Currencies

Citi, Credit Suisse join JPMorgan in warming to digital currencies

At the World Economic Forum in Switzerland, Credit Suisse chairman Axel Lehmann warned against getting left behind as digital assets win over more of the financial world.

Citigroup chief executive Jane Fraser said there had been an “unbundling from what was the old institutions of the world financial order,” towards new firms that are “born digital” thanks to crypto.

Their comments now echo JPMorgan’s too.

Boss Jamie Dimon last year staked his claim as one of the biggest bank boss sceptics by calling bitcoin “worthless.”

But in a May letter to shareholders, he said that the crypto ecosystem, decentralised finance and blockchain are “real, new technologies that can be deployed in both public and private fashion, permissioned or not.”

READ Pro traders flocked to bitcoin in crypto crash amid ‘flight to quality’

The comments signal a subtle warming to the technology surrounding the $2tn cryptocurrency market by some of the biggest giants on Wall Street. It’s also sign that big banks need to get with the new digital age, and fast. Lehmann said legacy banks need to either think strategically or get “sidelined very quickly”.

“Sometimes it takes two or three years and then you wake up one morning and say, ‘The world has changed and you are not part of it,’” Lehmann said at Davos.

Despite a crash in crypto prices in the last month and an impending regulatory crackdown in both the UK and the US, major financial institutions continue to invest heavily in their digital-asset-based offerings.

Nomura said earlier this month it will launch a new digital assets subsidiary to provide institutional clients with crypto-trading services.

READ Meet six former bankers who quit for crypto: ‘My phone rings off the hook’

Others recent plays in the digital assets space include HSBC taking a stake in metaverse gaming firm Sandbox in March, private equity giant Apollo hiring JPMorgan metaverse head Christine Moy in April, and Grayscale saying in May it plans to launch its first European ETF, the Grayscale Future of Finance UCITS.

The global market for major cryptocurrencies plunged from $2.3tn late last year to about $1.3tn now, according to Goldman Sachs. But as prices plunged, research firm Macro Hive found that net inflows into bitcoin futures ETFs picked up, a sign that institutional investors have found valuations more attractive.

It’s a sign that larger investors aren’t spooked by the crypto ‘Wild West.’

Financial News found that a flurry of bankers started ditching mainstream finance for cryptocurrency jobs, even as major players invest more in the sector.

READ Nomura to launch new firm to scale up offerings in crypto, DeFi and NFTs

Exits of traders, quants, technology specialists and bankers from traditional Wall Street or City backgrounds for crypto ventures are gaining pace, said recruiters and professionals who have made the move.

Dimon’s comments show the bank is unlikely to let itself fall behind. He said JPMorgan is “at the forefront,” of innovation, citing the bank’s blockchain network Liink, which enables banks to share information on payments, as well as JPM Coin, a digital currency tied to the US dollar.

“There are many uses where a blockchain can replace or improve contracts, data ownership and other enhancements,” he said, but added that for some purposes it is “currently too expensive or too slow to be deployed”.

Citi’s Jane Fraser was careful to distinguish between the currencies themselves and crypto-enabling tech.

“We love the technology, but we’re not sure on some of the crypto assets,” she said.

 

To contact the authors of this story with feedback or news, email Paul Clarke and Alex Daniel

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