JPMorgan’s Umar Farooq said that use cases haven’t arisen fully and regulation hasn’t yet caught up.
The head of JPMorgan’s digital assets unit Umar Farooq has suggestedthat most of the crypto assets on the market are “junk” and that real crypto use cases are yet to fully present themselves.
During a panel discussion at the Monetary Authority of Singapore’s Green Shoots Seminar on Aug. 29, Farooq stated that regulation is yet to catch up to the burgeoning industry which is holding back many traditional financial (TradFi) institutions from getting involved.
He also opined that with the exception of a few, utility for most crypto assets is lacking:
“Most of crypto is still junk actually, I mean with the exception of I would say, a few dozen tokens, everything else that has been mentioned is either noise or frankly, is just gonna go away.”
“So in my mind, the use cases haven’t arisen fully, and the regulation hasn’t caught up and I think that’s why you see the financial industry, in general, being a little bit slow in catching up,” added Farooq, who serves as CEO of JPMorgan’s blockchain unit Onyx Digital Assets (ODA).
The JPMorgan executive also argued that the sector hasn’t matured enough to where it can be utilized at scale to facilitate high-value “serious transactions” between TradFi institutions, or to host products such as tokenized deposits (an existing bank deposit held as a liability against depository institutions).
Instead, Farooq suggested crypto, blockchain, and the broader Web3 movement is primarily providing a vehicle for wild speculation at this stage.
“You need all of those things to mature so that you can actually do things with them. Right now, we’re just not there yet, most of the money that’s being used in Web3 today, in the current infrastructure, is for speculative investment.”
While JPMorgan has become relatively crypto-friendly over the past couple of years, the banking giant is primarily focused on blockchain tech, and how it can be used to specifically improve TradFi services.
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In May, Cointelegraph reported that JPMorgan had trialed tokenized collateral settlements via its own private blockchain. The test saw two of its entities transfer a tokenized representation of Black Rock Inc. money market fund shares.