On 10th April, a number of CEOs from leading banks testified in front of the House of Representatives Financial Services Committee about how the banking industry has transformed since the 2008 financial crisis. Blockchain technology was one of the topics discussed by both the bankers and lawmakers.
Warren Davidson (Rep) argued that the industry is entering into a new era of innovation, wherein blockchain technology is transforming existing financial systems, as well as cybersecurity. He also commented that the USA has fallen behind other jurisdictions due to issues with regulatory certainty.
Davidson directly addressed Jamie Dimon, chairman and CEO of JP Morgan Chase, commenting on the fact that in 2017, Dimon had been completely against digital currencies, yet in 2019 his bank announced the launch of the JPM Coin, suggesting this was a rather big U-turn for the bank. Dimon replied, saying: “The part that is not real is that cryptocurrency is not supported by anything, there is no value behind it other than what the next personal pay.”
Davidson then turned to Charles Scharf, the Chairman and CEO of the Bank of New York Mellon, pointing out that the banks’ website states that lack of regulatory clarity as a barrier to providing custody for digital assets. Scharf responded with: “Cryptocurrencies are very early in their existence. They are not significant today to speak of in terms of being used as a real currency to move value, and so we are actively thinking about what we want to do. One of the biggest issues that we have relates to any money laundering and KYC [Know Your Customer].”
Among other topics discussed, Alexandria Ocasio-Cortez (Dem) noted the fines the banks paid for disproportionately low salaries for minority and female employees, and there were discussions about the banks’ role in the housing market crash, bank financing for private prisons and even their equality and diversity policies.