many are considering the “Bitcoin Bible” earlier this month. The 71 page report documented use-cases, researched the underlying technology and spoke about overcoming problems for widespread adoption.

They came to the conclusion that cryptos are highly unlikely to disappear entirely and will continue to evolve in different ways.

They also spoke about the major tenets of peer-to-peer networks and a focus on anonymity in a greater decentralized marketplace.

These buzzwords sound familiar to anyone within the crypto space, so it’s worth taking note of when one of the largest banks in the world abandons their fear of crypto, and begins to express FOMO instead.

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