The only newsletter that scans and analyzes the full breadth of regulatory developments every day. Written and curated by Rob Garver for SourceMedia.

9.13.17 - JPMorgan Chase CEO Jamie Dimon cut loose on bitcoin at a financial services industry conference in New York on Tuesday, according to American Banker, calling it over-inflated and a refuge for criminal proceeds before saying he would fire any JPM trader who thought it was a good idea to invest in the cryptocurrency.

Noting that the value of bitcoin has soared in the past year to $4,000 from just $600, Dimon promised that a reckoning is on the way. “Eventually it will blow up,” he said. He called bitcoin a fraud that is only a practical investment “if you are a drug dealer or a murderer.”

He went on to compare the market in bitcoin to the infamous Dutch tulip bulb bubble from the 1600s, calling investing in the digital currency “stupid” and promising, “If we had a trader who traded bitcoin, I’d fire them in a second.”

Dimon isn’t alone on Wall Street. Bank of America’s September survey of fund managers, released Tuesday, for the first time added bitcoin as a possible answer to question asking respondents to identify the “most crowded” trade in the market. The cryptocurrency promptly leapt to the top spot.

In afternoon trading, bitcoin continued a recent slide, falling 6.5 percent to a three-week low of $3,953.

So. Does this mean it’s time to buy bitcoin?

That’s not as flippant a question as it may seem. To be sure, Dimon didn’t get to where he is by having bad instincts about the markets. But at the same time, bitcoin investors didn’t realize triple-digit returns on their investments over the space of 12 months by listening to people like the JPMorgan Chase CEO.

For example, Joon Ian Wong at Quartz offers this handy chart, juxtaposing Dimon’s previous warnings about investing in bitcoin with the currency’s actual performance. The short version? If you had invested your life’s savings in bitcoin every time Dimon told you not to, you’d have a lot more money than you do right now.

Dimon may well be correct in claiming that the world’s largest and most well-known blockchain-based currency is headed for a comeuppance. In fact, looking at the currency’s extraordinary growth over the past year, virtually any traditional market analyst would have to agree with him.

The problem is that traditional analysis of bitcoin has been pretty consistently wrong for years now. That’s because, despite the crowds of “experts” willing to show up on television to talk about bitcoin, nobody really understands how to value it or whether it will even be around in five years.

The confusion about cryptocurrency is made manifest in the pages of the New York Times today. On the one hand, the paper covers the Chinese government’s ongoing crackdown on cryptocurrencies in general and a recent warning from the UK’s Financial Conduct Authority about the “very high risk” of investing in new issues. On the other, it presents a splashy photo-feature on a massive bitcoin mining operation in Inner Mongolia that produces hundreds of thousands of dollars in cryptocurrency every day.

So, back to the question. Is it time to buy bitcoin? The conservative answer is “No.” But that’s always been the conservative answer. What’s the right answer? Nobody knows. Including Jamie Dimon.

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Today’s Key Reads

IRS eases retirement plan loans and distributions to Hurricane Irma victims
Accounting Today - The Internal Revenue Service streamlined the rules Tuesday to make it easier for 401(k)s and similar employer-sponsored retirement plans to make loans and hardship distributions to victims of Hurricane Irma and members of their families.

Public Company board members divided on tax reform, accounting and audit matters
Accounting Today - More than three-quarters of board members at public companies polled by BDO USA expect tax reform to be achieved before the end of President Trump’s term in office, but only 22 percent anticipate it will happen before the end of this year.

Wells internal review may unearth more problems: CEO Sloan
American Banker - Expect more bad news from Wells Fargo in the coming months. Speaking at an investor conference in New York Tuesday morning, CEO Tim Sloan signaled that the company could uncover more examples of financial harm to its customers as part of an ongoing internal review of its sales practices. “While we work to rebuild trust and make things right for our customers, we will be reporting more progress in the months ahead that no doubt will result in additional headlines,” Sloan said.

Panic over Equifax breach bleeds to TransUnion
American Banker - When news broke late on Thursday that a data breach at Equifax had potentially exposed the personal information of as many 143 U.S. consumers, phones started ringing off the hook at rival credit reporting bureau TransUnion, Chief Financial Officer Todd Cello said Tuesday.

Reintroduction of RBC bill in House could start new debate on CU capital
Credit Union Journal - A bill reintroduced in Congress today could reopen the argument surrounding one of the credit union movement’s biggest controversies in decades. The Risk-Based Capital Study Act of 2017 would require the National Credit Union Administration to perform additional due diligence on its Risk-Based Capital rule before it takes effect in January 2019.

MGMA blasts practice of insurers charging fees for EFT
Health Data Management - A physician group management association is asking federal agencies to restrict health insurers and their payment vendors from imposing fees on physicians who get paid by electronic fund transfers.

Equifax breach sparks congressional free-for-all
National Mortgage News - A mishmash of lawmakers from different parties and committees are wading into the aftermath of Equifax’s megabreach, with some using it to advance their policy agendas while others are calling for possible criminal prosecution.


Extra Credit

In China’s Hinterlands, Workers Mine Bitcoin for a Digital Fortune
New York Times - A Times reporter takes a trip to China’s Inner Mongolia, where a bitcoin “mining” operation pumps out hundreds of thousands of dollars a day, employing workers who just a few years ago would have known little or nothing about computers or digital currency.

Goldman Banks on Lending to Grow
Wall Street Journal - Facing a protracted slowdown in its securities business, investment banking giant Goldman Sachs Group said Tuesday that it expects old-fashioned lending to drive at least half of its growth by 2020.

US incomes at record levels while poverty declines
Financial Times - The FT highlights Census Bureau data released on Tuesday that shows, despite the rhetoric of the presidential campaign, that the US economy was healthy in 2016, with household income rising to record levels and the poverty rate on the decline.

Pandit Says 30% of Bank Jobs May Disappear in Next Five Years
Bloomberg - Former Citigroup CEO Vikram Pandit warns that automation will increasingly take over roles performed by human beings in the banking sector, predicting a 30 percent drop in headcount as a result. Now the CEO of New York-based investment fund Orogen, Pandit says he expects major changes in the financial services world. “I see a banking world going from large financial institutions to one that’s a little bit more decentralized,” he told Bloomberg.

Some U.S. banks already comply with new class action, arbitration rule
Reuters - Sen. Elizabeth Warren on Tuesday said that more than a dozen big bank CEOs had declined her request to defend the industry's lobbying against consumer protection rules, and said that many of them claim their banks already comply with incoming regulations on class action and arbitration clauses.

Rob Garver

Rob Garver has been covering the intersection of public policy and the private sector for more than 20 years.