JPMorgan Blockchain Head Says Most Crypto Is Junk

Umar Farooq, managing director of JPMorgan’s blockchain unit, believes that real use cases for crypto are yet to be clarified, while most of the existing assets are “junk” with only a few exceptions.

Mr Farooq said at the Monetary Authority of Singapore’s (MAS) Green Shoots seminar on Monday that regulation has also failed to catch up with the burgeoning sector, thus hindering the entry of many traditional financial institutions.

“Most crypto is actually still garbage, I mean with the exception of I’d say, a few dozen tokens, everything else mentioned is either noise or frankly, will just disappear.”

Regulated units to win

Farooq, who happens to headline JPMorgan’s Onyx, said users would eventually move to financial institutions that are regulated to carry out “serious” high-value transactions, primarily because the infrastructure will be supported by the government and regulators. That said, the executive noted that private options will always exist in the sector.

While arguing that the sector has not matured enough, the JPMorgan CEO went on to say that a large part of the capital in the Web 3 ecosystem at this stage is for speculative activities.

“You need all these things to mature so that you can actually do things with them. Right now we’re just not there yet, most of the money being spent in Web3 today, in the current infrastructure, is for speculative investments.”

JPMorgan is constantly changing its crypto stance

Farooq’s comment follows MAS’s new directive in which it revealed plans to shut down crypto speculation but not stifle crypto innovation. At the seminar itself, Singaporean financial regulators have projected a consistent message that while the digital asset industry as a whole holds much promise, trading cryptocurrencies is risky for non-professional investors. JPMorgan’s own views reflect the widespread sentiment.

Although the multinational investment bank has warmed to crypto, it has kept its focus fixed on blockchain technology. As such, it conducted a pilot transaction in which two of the entities transferred the tokenized representation of the asset manager – BlackRock Inc. money market fund shares as collateral for its private blockchain. JPMorgan had claimed that it achieved “frictionless transfer of securities on an instantaneous basis.”