JPMorgan’s Blockchain Unit CEO Calls For Consumer Protection In Digital Asset Projects
- Umar Farooq, chief executive officer of JPMorgan’s blockchain unit Onyx, stated that banks have to take precautions and implement steps to ensure consumer protection.
- JPMorgan Chase & Co. partnered with DBS Bank and SBI Digital Asset Holdings to conduct transactions in tokenized foreign exchange and government bonds under Singapore’s Project Guardian.
- Farooq also noted that many aspects of the blockchain technology have the capacity to better the current financial infrastructure and make financial services more efficient, accessible and affordable.
JPMorgan Chase & Co., one of the biggest multinational investment banks and financial services companies, has made another venture into the blockchain industry after it partnered with DBS Bank and SBI Digital Asset Holdings to conduct transactions in tokenized foreign exchange and government bonds under Project Guardian, as reported earlier by Bitnation.
In an interview with CNBC, Umar Farooq, chief executive officer of JPMorgan’s blockchain unit Onyx, stated that before implementing any experiment in the field of DeFi and blockchain, banks have to take precautions and implement steps to ensure consumer protection. However, he also noted that many aspects of the blockchain technology have the capacity to better the current financial infrastructure and also make financial services more efficient, accessible and affordable.
“What a bank needs to do from a regulatory point of view and customer’s point of view is that we need to protect our customers. We cannot lose their money,” Farooq said during a panel at the Singapore Fintech Festival 2022 on Wedneday.
Farooq believes that without implementing the consumer protection steps, the companies involved in blockchain experiment might expose customers to cybersecurity risks. This statement comes at a time when several crypto firms have been hacked, exploited, and drained last month, making it the worst month for the crypto industry in terms of security in 2022.
According blockchain analytics firm Chainalysis, almost $3 billion have been drained in 2022 due to crypto hacks and more could be on the way. Some of the biggest crypto firms hacked include Mango Markets, BNB Chain’s BSC Token Hub, and many others. Moreover, within the first week of November, Panama-based crypto futures and options exchange Deribit lost $28 million in a hot wallet hack this month.
“I do think you need some sort of identity solution or know-your-customer solution which verifies who the human being that is interacting is and what they are allowed to do. Because without that, in the longer term, it just doesn’t work,” he added in an interview with CNBC.
Farooq also confirmed that JPMorgan is currently using a solution called verifiable credentials which reside in the users’ crypto wallets and when any customer will use the new service to trade, their transactions will be secured via these credentials. Interestingly, Farooq also pointed out that the privacy feature of blockchains won’t hold for a long time as “sooner or later they will be in a money laundering incident.”
The CEO of JPMorgan’s blockchain arm believes that “education, protection and identity need to be in place” in order to safely send payments across borders without bringing the attention of the regulatory hammer.