Behind Wall Street's abrupt change on crypto

The reversal risks declawing a century of consumer financial protections and replacing the backbone of bank accounts, writes Rob Copeland from New York

- Rob Copeland

Not long ago, bank executives would compete with one another to be the loudest critic of cryptocurrencies.

Jamie Dimon, the chief executive of JPMorgan Chase, once compared Bitcoin to a pet rock and said the whole crypto industry should be banned. Bank of America’s Brian Moynihan described the space as an “untraceable tool for money laundering,” while HSBC's chief executive proclaimed bluntly: “We are not into Bitcoin.”

Now big banks can’t stop talking about crypto.

In investor calls, public presentations and meetings with Washington regulators, financial executives are tripping over one another to unveil new plans — including the development of fresh cryptocurrencies under bank umbrellas and loans tied to digital assets.

There’s no small mix of political opportunism at play, given that President Donald Trump and his family are vociferous crypto boosters and investors. And of course there is a degree of old-fashioned jealousy among the traditional finance set at the riches earned by onetime fringe companies and investors as Bitcoin more than doubled over the past year to blow past $100,000.

But behind the scenes at major financial institutions — and in stark contrast to the public showboating among chief executives — fear is also rising that the rush into crypto may risk the safety of personal bank accounts in ways that Wall Street and Washington are just beginning to understand.

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The worries, described by nine Wall Street executives briefed on their organisations’ crypto initiatives but not authorised to speak publicly for their employers, centre on the creation of a new interbank checking account and payments system built on crypto and blockchain technology. That system would come with few consumer protections and nascent regulatory oversight.