How Banks Are Trying To Discredit Bitcoin

Each year, Bitcoin continues to grow in stature. Bitcoin is going mainstream by every metric — financial value, adoption rates, transaction volume, you name it.

But not everyone’s happy Bitcoin adoption is growing. In particular, the banking industry feels threatened by bitcoin’s rise and continues to wage war on the cryptocurrency.

That banks don’t like Bitcoin shouldn’t be a surprise. Satoshi Nakamoto’s invention is the greatest disruption to the age-old monetary system in decades. As a peer-to-peer network for creating and exchanging value, Bitcoin may render banks useless.

To protect their position, banking institutions have resorted to the classic tool of warfare: propaganda. By spreading misinformation, banks hope to discredit Bitcoin — reducing public adoption and encouraging stricter regulation.

From the onset, Big Finance must have realized Bitcoin could potentially disrupt the banking system. But they chose to believe its use would remain restricted to drug dealers, computer geeks, cypherpunks, libertarians and other fringe elements.

But as cryptocurrency adoption grew, especially among institutional investors, panic spread in the banking system. For the first time, the possibility that this “magic internet money” may displace banks was real.

Thus, banks launched a coordinated effort to discredit cryptocurrencies. Bitcoin was and is a favorite target, given its status as the world’s first and most popular cryptocurrency.

In 2014, Jamie Dimon, billionaire President and CEO of JPMorgan Chase, America’s largest bank, declared Bitcoin “a terrible store of value” at the World Economic Forum in Davos, Switzerland. However, that didn’t stop the state of New York from issuing licenses to Bitcoin exchanges the following year.

Dimon followed up with his criticism of bitcoin in 2015, saying the cryptocurrency would never receive approval from governments. In his words, “No government will ever support a virtual currency that goes around borders and doesn’t have the same controls.”

Not satisfied, the JPMorgan Chase supremo launched his biggest attack on Bitcoin yet at the 2015 Barclays Global Financial Services Conference. 

Not only did he call Bitcoin a fraud similar to Tulipmania, but he also threatened to fire anyone who traded Bitcoin via his company.

Dimon isn’t the only Big Finance stalwart who has tried to undermine Bitcoin. President of the European Central Bank Christine Lagarde has also been critical of Bitcoin in the past.

At a Reuters Next Conference, Lagarde branded bitcoin “a highly speculative asset,” adding that it has been used to conduct “some funny business and some interesting and totally reprehensible money laundering activity.” 

This is even as the European Central Bank was considering launching its digital currency called the digital euro at the time.

The ECB, too, has often lent itself to the anti-Bitcoin propaganda campaign. In its 2021 Financial Stability Review, the apex banker compared surges in bitcoin’s price to the infamous South Sea Bubble. “[Bitcoin’s] exorbitant carbon footprint and potential use for illicit purposes are grounds for concern,” it added in the report.

Even the world’s largest financial institutions have also joined in on the anti-Bitcoin party. For example, the World Bank refused to support El Salvador’s plan to adopt bitcoin as legal tender, adducing “environmental and transparency shortcomings” of the cryptocurrency. 

The International Monetary Fund (IMF) also urged the Latin American nation to drop Bitcoin early this year.

Of course, there are many, many more instances of old-money institutions sowing doubt and spreading misinformation about Bitcoin. 

Nevertheless, these statements all point to the same conclusion: banks hate Bitcoin and will stop at nothing to discredit it.

Some financial players have taken another tack in their disinformation campaign. This involves criticizing Bitcoin but praising the underlying blockchain technology that powers the system.

Banks see the potential of blockchain technology to revolutionize payments and want to co-opt the technology for their benefit. For example, JPMorgan Chase, the avowed Bitcoin critic, has created a cryptocurrency called “JPMCoin” running on its Quorum blockchain.

Central banks have also touted blockchain’s capability to power central bank digital currencies (CBDCs) — cryptocurrencies issued and backed by governments. Such assets are pegged to a fiat currency, like the dollar or euro, much like a stablecoin.

The Bank for International Settlement (BIS) ripped into cryptos in a June 2021 report, describing them as speculative assets used to facilitate money laundering, ransomware attacks and other financial crimes. 

“Bitcoin, in particular, has few redeeming public interest attributes when also considering its wasteful energy footprint,” the report declared.

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