JP Morgan Jamie Dimon has labelled Bitcoin a fraud that will eventually ‘blow up’ at a banking conference in New York.
In an astonishing tirade against the flagship digital currency, Dimon said that it was only fit for use by drug dealers, murderers and people living in locations like North Korea. He also said that he would immediately fire any employee at the investment bank that he found to be trading in Bitcoin.
The Guardian quotes Dimon as saying:
“The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.
“It is worse than tulip bulbs. Don’t ask me to short it. It could be at £20,000 before it happens, but it will eventually blow up. Honestly, I am just shocked that anyone can’t see it for what it is.”
The banking honcho’s remarks caused Bitcoin to trade down over 100% on Tuesday, although it is still up over 350% this year.
FCA issues warning to investors on ICOs
Dimon’s warning occurred as the UK regulator Financial Conduct Authority (FCA) issued a warning to investors about the speculative activity occurring around ICOs.
The world of ICOs has been thrown into disarray since China took the huge step of banning the practice last week. The US SEC had also previously issued a warning to investors that is similar to the FCAs.
The FCA statement asks investors to make themselves aware of the risks involved in ICOs.
The statement calls ICOs “high-risk, speculative investments”:
“Typically ICO projects are in a very early stage of development and their business models are experimental. There is a good chance of losing your whole stake.”
The statement lists a number of other risks:
- lack of regulation – most ICOs are not regulated by the FCA and are based overseas
- investors have little to no protection
- tokens may experience extreme price volatility
- there is serious concerns over the potential for fraud
- there is inadequate documentation – such as potentially “unbalanced, incomplete or misleading” ICO whitepapers
On what role businesses should play, the FCA states:
“Businesses involved in an ICO should carefully consider if their activities could mean they are arranging, dealing or advising on regulated financial investments. Each promoter needs to consider whether their activities amount to regulated activities under the relevant law.”
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