On Monday (April 4), JPMorgan Chase Chairman and CEO Jamie Diman spoke about blockchain technology and decentralized finance (DeFi) in his company’s latest annual letter to shareholders.
In the section “Investing and Acquisitions: Determining the Best Use of Capital and Assessing Return on Investment” of this report, he stated:
«We now process payments for eight of the world’s 10 leading major technology companies (compared to 3 out of 10 companies five years ago), consistently winning business from strong competitors. We continue to market and commercialize innovative products such as embedded banking services; AI-based fraud control and prediction; as well as account verification and programmable payments on the JPM coin.
«Decentralized finance and the blockchain are real new technologies that can be deployed in both public and private ways, with or without permission. JPMorgan Chase is at the forefront of this innovation. We use a blockchain network called Liink to allow banks to share complex information, and we also use a blockchain to move tokenized US dollar deposits using JPM coins.
«We believe there are many uses where blockchain can replace or improve contracts, data ownership and other improvements; for some purposes, however, it is currently too expensive or too slow to deploy.
«We expect to achieve double-digit payments market share over time, being the most innovative bank in the world as well as the most secure and sustainable.«
On February 15, JP Morgan expressed its interest in the metaverse by releasing a research report entitled “Opportunities in the Metaworld” and establishing a virtual presence in the Decentraland-based virtual world based on Ethereum.
JP Morgan’s 18-page report, which examines the “exciting opportunities” that the metaverse “presents to consumers and brands,” was prepared by its Onyx blockchain division.
Here is how they explained what the metacosm is:
«The metauniverse is the gradual convergence of our physical and digital lives, creating a single virtual community where we can work, play, relax, socialize and socialize. The metaverse is still in its infancy, and there is no single, comprehensive definition that humans can turn to. However, there are themes of what the metaworld is and can be.
«The key point is that there is no single virtual world, but there are many worlds that are being formed to allow people to deepen and expand social interactions digitally. This is done by adding an exciting three-dimensional layer to the grid, creating a more authentic and natural impression.«
Here are some numbers named by the Onyx team to give everyone an idea of the possibilities offered by the metacosm:
- Deal – «$ 54 billion is spent on virtual goods each year, almost twice as much as on music«
- Socialize – «About 60 billion messages are sent to Roblox every day«
- Create – «GDP for Second Life was about $ 650 million in 2021, with nearly $ 80 million paid to the creators«
- Own – «Currently, the market capitalization of incompatible tokens (NFT) is $ 41 billion«
- Experience – «200 strategic partnerships to date with The Sandbox, including Warner Music Group to launch a virtual world on music«
Towards the end of the report, they talked about their approach to the metaworld:
«The success of building and scaling in the metaverse depends on having a robust and flexible financial ecosystem that will allow users to seamlessly connect between the physical and virtual worlds. Our approach to payments and financial infrastructure will enhance this compatibility.
«We believe that the existing virtual gaming landscape (each virtual world with its own population, GDP, in-game currency and digital assets) has elements that are parallel to the existing global economy. This is where our long-standing core competencies in cross-border payments, foreign exchange, financial asset creation, trade and conservation, in addition to our consumer bridgeheads on a scale, can play an important role in the metasection.
«We create and scale new technologies to upgrade infrastructure and business models, including, but not limited to, tokenization and digital identity, as we strive for continuous innovation and better ways to organize financial transactions and payments in a decentralized network.«
On the same day, JPMorgan also announced that it had become the first major bank to enter the metaverse, creating a virtual presence called “Onyx Louge” in the Centralland. According to The Block, this place “depicts the image of the CEO of the bank Jamie Diamond, which turns into a JPEG image of Christine My from Onyx.” Mine is the world leader of Liink, Crypto & Metaverse at Onyx.
On January 15, 2021, during a JPMorgan Chase earnings call for the 4th quarter of 2020, CFO Jennifer Pipshack and CEO Jamie Diman talked about blockchain technology and “very very fierce competition” over the next 10 years against FinTech.
During the Q&A segment of the conference, Charles Peabody, President of Portales Partners, asked the following questions:
«Good morning I have a few issues related to FinTech, and unfortunately I was born in the wrong generation, so I need a lot of help. To what extent does the world of FinTech depend on the banking system? As I understand it, they lay on top of the pipes and plumbing of the banking system. Do you have any leverage in the competitive world against the world of FinTech?
«And then, secondly, I noticed that the OCC gave banks the green light to use public blockchain and stablecoin networks. Can you explain what this means for JP Morgan?«
CFO of JPMorgan Chase replied:
«Oh well, of course. This guide allows you to offer stablecoins on a public blockchain. This does not affect the JPM coin. JPM Coin, you need to think about tokenizing our customers ’deposits.
«Obviously very early. We will evaluate usage options and customer demand. But it is too early to see what this will lead to us.«
And the CEO of JPMorgan Chase added:
«And we already use the blockchain to share data with banks, and so we’re at the forefront of that, which is good. Another question was about FinTech … Look, first, they are very good competitors … They are strong. They are smart. Some travel efficiently on rails. So we keep a lot of them. You know, we help them achieve what they want …
«I believe we are going to compete – we need it – and we need to look at our split in what we could do better, or could do better, and things like that. So I’m sure we’ll be competing, but I think we’re now faced with a whole generation of new, tougher, faster competitors who, if they don’t ride the J. rails. P. Morgan, they can ride someone else’s rails …
«I told you before: everyone will be involved in the payment. Some banks are moving to white label, which makes FinTech’s competitors white label banks and creating any service based on it, and we need to be prepared for that. I expect that in the next 10 years it will be very tough competition. I look forward to winning. So help me God.«
Then Peabody had the following question:
«So do they need a banking system to complete the service cycle or can they operate completely outside the bank?«
«Well, most of them will do so far, but I think it’s wrong to say it will be forever. They get banking licenses. Utah grants industrial licenses. As I said, banks have white markings. So it’s actually the same …
«If a tech company uses a white bank only to handle its business, it’s basically a bank. You know what the regulator will do, I don’t know, but we have to assume that they will do it. And that some will find ways not to use the banking system, which they did … I do not mind. Regulators may have a point of view on this one time, but it worries me less. I will worry about us.«
The CEO of JPMorgan Chase has long been a supporter of blockchain technology, but not cryptocurrency. In fact, he called bitcoin a “scam” back in September 2017.
According to a Bloomberg report, on September 13, 2017, calling bitcoin a “scam,” Diman said bitcoin was “worse than tulip bulbs”. And when a JPMorgan trader started trading bitcoins, Diman said he would “fire them up in a second”.
He further said that:
«If you’ve been to Venezuela, Ecuador, North Korea, or a bunch of similar items, or if you’ve been a drug dealer, killer, etc., you’re better off doing it in bitcoins than in US dollars. So there may be a market for this, but it will be a limited market.”
In a January 2018 interview with FOX Business’s Maria Bartiroma, Damon said he regretted his previous comments about bitcoin, and expressed his belief in blockchain technology:
«The blockchain is real. You can have crypto-yen, dollars and all that. ICO you should consider individually. For me, bitcoin has always been something that governments will feel relatively bitcoin when it gets really big, and I just have a different opinion than other people. I’m not at all so interested in this topic.”
In an interview with the Harvard Business Review (July-August 2018), here is what Damon said about the crypt:
«About cryptocurrency, probably not worth talking about anymore. But it’s not the same as gold or fiat currencies. They are supported by the law, the police and the courts. They cannot be repeated, and there are limitations to them. Blockchain, on the other hand, is real. We are testing it and will use it for many things.”
The opinions and opinions expressed by the author or any of the people mentioned in this article are for informational purposes only and are not financial, investment or other advice. Investing in cryptocurrencies or trading is associated with the risk of financial loss.