In an interview,the CEO of JP Morgan Jamie Dimon weighed in on the new Libra crypto being launched by Facebook. He admitted in the interview that he thinks of it as a competition, and showed some concerns.
In February, JP Morgan announced that the bank was launching its own cryptocurrency called the JPM Coin. The announcement sent the crypto world into a frenzy because JP Morgan and its CEO had been the biggest critics of bitcoin and other cryptocurrencies during the 2017 run of the crypto market.
Dimon in the interview, made it clear that he had not talked to Facebook about the Libra project. He said that “But it’s very possible someone in the company did.” Dimon also admitted that “blockchain is real” and that now the “competition is real” too. Talking about JP Morgan’s competition with these new crypto projects he said:
We’re going to have competitors, whether it’s a cryptocurrency competitor or another FinTech competitor. We’re going to have competitors. I tell our people, don’t guess, you know they’re there, you know they’re coming, you know they want to eat our lunch. Assume it.
From time and time again, he has reiterated his stance on bitcoin and other cryptos saying “Bitcoin is a fraud” and “it’s not going anywhere”. However, since then, things have changed the bank has not only developed its own blockchain but also its own cryptocurrency.
The blockchain platform by JP Morgan is also one of the best inter-banking networks for international banking transactions. Last month, JP Morgan used its blockchain tech to facilitate a cross border transaction between the central bank of Canada and Singapore, one of the first cross border transaction done through blockchain.
Facebook announced its Libra cryptocurrency on 18th June, the 2020 crypto has the backing of most of the world’s biggest tech companies, like MasterCard, PayPal, Uber, Lyft and many more and by the looks of it may be a direct competition to all cryptocurrencies out there including bitcoin and JPM coin.
He also admitted that cryptocurrencies are disrupting the banking industry by providing similar monetary services that traditional banks used to provide but he doesn’t think of them as “an existential threat.” But he also said that JP Morgan “wants to be able to serve their clients” and they are not anti-implementation of these systems he added:
I always look at these [blockchain] systems like we’d like to do some of it too, ourselves.
Concerns about Libra:
Dimon in the interview also highlighted that there are a few concerns that he feels were not yet highlighted by the Libra White Paper. He said:
Will they follow banking rules or KYC, BSA, AML or will they not? But they obviously want to serve their clients, and that’s fine. I also want to be able to serve their clients, too. We would like to do some of it too, ourselves, and we don’t always want to be forced into someone else’s ecosystem.
The rules that Dimon refers to are the Know Your Customer (KYC), Anti Money laundering (AML) and Bank Secrecy Act (BSA) rules that any company providing financial services in the US has to follow. An in-depth study of the paper revealed that Dimon is right.
The Libra white paper makes no mention of all three acts in it. However, the paper does say that all details of the project have not been finalized and the team is still working on it. CEO of Binance Changpeng Zhao in a tweet did put down Dimon’s concerns saying:
Facebook Libra coin don’t need KYC. They have so much more data on the 2 billion people. Not just name, id, address, phone number. They know your family, friends, real-time/historic location, what you like… They know you more than yourself. And now your wallet too. Best AML!