Gerry Palmers Tech 08.30.2022 02:Aug AM EDT

JPMorgan Exec: Most Crypto Assets ‘Junk’, Lack Use Cases

Most of crypto assets are junk and that real use cases remain inexistent.

JPMorgan digital aasets unit head Umar Farooq stated this at a panel discussion Monday during the Green Shoots seminar of the Monetary Authority of Singapore. He emphasized that regulation has not kept up with the emerging industry-a fact that is preventing traditional financial institutions from participating.

Farooq also noted that with the exception of a few crypto assets, most of them lacks the utility to make them widely beneficial.

Crypto Industry Not Mature Enough for 'Serious Transactions' Involving Traditional Finance Institutions

The JPMorgan executive, who is likewise the CEO of JPMorgan's blockchain unit Onyx Digital Assets, also argued that the crypto industry hasn't matured enough to where it can be wide;y utilized to make high-value "serious transactions" between traditional financial institutions possible, or to accommodate financial products such as tokenized deposits, which are existing bank deposits held as a liability against depository institutions).

Instead, Farooq pointed out that crypto, blockchain, and the entire Web3 movement is still mainly offering a vehicle for wild speculation at this stage.

While JPMorgan has been seen as crypto-friendly over the past years, the banking titan is concentrated on blockchain tech, and how this can be utilized to specifically enhance traditional financial services.

In May, JPMorgan had tested tokenized collateral settlements through its own private blockchain. The trial saw two of the bank's entities transfer a tokenized representation of Black Rock Inc. money market fund shares.

Retail Investors Increase Crypto Trading While Being 'Oblivious of Risks'

During the same event, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said) that despite advising extreme caution, surveys show that consumers have increasingly traded in cryptocurrencies globally,, attracted by the prospect of sharp returns.

These investors, he said continue to be oblivious about the risks of cryptocurrency trading.

"These may include customer suitability tests and restricting the use of leverage and credit facilities for cryptocurrency trading," he added at a seminar. Such risks fall under customer suitability tests and the use of leverage and credit facilities for cryptocurrency trading.

And, since cryptocurrencies are unsuitable for use as money, it is "highly hazardous" for retail investors.

He added that since the cryptocurrency sector is borderless, banning retail access is not likely to work. With just a mobile phone, anyone canhave access to any number of crypto exchanges in the world and can buy or sell any number of cryptocurrencies, thus increasing the risk.

Interest Rates, Record Inflation Cause Plunge in Crypto

Cryptocurrencies have plunged this year, as U.S. interest rate increases and record-breaking inflation prompt investors to ditch riskier assets.

Menon also urged consumers to take responsibility and exercise judgment and caution.

Menon added that no amount of government regulation, international co-operation, or industry safeguards will safeguard consumers from losses if their digital assets lose value.