JPMorgan Chase: Bitcoin needs to "evolve" and blockchain is not a threat

JPMorgan Chase’s investment in blockchain may surprise some people, but Umar Farooq, head of the investment bank’s blockchain business, attended Yahoo Finance’s All Markets Summit in New York this week, where he spoke about how banks can use blockchain.

Omar Farouk mentioned that the banking industry is actively deploying and applying blockchain technology as they increasingly view distributed ledger technology as a viable solution to problems.

Omar Farouk is open to Bitcoin, even more “open” than you might think. He further pointed out that although industry insiders always say that blockchain is good but Bitcoin is not good, JPMorgan Chase has another view, saying:

“We all believe that blockchain technology is good, but at the same time I will not say that encrypted digital currency is bad. I can only say that digital currency has some problems.”

Omar Farouk believes that the biggest problem with digital currencies at present is the need to comply with KYC (Know Your Customer) and Anti-Money Laundering (AML) policies. He went on to add:

“I have communicated with people in the banking industry, regulators, and central banks. They all see the potential of digital currency and want to solve the problem fundamentally. So, I won’t say that digital currency is bad, but I think digital currency needs to evolve.”

The elephant in the room

(Note: The elephant in the room is a British proverb used to describe a situation where a problem that clearly exists is deliberately avoided or ignored.)

In fact, Omar Farouk is not afraid to tackle the “elephant problem” despite his boss Jamie Dimon’s previous disparaging remarks about Bitcoin. Omar Farouk said:

"I think Jamie Dimon has backed down and clarified his previous comments, which were actually about distinguishing between digital currency and blockchain. The banking industry is indeed facing a series of problems with digital currency, and I think Jamie Dimon's comments are quite contemporary. If you talk to regulators, you will find that they may have similar feelings."

So, will JPMorgan launch a Bitcoin product later?

Omar Farouk added:

“Everyone is looking at this stuff at this stage. Once the KYC and anti-money laundering standards are in place, then retail banks will seriously look at how to launch bitcoin products.”

Radical influence

About two years ago, when the market was still in its infancy, JPMorgan Chase began exploring blockchain technology and developed the enterprise-level blockchain project Quorum based on Ethereum.

In fact, Omar Farouk does not see blockchain technology as a threat. He expects that blockchain will have a "radical impact" on some banking businesses, especially in improving trust between banks and customers. He said:

“Banks can provide infrastructure or improve data layer functions. Blockchain will always play a role in decision-making, at least in the short term, it will not be a threat.”

JPMorgan Chase has begun exploring blockchain technology. At first, their team was very small, but now blockchain technology representatives can be seen in almost every business, such as data transmission, reconciliation, payment, capital markets, supervision, etc.