GP: JPMorgan workplace
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SINGAPORE — Banks need to prioritize shopper safety as they embark on digital asset experiments, mentioned Umar Farooq, chief government officer of JPMorgan’s blockchain unit Onyx.
Many blockchain initiatives and different crypto protocols have the potential to make monetary companies extra environment friendly, accessible and inexpensive. But with out correct precautions, they might additionally expose prospects to cybersecurity dangers.
In current months, many crypto traders have been struck by hacks and scams. For instance, crypto trade Binance was hit by a $570 million hack in October and Deribit misplaced $28 million in a scorching pockets hack this month.
“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 mentioned throughout a panel on the Singapore Fintech Festival 2022 on Wedneday.
“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.
Farooq defined that JPMorgan is utilizing an answer known as verifiable credentials that stay within the buyer’s blockchain pockets. When the client goes to a protocol to commerce, the protocol validates the credential.
“I can’t foresee people being able to send money across borders if no one checks and no one knows who’s sending money to who, because sooner or later they will be in a money laundering incident,” mentioned Farooq.
“So those are the very fundamental things that need to be addressed before you even get to systematic issues. Education, protection and identity need to be in place,” he added.
Project Guardian trade pilot
Farooq and Onyx tackled a few of these safety and verification points as a part of Project Guardian, an trade pilot the Monetary Authority of Singapore introduced in May.
“It was very, very hard,” Farooq mentioned.
In the pilot, DBS Bank, JPMorgan and SBI Digital Asset Holdings carried out transactions in tokenized international trade and authorities bonds. Tokenizing a monetary asset entails changing its possession rights into digital tokens. It permits monetary transactions reminiscent of borrowing and lending to be carried out autonomously on a blockchain with out the necessity for intermediaries.
“It was the first time we had tokenized deposits. I actually think it’s the first time any bank in the world has tokenized wallets on a public blockchain,” Farooq informed CNBC in an interview.
“Using public blockchain, we had to spend a lot of time thinking through identity. We did lots of audits of smart contracts because again — they were publicly visible. And finally, it was using a protocol to actually make it all happen. It’s a lot of managing the risks. All of these were firsts for us,” he mentioned.
Source: www.cnbc.com”