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Is Libra the opening act for the JPM finale? Jamie Dimon likes to think so.
With the amount of hype Libra has gathered in less than a month, you would think this is the first time a corporate heavyweight is introducing a cryptocurrency. However, JP Morgan would beg to differ.
The Wall Street mainstay came out with its own digital asset back in February, although with more internal objectives. The JPM Coin was created to serve as an internal payment and settlement tool within the ecosystem of the big bank, without it venturing into the retail payment sphere.
Libra, on the other hand, was always meant to be ‘global.’ Initially referred to as “GlobalCoin,” Facebook’s cryptocurrency foray aims at revolutionizing the way money is sent, received, and paid, backed by a basket of fiat currencies and pegged on a native blockchain and wallet. From the outside, Libra looked like the evolution of the JPM Coin, and with a better name.
However, Jamie Dimon, CEO of JP Morgan, isn’t too concerned about the far-reaching ambitions of Libra. In fact, Dimon is quite possibly is enjoying the regulatory mess Facebook has found itself in. As the collective cryptocurrency industry, particularly banking centric coins hold their breath on the Libra decision, Dimon isn’t playing it cautious.
The JP Morgan CEO told analysts in a recent earnings call that Libra was not a near-term threat whatsoever. Blockchain, the foundation on which both Libra and the JPM Coin are being built, was also criticized by the CEO, who stated that in the distributed ledger industry, “little has happened.”
He said,
“We’re going to be talking about Libra three years from now. I wouldn’t spend too much time on it.”
Despite attesting to Libra’s [very] short-term effect, it is clear the banker does not believe that the project will have far-reaching objectives, or will even be around.
It should be noted that no big bank is present in the 28 member-strong Libra Association that will oversee the governance of the cryptocurrency. To date, only the Royal Bank of Scotland [RBS] has entered into ‘discussions’ with Facebook about project Libra.
David Marcus, the spearhead of the project has stated that “conversations with banks” have taken place and the ‘consortium’ may include banks, “by the time this thing [Libra] launches.”
However, it is clear that Dimon will not be approaching Menlo Park with a request to enter the Libra Association anytime soon. In fact, he is looking at Facebook as potential competition, one that he ‘does not mind.’
Even with the two giant companies now embracing digital assets and facing off, one thing remains common; the mess that is regulation. Dimon added,
“The request is always going to be the same: We want a level playing field. And governments are going to insist that people who hold money or move money all live according to rules where they have the right controls in place; no-one wants to aid and abet terrorism or criminal activities.”
With JPM Coin specifically curated for one institutional bank, and one institutional bank only [for now], Libra does not pose a threat. Facebook has maintained that this will be the new payments model, more from a retail perspective than anything else. But a perceived threat can be sniffed out if either of these two companies are looking to crossover into the other’s territory.
Only time will tell.