[2018-02-10] JPMorgan: Bitcoin Must Evolve, Blockchain’s Not a Threat

[Terraformer]

It may surprise some people to learn that JPMorgan Chase is invested in the blockchain. Umar Farooq, a banker turned blockchain leader at JPMorgan, discussed how the bank is using the blockchain and didn’t shy away from bitcoin. He was speaking at the Yahoo Finance All Markets Summit for Crypto in New York earlier this week.

He spoke of “active engagement” with blockchain internally, as teams from across the bank’s operations are increasingly looking to distributed ledger technology as a possible solution to problems. Farooq’s at the head of that business, and he’s more open-minded about bitcoin than you might think.

He said that while the industry may say blockchain’s good and bitcoin’s bad, that’s now how JPMorgan, the top US bank based on assets, sees the world. “We all believe in blockchain good. I wouldn’t go as far to say cryptocurrencies bad. I would say and cryptocurrencies have issues.”

The big issue, he says, surrounds know-your-customer (KYC) and anti-money laundering (AML) rules.

“Everyone I talk to in the banking industry, regulators, central banks — everyone sees the potential. But everyone is trying to fundamentally grapple with the issues. I wouldn’t say crypto is bad, but I think crypto needs some evolution,” he said.

Elephant in the Room

Meanwhile, he wasn’t afraid to tackle the elephant in the room, his boss Jamie Dimon’s previous derogatory remarks on bitcoin, offering some perspective.

“I think he’s backed off, clarified a couple of comments. He’s always been super consistent in breaking the two apart cryptocurrencies versus blockchain. In terms of cryptocurrencies, given right now the banking industry is facing these questions, I think his comments were quite relevant to the times. If you talk to many regulators, they possibly have similar feelings,” said Farooq.

But he wouldn’t go so far as to say that JPMorgan has plans to roll out a bitcoin product to retail investors in the near future, saying: “At this point, everyone is studying the stuff.” Once policies are developed reflecting KYC and AML standards, “then the retail bank will take a hard look at how to do this,” he added.

Radical Impact

Meanwhile, JPMorgan has been exploring blockchain technology for the past two years when the market was still “nascent,” having developed Quorum, based on Ethereum, which was open-sourced and brought Jamie Morgan to GitHub. He doesn’t view the technology as a threat for now.

Farooq expects blockchain will have a “radical impact” on some of the bank’s businesses, particularly as it relates to providing trust between parties.  “There’s always a role for a trusted advisor in the mix,” he said, adding the bank could provide infrastructure or facilitate the data layer. “There will always be a role. It’s not an existential threat in the short-term.”

Blockchain has gripped JPMorgan, as evidenced by a blockchain virtual room for messaging that’s ballooned to more than 1,500 people. He said his team started small and now every line of business at the firm has blockchain representation. They approach the blockchain group saying a problem “smells or feels” like it could use the blockchain for data transfer, reconciliation, etc.  Today the blockchain group is engaged with multiple businesses across payments, capital markets and custody.

“Our fundamental approach to blockchain is we think about the customer issue we want to solve … 80% of the time, blockchain isn’t the answer and it ends up being an infrastructure issue. But we focus on the 20% of the time where blockchain really is a good solution. We have a number of solutions on the way,” he said.

https://www.ccn.com/jpmorgans-farooq-bitcoin-must-evolve-blockchains-not-a-threat/

[1Referee]

Why should it surprise anyone that JPM (or basically any other financial institution) is investing in blockchain technology? It has been going on for years, so there is basically no way for anyone following the latest developments to be surprised. The main point is that whether banks like Bitcoin or not, it is taking over and as result financial institution will hop on board one way or another. And who knows, they may even hold a significant number of coins in reserve already through various proxy constructions. They have already been known for doing so for their wealthy clients, so it may not even be that far-fetched after all - they at least know how to do it.

[veleten]

the guys at investment funds know their business and can see and seize the opportunity
if they say something is worth looking into or even investing (which is the highest form of appraisal from them    )
then it usually is so,blockchain is not a threat for sure,more than that almost every top bank declared their projects
blockchain based or variations of blockchain,adopted for their own needs,some are toying with an idea of creating their own coin
I'm pretty sure he is wrong about only 20% possible usage scenarios,but what do I know...

[Carlton Banks]

I would say and cryptocurrencies have issues.

The big issue, he says, surrounds know-your-customer (KYC) and anti-money laundering (AML) rules.

Everyone I talk to in the banking industry, regulators, central banks — everyone sees the potential. But everyone is trying to fundamentally grapple with the issues. I wouldn’t say crypto is bad, but I think crypto needs some evolution

These people are too used to being able to talk shit in order to get around a difficult situation.


Too bad. The evolution's already happened, and no amount of talking is going to change what Bitcoin fundamentally is. All the "legal" privileges banks had can now be enjoyed by regular people. I have a branch of the International Bank of Bitcoin at my place, as do all other Bitcoiners.

So keep talking, banksters. Everything they've known is set to be flushed away, I'm not surprised they're not coping well.