Cryptocurrency, JP Morgan, & Jamie Dimon Ethics
Jamie Dimon is one of the most influential bankers on Wall Street. Dimon is a brash, intelligence, and scrappy turnaround manager within the banking industry. Dimon has appeared on the list of the top one hundred (100) most influential people by Time Magazine on numerous occasions. After graduating from Harvard Business School, Dimon refused offers from large investment banks to work for his mentor, Sandy Weill. Weill sold his firm, Shearson Loeb Rhoades, to American Express. Dimon continued to work closely with Weill at American Express. After Dimon and Weill left American Express, Dimon was instrumental in helping Weill grow his second empire with Commercial Credit. After a series of acquisitions under the Commercial Credit flagship, Dimon was promoted to CEO of Citigroup. Due to differences of opinion, Dimon was famously fired by Weill (Crisafulli, 2011; McDonald, 2009).
After being fired from Citigroup, Dimon was hired by Bank One purchases two million shares of Bank One stock; Dimon’s stock purchase was a gesture which communicated his commitment and leadership as the new Bank One CEO. Bank One was later acquired by JP Morgan, Dimon became President and Chief Operating officer of JP Morgan after the merger & acquisition. After becoming President of JP Morgan, Dimon implemented his turnaround management tactics to revive the fledging organization by slashing executive compensation packages. Under Dimon’s executive leadership, J.P. Morgan become the leading US bank in domestic assets under management (AUM), market capitalization value, and shareholder value. Today, JP Morgan remains among one of the top bulge bracket investment banks in the world (Crisafulli, 2011; McDonald, 2009).
Today, cryptocurrencies have a market cap of almost $4 Trillion dollars. Dimon, however, continues to bash the purchase of cryptocurrencies, such as Bitcoin, with each opportunity. As a wall street titan, Dimon carries sizable influence within the investment banking community and on Capitol Hill; Dimon has frequented the Congress to provide testimony on several occasions. Despite Dimon’s contempt for cryptocurrencies, JP Morgan was found purchasing sizable cryptocurrency positions. Blockchain is a distributed ledger technology (DLT) that allows people to send and receive cryptocurrencies. Dimon bashes cryptocurrencies, not stable coins, but believes blockchain technologies may be transformational for the banking industry. As a result, JP Morgan is the first global bank to design a network to facilitate instantaneous payments using blockchain technology. JP Morgan’s blockchain enables 24/7 business-to-business money movement. JP Morgan’s blockchain was developed by Quorum; Quorum is a private enterprise Ethereum blockchain venture. Quorum was acquired by ConsenSys to form ConsenSys Quorum. Dimon wrote in his annual shareholder’s letter a few weeks ago, “Decentralized finance [DeFi] and blockchain are real, new technologies that can be deployed in both public and private fashion, permissioned or not.” “JP Morgan’s Interbank Information Network (IIN) is the firm’s first scalable, peer-to-peer network powered by blockchain technology. IIN serves to address the longstanding challenges of interbank information sharing, minimizing friction in the cross-border payments process to enabling payments to reach beneficiaries faster and with fewer steps. IIN allows member banks to exchange information necessary for the completion of payments in real-time” (Crisafulli, 2011; McDonald, 2009; “Technology — Blockchain Center of Excellence,” 2022).
Due to JP Morgan’s investment in private blockchain technology, JP Morgan has successfully created and tested its own digital currency called JPM Coin; JPM coin is the first cryptocurrency backed by a US Bank. Umar Farooq, Head of Digital Treasury Services and Blockchain at J.P. Morgan, defined the JPM coin as “a digital coin designed to make instantaneous payments using blockchain technology”. Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM coin,” Farooq added. JPM coin will serve as the settlement layer between JP Morgan and its clients (“Technology — Blockchain Center of Excellence,” 2022).
- To start the process, a JP Morgan client sends funds to a pre-specified account or wallet, after which the client receives the same amount in JPM coins.
- Once clients receive their JPM coins, they can then use these digital tokens to facilitate transactions over the Quorum blockchain.
- To finalize the process, a recipient of JPM coins can redeem JPM coins for US dollars at the nearest bank branch.
Because these transactions occur on the blockchain, significant cost-saving advantages and faster settlement speeds are possible when compared with traditionally processed transactions. JPM Coin runs on the ConsenSys Quorum enterprise blockchain. Like stable cryptocurrency coins like Tether (TRC20), the JPM digital coin is pegged to the US dollar to provide faster transfers between accounts. Blockchain transaction offer drastic improvements over traditional transfer methods currently available with traditional banking instruments. In pursuit of further banking innovations, JP Morgan’s has launched a technology venture group entitled Onyx. Onyx will continue leveraging blockchain technologies, such as ConsenSys Quorum, to innovate and commercialize new FinTech solutions (“Technology — Blockchain Center of Excellence,” 2022).
During the virtual summit at the Institute of International Finance meeting, Dimon called Bitcoin worthless during. Dimon has likened trading Bitcoin to smoking cigarettes. In times past, Jamie Dimon has called Bitcoin a fraud and claims that he would fire any employee from JP Morgan who traded the cryptocurrency for stupidity. Despite Dimon’s claims to fire cryptocurrency traders, JP Morgan was found purchasing exchanged traded notes (XBT shares) which track the price of Bitcoin. Bitcoin exchange traded notes (ETNs) are a popular investment vehicle for investors and financial management firms that want exposure to Bitcoin. These Bitcoin-based ETNs track Bitcoin price movements against the Euro and US dollar. In addition to purchasing Bitcoin notes, JP Morgan applied for a “Bitcoin alternative” patent with the U.S. Patent and Trademark Office (USPTO) over 175 times in 2013 but was unable to secure a patent successfully within the cryptocurrency alternative domain. Dimon believes the opportunities lie in cryptocurrency technologies, not the cryptocurrencies or digital currencies themselves. As a result, JP Morgan continues investing heavily in blockchain and bank-backed cryptocurrency alternatives (“Technology — Blockchain Center of Excellence,” 2022).
Based on a sampling of articles and video interviews, the author seeks examine the social ethics of Jamie Dimon regarding his blockchain and cryptocurrency rhetoric. On one hand Dimon calls Bitcoin a fraud; however, JP Morgan launched its own actively management cryptocurrency fund rather than struggling to co-opt blockchain technologies for its own purposes. Decision regarding right and wrong permeate everyday life. As a result, ethical decisions permeate every level of life. As responsible citizens, acting properly as individuals, creating responsible organization, and making society as whole more ethical should be a major consideration for us all. Ethics provide a set of behavioral standards that helps to guide us in how we ought to act in a range of situations. Dimon is a lightning rod for controversy; some love him while others hate him. Regardless of one’s personal opinion of Jamie Dimon, the author will examine Dimon’s actions using popular consequential and non-consequential ethical frameworks to better understand his ethical motivations. Ethic should not be confused with virtue. Some reserve morality for the state of virtue while seeing ethics as a code that enables morality. Ethics provides a rational basis for morality. Better stated, ethics provides rationale for why something is moral or not. The author’s goal is to analyze Jamie Dimon’s and JP Morgan’s actions using the divine command, duty, egoistic, right approach, and virtue frameworks. This examination is not exhaustive but will examine specific instances (Crisafulli, 2011; Johnson, 2021; “Technology — Blockchain Center of Excellence,” 2022).
Applied ethics deals with issues in private or public life that are matters for ethical judgments. Making good ethical decisions requires trained sensitivity to ethical issues and a practical method for exploring the ethical aspects of decisions while weighing the considerations that should impact our choices during specified courses of action. Having a predefined method for ethical decision making is essential (Johnson, 2021). From an applied ethics perspective, we seek to better understand Jamie Dimon’s ethical posture. From a consequential theory perspective, we seek to examine Dimon’s actions from an egoistic frame. In the egoistic approach, Jamie Dimon has probably developed a utilitarian calculation to produce the greatest amount of good for himself. Jamie Dimon is enriched when JP Morgan succeeds. With the accumulation greater market share, JP Morgan would be better positioned to maintain its competitive advantage. In addition, JP Morgan’s enterprise blockchain adoption provides a first mover advantage to JP Morgan despite Dimon’s distrust of cryptocurrencies. Many believe that Jamie Dimon’s downplay of Bitcoin is hewn out of his desire to preserve JP Morgan’s competitive advantage. Cryptocurrency enthusiasts believe that crypto threatens the continual dominance of the banking industry behemoths, such as JP Morgan. From both an ethical egoism and laissez-faire economic theory perspective, Jamie Dimon’s actions are ethically correct since everyone behaves in his or her own individual self-interest. When viewed from an ethical egoistic perspective, the pursuit of self-interest is seen as leading to the benefit of society, although the benefit of society is seen only as the fortunate byproduct of following individual self-interest, not its goal. Currently, Dimon’s actions seem to have positively impacted his organization’s financial position. Dimon remains the beneficiary of JP Morgan’s success and his goal is self-preservation (Johnson, 2021; “Technology — Blockchain Center of Excellence,” 2022).
The Rights approach to ethics is another non-consequentialist approach which derives much of its form from Kantian duty-based ethics and has another influential current which flow from the work of John Lock, the British empiricist philosopher. The Rights approach stipulates that the best ethical action protects the ethical right of those who are affected by the action. The Rights approach believes all humans have the right to dignity; the Rights approach is based on a formulation of Kant’s categorical imperative which states: “Act in such a way that you treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply as a means to an end.” During a video interview with LinkedIn Editor in Chief, Daniel Roth, Dimon states that “most successful leaders have certain key traits. Humility, openness, fairness, and being authentic are most important — not being the smartest person in the room or the hardest working person in the room. Management is analysis, discipline, follow-up, getting it done, and planning. It’s getting the right people in the room and killing the bureaucracy, among other things. But the real keys to leadership aren’t just doing that. It’s about having respect for people, not about having charisma or brain power,” Dimon said (Crisafulli, 2011; Johnson, 2021; “Technology — Blockchain Center of Excellence,” 2022).
Dimon believes that possessing the traits mentioned earlier increases one’s productivity along the road to individual success. From a non-consequentialist theory perspective, the rights approach stipulates that the best ethical action is one which protects the ethical rights of others. Dimon continues to maintain an anti-crypto outlook, but JP Morgan offers cryptocurrency investments funds for its wealth management clients as a right. Dimon states at the Wall Street Journal CEO Council Summit, “I’m not a Bitcoin supporter. I do not care about Bitcoin. I have no interest in it. Clients are interested, and I don’t tell clients what to do”. Dimon remains opposed to cryptocurrency investment, but he respects his clients’ right to invest in asset classes, such as cryptocurrency (Johnson, 2021; “Technology — Blockchain Center of Excellence,” 2022).
The Divine Command approach sees what is right as the same as what God commands and ethical standards are the creation of God’s will. Following God’s will is perceived as the very definition of ethical standards. In Matthew 7:12 New Living Translation (NLT) Jesus states, “Do to others whatever you like them to do to you. This is the essence of all that is taught in the law and the prophets. Biblical tradition also believes that Jesus was God wrapped in human flesh. In scripture, John 5:19 NLT, Jesus states, “I tell you the truth, the Son (Jesus) can do nothing by himself. He does only what he sees the Father doing. Whatever, the Father does, the Son does also”. As a result of John 5:19, one can conclude that Jesus is following the divine code of God. Therefore, Dimon is employing the Divine Command approach with this, specific, leadership principle. Dimon has often paraphrased the Golden Rule as a core tenet for his success as a leader in many recorded interviews. Although one is not comparing Dimon to God, however, Dimon is adhering to the Divine Command approach when it concerns his philosophy regarding the treatment of others. Dimon believes that success is achieved when one follows the golden rule: treat others the way you would like to be treated. In short, Dimon believe it important to have respect for others. Dimon says he treats everyone equally and fairly during his interview with Daniel Roth. Dimon’s utilization of the Golden Rule can also be examined under the Virtue Frame. When using the Virtue Framework, one tries to identify character traits that may motivate individuals in context-specific situation. One may define ethical behavior based on what a virtuous person may do in a similar situation. The Virtue Frame emphasizes the importance of role models and education in shaping ethical behavior; virtue modeling may also be used to reinforce cultural norms as the standard for ethical behavior. If Dimon practices what he preaches regarding the treatment of others, JP Morgan executive leaders should be seen modeling Dimon’s approach to equality over time (Crisafulli, 2011; Johnson, 2021; Tyndale & Publishers, 2004).
From a duty perspective, we must focus on the duties and obligations of Jamie Dimon as the Chairman and CEO of JP Morgan. Philosopher Immanuel Kant argued that doing what is right is not about the consequences of our actions, but about the proper intention in performing stated actions. The ethical action is one taken from duty; it is done precisely because it our obligation to perform the action. These ethical obligations are universal and knowledge of what these obligations entail is discoverable when one understands the rules of behavior that are not contradicted by reason. Therefore, Dimon’s ethical conduct is defined by how well he performs his duties as Chairman and CEO. As CEO of a banking dynasty, Dimon may be concerned about JP Morgan’s competitive advantage being eroded with the promulgation of cryptocurrencies. Cryptocurrencies threaten the existence of the banking industry, as we know it; traditionally, banks make profits from its fee structure and other intermediary service activity fees. As CEO, Dimon has a fiduciary responsibility or duty to remain as profitable as possible while working to raise JP Morgan’s share price for its investors (Crisafulli, 2011; Johnson, 2021).
Many believe that cryptocurrencies, such as Bitcoin, potentially threatens the future share price of JP Morgan stock which threatens Dimon’s duty. If Dimon’s rhetoric fueled by fears of JP Morgan’s decline due to cryptocurrency, Dimon’s reaction may be warranted as cryptocurrency market capitalization continues to rise. At the time of this writing, cryptocurrency market capitalization exceeds three trillion dollars. Despite Dimon’s concerns, JP Morgan employees are smart, and they understand that blockchain technology could potentially disrupt the whole banking industry. If blockchain delivers on its promise, JP Morgan’s decision to invest in blockchain technology would be rewarded by increases in profitability and rising shareholder value. If successful, Dimon will be praised for having the wisdom to invest in blockchain despite his personal disdain for cryptocurrencies. As CEO and Chairman of JP Morgan, Dimon has an obligatory duty to maximize profits and value for shareholders (Crisafulli, 2011; Johnson, 2021).
Making ethical decisions requires sensitivity to the ethical implications of situational problems. Before pursuing major decisions, I advise leaders to gather all pertinent information while weighing the cons and pros of important decisions. Each decision should be examined from pertinent consequential, duty, and virtuosity perspectives. Although one may either agree or disagree with Dimon’s investment philosophy regarding cryptocurrency, Dimon’s isolated actions can be examined from a non-consequential lens of divine command, duty, egoistic, and the right approach. Dimon’s application of the Golden Rule is one concrete example of the Divine Command approach in practice. The agent-center, consequentialist, and non-consequentialist theories help users to remove personal bias when evaluating ethical dilemmas in practice (Crisafulli, 2011; Johnson, 2021).
References
Crisafulli, P. (2011). The House of Dimon: How JPMorgan’s Jamie Dimon Rose to the Top of the Financial World: John Wiley & Sons.
Johnson, C. E. (2021). Organizational ethics: A practical approach: SAGE Publications, Incorporated.
McDonald, D. (2009). Last man standing: The ascent of Jamie Dimon and JPMorgan chase: Simon and Schuster.
Technology — Blockchain Center of Excellence. (2022). Retrieved from https://www.jpmorgan.com/insights/technology/blockchain?source=cib_di_jp_taof1119
Tyndale, & Publishers, T. H. (2004). Life Application Study Bible: New Living Translation: Tyndale House Publishers, Inc.
