The head of blockchain at JPMorgan says that most cryptoassets on the market are “junk”.
Umar Farooq, CEO of the investment bank’s blockchain unit Onyx Digital Assets, believes that real use cases for the technology are yet to fully present themselves.
“Most of crypto is still junk, actually; with the exception of a few dozen tokens, everything else that has been mentioned is either noise or frankly, is just going to go away,” he told a seminar hosted by regulator the Monetary Authority of Singapore.
“In my mind, the use cases haven’t arisen fully, and the regulation hasn’t caught up. I think that’s why you see the financial industry, in general, being a little bit slow in catching up.
“But when it does catch up… the large institutions who catch up to this are going to be absolute winners.”
JPMorgan has focused on building out its blockchain infrastructure rather than releasing products.
Farooq suggested that the Web3 movement is primarily focused on speculation rather than providing solutions.
“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,” he explained.
He expects users to turn to regulated financial institutions for “serious transactions” of large value: “You know that the government, the regulators and the entire financial infrastructure stands behind them.”
Regulator MAS is considering stricter rules to protect consumers, including customer suitability tests and limits on the use of leverage and credit facilities for crypto retail investors.
“It’s obviously a little bit more complicated given our regulatory regime and frankly, that’s what makes us safe versus nascent technology in this industry,” said Farooq.
He added: “Probably also makes us a bit slower.”