Grasshopper Capital Daily: JP Morgan does a 180

CFTC = Bitcoin Friendly?

Chairman of the CFTC, Giancarlo Stanton, has become a cult-figure in the cryptocurrency community following his positive comments about cryptocurrency at a Senate hearing. Today, the CFTC announced that employees of the agency can trade Bitcoin. The statement reads:

Under the Commodity Futures Trading Commission’s ethics guidance, workers can trade digital tokens as long as they don’t buy them on margin or have inside information gleaned from their jobs. Investing in the Bitcoin futures that the CFTC polices, however, is barred.

I'm happy to see the CFTC allow this, especially, because the SEC allows their employees to own equities. I think it's naive to believe that government workers won't trade off of potential regulatory decisions.When our own congress members can legally trade on insider information, it would be a hypocrisy not to allow CFTC employees to trade Bitcoin and other digital currencies. 

The New Superstars Are Regulators

Cryptocurrency companies aren't fighting just for engineering talent, but also regulatory talent. This reminds me of the days when hedge funds used to hire former regulators. It makes perfect sense. No one knows what a truly compliant ICO looks like or what exchanges might get closed down. However, if you hire a former attorney who worked on cryptocurrency regulations at the SEC, I'm sure they'll have insight on how decisions are made and which way regulators are leaning on certain decisions. Ripple, for example, hired Ben Lawsky, the former head of New York State's Financial Services division which was in charge of creating BitLicense. Arthur Levitt, former SEC head, writes:

Enlisting former government regulators is a natural progression, according to Arthur Levitt, the former Securities and Exchange Commission chairman. “All new companies try to do that,” said Levitt, who advises cryptocurrency ventures including BitPay and Mirror and is a director at Bloomberg LP, the parent of Bloomberg News. “There’s nothing unique about cryptocurrencies,” he said.

Cryptocurrency is a Risk to JP Morgan

JP Morgan is now admitting cryptocurrency is a risk to their business is the biggest 180 the bank could pull. JP Morgan's annual report says:

Both financial institutions and their non-banking competitors face the risk that payment processing and other services could be disrupted by technologies, such as cryptocurrencies, that require no intermediation

I never comprehended why executives comment on things they clearly don't understand. You are being paid because you are an expert in your field. It's okay to not understand something. If anything, it shows you are human. Instead, they risk not only their personal reputation but the company's reputation by speaking poorly on a subject that comes back to bite them. If Jamie Dimon just said, we are watching the space, but have no comment at this time, they could've avoided this whole PR disaster. 

Some Other Things I Read Today

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