JPMorgan Chase CEO Jamie Dimon has called on the government to ban cryptocurrency as part of a Senate Banking Committee hearing. Dimon, who has emerged as one of the most vocal critics of crypto over the past decade, expressed his belief that the technology’s only “true use case” was for those committing illegal activities.
The comments came under questioning from Senator Sen. Elizabeth Warren, who seemed to agree with Dimon’s remarks. According to Warren, congress should act to prevent “terrorists, drug traffickers, and rogue nations” from using crypto for their “dangerous activities”, warning that it is a matter of “national security”.
The CEOs of Wells Fargo, Bank of America, Citigroup, BNY Mellon, Goldman Sachs, and Morgan Stanley also attended the full committee hearing, titled Annual Oversight of Wall Street Firms.
The Case Against Crypto
While cryptocurrencies were not at the center of the hearing, Sen. Warren did put them in the spotlight after asking all of the CEOs if their financial institutions had controls in place to prevent bad actors from using their systems.
As such controls are required by the Bank Secrecy Act, all of the witnesses answered positively to the question, which according to Sen. Warren was a demonstration of how traditional banks are less risky to national security than cryptocurrency.
Among many of the arguments made during the hearing, Sen. Warren referred to North Korea and Hamas’ use of cryptocurrency to fund their operations before asking Dimon what made crypto “such an attractive financial tool for terrorists, drug traffickers, and rogue nations.
Crypto’s pseudo-anonymity, instantaneous transaction, global reach, and decentralization were then mentioned by Dimon as some of the reasons why the technology should be banned.
Warren is part of a group of more than 100 lawmakers looking to pass legislation to address the use of cryptocurrency by financial institutions. A letter urging the Biden administration to act on what the bipartisan group saw as a “clear and present danger” was sent back in October.
The group asked the the administration to “provide additional details” on what steps were being taken to prevent such a use of crypto to finance terrorism, citing “the deadly attack by Hamas.”
Are Dimon and Warren Pushing a False Narrative?
The arguments used by the lawmakers, Sen. Warren, and Dimon are not new, having been used as far back as 2014. The use of cryptocurrency for illegal activities was also in the spotlight in 2021 when Secretary of the Treasury Janet Yellen said crypto use was “mainly for illicit financing.”
The crypto industry as a whole condemned the comments, pointing out that the government was pushing a false narrative to make crypto its scapegoat.
Chainalysis’ 2023 Crypto Crime Report found that the illicit share of all cryptocurrency transaction volume rose in 2022 for the first time in three years. Standing at 0.24%, the illicit share is a far cry from the 1.9% seen back in 2019. The firm also concluded that the rise in the illicit share was not only the result of the surge of activity by sanctioned entities and a reduction in legal trading volume resulting from the bear market.
The United Nations estimates that 2 to 5% of global GDP is laundered globally in one year, which would have represented between $1.9T and $4.75T in 2022, an amount considerably higher than that of crypto. JPMorgan Chase itself was fined $920 million in 2020 and was found to have moved over $514 billion associated with “possible money laundering or other criminal activity.”
JPMorgan has also been developing a new financial network which, despite not being decentralized or considered to use cryptocurrency, relies heavily on blockchain technology and has connected to public networks in the past.