In a move likely to spur other financial institutions into action, JPMorgan Chase now supports money transfers to both the Coinbase and Gemini cryptocurrency exchanges, which are two exchanges that have invested heavily to meet regulatory hurdles. Both have received a BitLicense from the New York State Department of Financial Services and both have implemented know your customer requirements sufficient to become registered as a money services business with FinCEN.
This relationship falls far short of providing anything approaching a crypto trading desk and is certainly not JPMorgan Chase holding any crypto assets, all it has done is enabled account holders to transfer money to and from these two exchanges. This indicates that JPMorgan Chase is prepared to defend this activity to regulators and clearly represents a major thawing in how major financial institutions view cryptocurrencies. If nothing else, it acknowledges that customers are interested in making investments in, and holding, cryptocurrency assets. Coinbase supports trades for 19 different crypto assets which includes crypto from Bitcoin, Ethereum, Ripple, Litecoin and others:
“ ‘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,’ he added, according to The Guardian. ‘If you were in Venezuela or Ecuador or North Korea … or if you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than US dollars. There may be a market for that, but it would be a limited market.’
Dimon, however, has been a booster of blockchain technology, upon which bitcoin is built. JPMorgan Chase last year said it successfully tested JPM Coin, a digital currency meant to speed up payments. The bank also plans to merge its blockchain unit Quorum with the developer ConsenSys, Reuters reported in February. The bank said it wants to use Quorum to issue JPM Coin to settle interbank transfers.
Banks had resisted dealing with coin exchanges for years out of fear of regulator scrutiny or concern that such ties would expose banks to money laundering. Coinbase and Gemini, however, are regulated by multiple bodies.
Coinbase is registered as a money services business with the Financial Crimes Enforcement Network, and Gemini obtained a trust charter from New York’s Department of Financial Services in 2015. Both exchanges have gone through the rigors to operate under NYDFS’s BitLicense framework and are licensed money transmitters in multiple states.”
Overview provided by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group.
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