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2nd January 2024 > > JPM & privacy coins.


J.P. Morgan does not support cryptos. Oh wait, yes it does. Privacy coin holders should be aware of some potential pitfalls.

Market Snap

Market Wrap

With a breach to the upside of $45k for reasons I do not need to explain, here’s a handy graphic demonstrating why serious consideration should be given to including BTC in any investment portfolio:

Curious Cryptos’ Commentary – J.P. Morgan

Jamie “you cannot fire me” Dimon, CEO of J.P. Morgan, recently testified in front of a Senate Committee that:

“The true use case for it [crypto] is criminals, drug traffickers, money laundering, tax avoidance.”

This is the same J.P. Morgan that has been fined TWO HUNDRED AND SEVENTY-TWO times since 2000 for illegal activity, paying nearly $40 BILLION in fines for money laundering for drug traffickers, tax avoidance, and other assorted criminal activities.

J.P. Morgan is now one of the authorised market-makers for spot BTC ETFs that are merely days away from approval (probably). Also known as APs (authorised participants) those who take on this role perform the arbitrage function of creating and destroying units of the ETF, a process that maintains close alignment of the ETF with the price of the underlying security (see CCC 22nd December for more details). APs spend the trading day buying and selling the ETF and the underlying security in response to client demand, and for their own book to monetise fleeting arbitrage opportunities.

Dimon is being true to his real beliefs, however misinformed those beliefs are concerning cryptos.

Curious Cryptos’ Commentary – Privacy coins

Privacy coins inhabit that part of the crypto ecosystem that really gets regulators wound up. All transactions are available for anyone to view on the blockchain, but privacy coins will obscure details about sending and receiving addresses, as well as some other information. The clue is in the name. They have been compared to the use of cash – a bank will record your cash withdrawal, but what happens to your dollars after that is known only to you and the recipient, be that the corner shop, a builder, a stripper, or a drug dealer. In the latter case, J.P. Morgan (see above) will be ready and willing to help get those dollars back into the regulated financial system.

I have in the past had some small investments in several privacy coins, but I now steer well clear. The heightened risk of extra attention from the tax authorities, and the increasing likelihood that one might make genuine errors in one’s tax submission, suggests to me that this is a wise tactical decision.

Centralised cryptocurrency exchange OKX agrees with me, having recently announced that it will delist privacy coins from its platform, including one of the largest XMR (Monero). Delisting of a coin is usually in response to a lack of liquidity, which is not the case here.

Huobi delisted privacy coins in September 2022. Binance did the same in May 2023 but reversed that decision. Now that there is an adult at the helm of Binance, rather than a man-child who thought that rules and regulations did not apply to him (where have we heard that before?), I expect a reversal of the reversal.

If this trend continues, the pricing and liquidity of privacy coins may become challenging, an issue worth considering by current holders.

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