JPMorgan Capitulates, May Help Clients Trade Bitcoin Futures (For A Fee)

Tyler Durden's picture

On September 12, Jamie Dimon caused a stir (and selloff) within the cryptocurrency community when he lashed out at bitcoin, calling it a "fraud" which is "worse than tulip bulbs, predicting "it won't end well", will "blow up" and "someone is going to get killed." Oh, and just to make it clear, "any JPM trader caught trading bitcoin" would be "fired for being stupid."

After briefly plunging, since then the price of Bitcoin has doubled, and earlier today, Bloomberg quoted money manager David Kotok who said that "clients bring up bitcoin all the time. They think it’s cool. It has the newness, which is attractive to some people, though others would say newness is a risk they don’t want to take." For banks, as Lloyd Blankfein learned over the past month, this means they have a choice: either get with it, and make money on the latest investing craze, or stand aside and make nothing.

And now, none other than JPMorgan is "getting with it", because as the WSJ reports, despite Dimon's guarantee of a pink slip for any trader caught transaction in bitcoin, the bank is now looking at business opportunities in the planned bitcoin-futures market, which the CME has said it will launch by the end of the year. Specifically, J.P. Morgan is considering whether to provide its clients access to CME’s new bitcoin product through its futures-brokerage unit. That, the WSJ reports, means the bank’s customers could use it to trade bitcoin futures while J.P. Morgan collects fees for such services, seemingly in violation of its fiduciary duty considering its CEO just two months ago called the product a "fraud."


The reversal is not definitive yet, and the process has involved assessing whether there is demand among J.P. Morgan’s customers for the proposed CME bitcoin contract, according to the WSJ source, although judging by the reverse inquiry, there clearly is.

And where JPM goes, others are sure to follow: 

Other banks must also make the call about whether to support CME’s bitcoin futures. Goldman Sachs Group Inc., Bank of America Merrill Lynch and Morgan Stanley are among the dozens of firms that offer their customers access to CME’s markets through their futures-brokerage arms.

But, as everyone knows courtesy of repeat media appearances by the outspoken CEO, none of those banks has chief executive who has been as critical of bitcoin as Dimon, who has blasted it as a “fraud” and compared it with past financial bubbles. “If you’re stupid enough to buy it, you will pay the price for it one day,” he told a conference last month.

And now, in delightful irony, JPM is preparing to make money by offering this "fraud" to clients. This, also, just days after JPM was busted for assisting money laundering in Switzerland after accusing bitcoin of being used as a tool for money laundering.

Here, we naturally commisserate with the JPM chief: In a world in which as Mike Novogratz said earlier, retail interest in equities has been waning over the past decade as "investors no longer trust financial institutions", the only alternative to grip the public's trading and investing interest has been the very bitcoin (and other digital currencies) so loathed by establishment commercial and central banks, especially since the "money" is printed not by some central bank, but the universe of users themselves: a lack of control central banks would never willingly cede.

JPM's looming decision about whether to let customers trade bitcoin futures underscores the challenges that Wall Street firms face as the cryptocurrency emerges from the shadowy margins of the financial markets and draws growing investor interest. Meanwhile, CME CEO Terrence Duffy said in a CNBC interview this month he expects trading in bitcoin futures to begin the second week of December. Launching futures would bring the virtual currency a big step closer to the financial mainstream, making it easier for both large financial firms and retail investors to trade it.

Furthermore, as we showed in September, J.P. Morgan already gladly collects commcision for handling client trades of Bitcoin XBT, an ETN trading in Europe and tracking bitcoin. While the bank has said it doesn’t take positions in the note and simply routes customers’ buy and sell orders electronically to exchanges, it wouldn't be the first time JPM has lied about it considers prop trades (see the London Whale). 

In any case, brokering trades in bitcoin futures would be similar, as JPM would be happy to collect a spread every time a client buys or sell the "fraud." And once in, JPM will have no choice but - as a matter of ego - to be the biggest. J.P. Morgan is the second-biggest futures broker in the U.S., second only to Goldman, CFTC data show.

And as more and more Wall Street firms scramble to offer the retail public access to bitcoin, last week IB CEO Thomas Peterffy, warned that CME needs to ring-fence its system for clearing bitcoin futures trades from the rest of its markets, or else losses in bitcoin could end up rippling through the broader financial system.

“Unless the risk of clearing cryptocurrency is isolated and segregated from other products, a catastrophe in the cryptocurrency market that destabilizes a clearing organization will destabilize the real economy,” Mr. Peterffy wrote last week in an open letter to the chairman of the CFTC, which he also published in a full-page advertisement in The Wall Street Journal.

Ironically, this legitimate warning appears to have only cemented JPM's resolve to become a bitcoin middleman, and soon, principal. Which brings us to a question we first asked two months ago: "which is it Jamie?"

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E.F. Mutton's picture

Well shit, a more relevant question is, what WON'T they do "for a fee?"

Pladizow's picture

As Jamie threatened any JPM trader caught trading BTC with termination - will he now resign?

ParkAveFlasher's picture

Gotta keep that good ol' silver short from exploding somehow.


Jamie hired tmosley as his chief Bitcoin pumper, dog walker, and cornhole stand in. 

mpnut's picture

What he MEANT: We will sell you our BITCOIN that we bought during the Bitcoin "Fraud" allegation LOW..  "You get what you want, we get what we want.. Everyones happy"

thinkmoretalkless's picture

Just what we need... paper bitcoin

BandGap's picture

Wow, admit you're wrong and make money. What a great bunch of guys.

???ö?'s picture

Don't confuse prostitution with love.

ThePhantom's picture

how does something with no value have value? asks Dimon ... well i dont' know? how do you purchase "stuff" with special paper... also called Dollars? and where do those $$$ come from? a keystroke? no!

prymythirdeye's picture

Folks, Jamie Dimon will sell his children for a buck.  He's already told us how dumb his daughter is.

???ö?'s picture

You can choose your friends but you can't choose your parents.

freedogger's picture

Indeed. He's already sold our children for more than that.

JLee2027's picture

You can now short this thing, so it's a matter of time before it's manipulated and then destroyed. 

Peacefulwarrior's picture

Great Point... and also wasn't one of the new crypto's just hacked for 30+ million? That may be the other way to short these stocks :)

disagreeableness's picture

No, it was a wallet. It's always either a wallet or an exchange. 

freedogger's picture

Etherium has more interesting ways to hack than just the wallet or the exchange. Poorly written contracts can be "hacked" or stolen from.

Joebloinvestor's picture

I smell profit and manipulation.

Bendromeda Strain's picture

I think the whole thing was Kabuki.

Yellow_Snow's picture

He's a gangster - speaks out of the side of his mouth while he's scheming something else.

Did you think he became CEO of the world's most corrupt bank by being honest and trustworthy?

Maybe even throw his daughter under the bus?

Two-bits's picture

Why do the worlds bankers keep saying crypto is bad...


When it gets serious, lie.


get yours drip by drip.

DavidFL's picture

The top must be in!!

ThePhantom's picture

infj. anyone know what im talking about ?  just wondering

small axe's picture

Dimon's rap sheet is longer than you can stay solvent

GreatUncle's picture

Untouchable, above the law ... hence no rap sheet ... squeaky clean.

disagreeableness's picture

Did anyone else get airdropped 26 BTG yesterday, or was it just me that got the free 7k?

BitchesBetterRecognize's picture

BTC is doomed once JPM & the other Banks get their hands all over it via ETF.....  


GreatUncle's picture

Point taken although here is the trick of crypto currencies ... you can start another one if you reckon the current one has too many ETF's.

Not so gold, gold is gold and they keep stacking ETF's against it ... what is it now, last I heard was 250x and nowhere to go but more ETF's.

freedogger's picture

Yes it will be interesting to see if BTC and its cousins remain corellated after these futures start trading.

adr's picture

Just because Fed dollars are a fraud doesn't mean Bitcoin is not. 

Anything that can move hundreds of dollars from a single miniscule investment in one thousandth of itself can be moved to any price at will. 

People ask how Bitcoin can seemingly bounce back after every rightfully negative development. Because 90% of Bitcoin are held by a handful of investors and a tiny bid in Satoshis can move a full Bitcoin a lot. 

The holders of Bitcoin do not want it legitimized or regulated. They prefer it to remain a manipulated vehicle for fraud as it has made them immensely wealthy from fools handing them earned cash for an electronic token with no real value. 

Fools are easily parted with their money, even though they believe themselves geniuses while their "investment" goes up in value. 

If Bitcoin wallets were evenly distributed with equal holdings, maybe. But when 90% of wallets hold less than one Bitcoin it is as bad as a CEO holding nearly every voting share. 

buzzsaw99's picture

i can understand people who invest in computer equipment and mine bitcoin trying to turn a profit.  i don't understand how it works, but i could see someone giving it a go.  pay cash for a bitcoin?  fuck that.

GreatUncle's picture

TBH I can wipe my ass with paper or burn it for warmth ... bitcoin can't do that.

It a great place to attempt to move money out of the current fraudulent system, I CANNOT DISAGREE WITH THAT.

At that point it has a similarity to silver and gold ...

I am a serf, GTFO of the fraud if you can otherwise you remain a serf.

GreatUncle's picture

No more a fraud than everything else!!

TacticalTrading's picture

I wonder if they ever considered beanie baby futures 

Dr. Gonzo's picture

Open a Coinbase or Poloniex account and pay $80 for a nano ledger and send them to your own cold storgage. Who need JPM's fees?


TeddyBear's picture

Bitcoin has its own problems

It's really a Ponzi scheme. It's only worth what someone else will buy it for. Gold at least you can make jewelry out of it and electronic parts.


How many people do you think are trying to hack the code right now? And the first one that succeeds will drive it to zero overnight. It's just computer code and code can always be hacked. Just keep some Pocket Change in it if you want. I did sell all of mine earlier in the year. But to take a prophet was great. Never complain when you take a profit.

Time to move on to the next big thing. Robots and AI.

The man in the suit just bought a new car from the profits he's made on your dreams.



blentus's picture

A tree can also fall on your head.

Probably best not go to outside.

TeddyBear's picture

Do a search for.

Texas governor Abbott's life story. That's exactly what happened to him..

And I live in Houston near where that happen.

Well here it is never mind the search.

On July 14, 1984, at age 26, Abbott was paralyzed below waist-level when an oak tree fell on him while he was jogging following a storm.[5][6] He had two steel rods implanted in his spine, underwent extensive rehabilitation at TIRR Memorial Hermann in Houston, and has used a wheelchair ever since.[7][8] He sued the homeowner and negotiated an insurance settlement worth more than US$10 million, resulting in payouts of US$14,000 a month.[9]

You're pretty good at predicting. Give me a stock tip.

GRDguy's picture

JPM: Since your income depends on lyin' and stealin', (and not going to jail)

finding new markets like bitcoin is a necessity.

VWAndy's picture

 Come on Man! That shit is funny. Hahahahahaha