JPMorgan executive stated that cryptocurrency is a nonexistent asset class for the vast majority of large institutional investors due to the volatility and inadequate intrinsic returns.
As JPMorgan strategist and investment banker Jared Gross told Bloomberg, the big players in the financial institutional investment scene are keeping off crypto ecosystems:
“As an asset class, crypto is effectively nonexistent for most large institutional investors; the volatility is too high, and the lack of an intrinsic return that you can point to makes it very challenging.”Jared Gross, JP Morgan strategist
Gross believes bitcoin is yet to become a haven asset or a form of digital gold. He said that several institutional investors are sighing in relief they had not jumped into that industry.
JPMorgan’s controversial stance on crypto
JPMorgan Chase & Co., one of the largest banks in the world, has had a somewhat mixed stance on cryptocurrencies and blockchain technology.
On the one hand, the bank has invested in and developed its own blockchain-based payment system, called Quorum. It has been involved in several projects using blockchain technology, including the development of a digital currency JPM Coin. In addition, the bank has also explored the use of cryptocurrencies for its own operations, such as using bitcoin to settle foreign exchange trades.
At the same time, the bank expressed scepticism about cryptocurrencies in general. Its CEO, Jamie Dimon, famously called bitcoin a “fraud” in 2017. In recent years, the bank has also warned its clients about the risks associated with investing in cryptocurrencies, stating that they are highly volatile and not backed by any tangible assets.
Overall, it appears that while JPMorgan is interested in the potential applications of blockchain technology, it is more cautious about the use of cryptocurrencies as an investment or as a medium of exchange.