JPMorgan Chase has been routing customer orders for bitcoin-related instruments, a spokesman said on Monday, despite the bank’s chief executive’s calling the crypto currency “a fraud.”
Like other Wall Street banks, JPMorgan acts as an agent for buyers and sellers of Bitcoin XBT, an exchange-traded note designed to track the value of the crypto currency.
JPMorgan does not take positions in the instrument with its own capital and routes the orders electronically to exchanges, JPMorgan spokesman Brian Marchiony said.
“They are not JPMorgan orders,” Marchiony said. “These are clients purchasing third-party products directly.”
JPMorgan’s relationship with Bitcoin XBT came into question over the weekend when the financial blog Zerohedge asked why the bank was involved with the trading after CEO Jamie Dimon called bitcoin a fraud and said he would fire anyone at the bank who trades it.
Bitcoin is a digital currency that enables individuals to transfer value to each other and pay for goods and services outside of the regulated financial system.
Because it is not backed by any government and has been tied to crimes, including money laundering, hacking and drug trafficking, most financial institutions have stayed away from dealing in bitcoin.
Dimon captured that sentiment in his comments last week. “If we have a trader that trades bitcoin, I would fire them in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous,” he said at an investor conference.
Even so, major financial firms including JPMorgan have invested in a technology called blockchain that underpins bitcoin transactions in hopes that it can be used for other purposes, such as settling ordinary trades.
Bitcoin prices fell last week to nearly $3,000 from $4,200 after Dimon spoke and China reportedly cracked down on crypto currency exchanges. But bitcoin rebounded with the new week, trading on the Bitstamp exchange at $4,025 on Monday.
Along with JPMorgan, more than a dozen banks, including Morgan Stanley, Goldman Sachs Group Inc and Credit Suisse Group AG, have acted as brokers for buying and selling Bitcoin XBT on Nasdaq’s Stockholm-based exchange, according to Swedish online bank Nordnet AB.
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Other exchanges want to trade, too. CBOE Holdings Inc has applied with U.S. Regulators to handle a bitcoin futures contract and an exchange-traded fund.
“Like it or not, people want exposure to bitcoin,” CBOE CEO Edward Tilly said last week at the same conference where Dimon spoke.