What if the feds got in on the cryptocurrency craze?
There’s now one Wall Street chief executive officer who says bitcoin presents a real enough threat to the financial system that governments will have no choice but to issue versions of their own.
“I don’t think governments are going to take lightly other people coming in and potentially disrupting their abilities around data, around tax collection, around money laundering, around know-your-customer,” Citigroup Inc. CEO Michael Corbat said Wednesday in an interview at the Bloomberg Year Ahead summit in New York. “It’s likely that we’re going to see governments introduce, not cryptocurrencies — I think cryptocurrency is a bad moniker for that — but a digital currency.”
That’s a fresh perspective from an industry in which some leaders have dismissed bitcoin’s viability as a currency and its run past $7,000. Instead of focusing on what bitcoin can’t do, such as replace money or function as a store of value like gold, Corbat is more concerned by its ability to bypass many of the protections built into regulated banking.
For example, U.S. law requires banks to ensure that transactions aren’t used for money laundering, bribery, corruption and terrorism financing. Meanwhile, trading in bitcoin, thanks to the nature of its programming, is anonymous and almost impossible to trace.
Other CEOs have weighed in, with JPMorgan Chase & Co.’s Jamie Dimon saying he’s skeptical authorities will allow a currency to exist without state oversight, especially if something goes wrong. “Someone’s going to get killed and then the government’s going to come down,” he said in September. “Governments like to control their money supply.”
Goldman Sachs Group Inc. CEO Lloyd Blankfein isn’t sure what to make of bitcoin, but he said he’s unwilling to reject the digital currency just yet.
Corbat made clear that he’s still very positive on the underlying technology. His bank is experimenting internally with its own currency, dubbed Citicoin, which can reduce friction in international foreign-exchange transactions. It’s also partnered with Nasdaq Inc. to use blockchain to help trade private shares.
“You won’t hear us be dismissive in terms of the nascent technology because it’s real and there is something there,” he said.