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JPMorgan Chase Considers Cryptocurrencies As Risk

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Financial services major JPMorgan Chase consider cryptocurrencies as new forms of competition and a serious risk factor to its future.

In its annual report published on Tuesday, the bank stated, "Both financial institutions and their non-banking competitors face the risk that payment processing and other services could be disrupted by technologies, such as cryptocurrencies, that require no intermediation."

In a filing with the Securities and Exchange Commission, JPMorgan Chases said it operates in a highly competitive environment, and expects that competition will continue to be intense. It said new competitors have emerged, including technological advances and the growth of e-commerce.

According to the bank, ongoing or increased competition may put downward pressure on prices and fees for its products and services or may cause the firm to lose market share.

Cryptocurrecies, like bitcoin, are backed by blockchain technology. The bank noted that new technologies have required and could require it to spend more to modify or adapt its products to retain customers or to match products and services offered by its competitors, including technology companies.

JP Morgan Chase CEO and chairman Jamie Dimon had called bitcoin, the biggest cryptocurrency, a fraud, but later regretted calling it so. In an interview with FOX Business, Dimon said, "I regret making them. The blockchain is real." He said the initial coin offerings, or ICO's, must be viewed individually.

Rival Bank of America also recently described cryptocurrencies as a material risk to its business in its annual report published last week. "Emerging technologies, such as cryptocurrencies, could limit our ability to track the movement of funds," the bank said in an SEC filing. The bank also fears that it may lose clients to competitors who offer products that are speculative or risky such as cryptocurrencies.

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