The CEO of Ripple, Brad Garlinghouse discussed his thoughts on the stablecoin project from JP Morgan, JPM Coin. Speaking at the DC Blockchain Summit, which is being held this week (6th - 7th March) Garlinghouse gave his thoughts on the new project by a reporter from Nasdaq, Jill Malandrino.
For those that are unaware, the event is in the Chamber of Digital Commerce’s "annual in-person gathering held in partnership with Georgetown University’s Center for Financial Markets and Policy." The primary objective for the Chamber of Digital Commerce is "to promote the acceptance and use of digital assets and blockchain-based technologies."
During the interview on stage with Malandrino, the CEO of Ripple was asked about his thoughts on the new JPM Coin which was announced by JP Morgan on 14th February. At the time of the announcement, Garlinghouse took to Twitter to show his thoughts at the time when he said:
As predicted, banks are changing their tune on crypto. But this JPM project misses the point – introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer https://t.co/39EAiSJwAz https://t.co/e7t7iz7h21— Brad Garlinghouse (@bgarlinghouse) February 14, 2019
Garlinghouse’s tweet was linked to a post titled “The Case Against BankCoin” that he had written on LinkedIn back in 2016. In the article, he described why projects like BankCoin were “misguided” efforts.
"UBS, Deutsche Bank, Santander and BNY Mellon announced their 'utility settlement coin,' a new digital asset they hope will become the industry standard for blockchain settlements. They expect banks will initially use the coin for post-trade settlement and clearing by early 2018, after they secure blessing from regulators and central banks. While this development signals significant market traction for an institutional use of digital assets, I have to say it’s deeply misguided. A bank-issued digital asset can only really efficiently settle between the banks who issued it. Then, two scenarios can play out.”
In the first scenario, “All banks around the world put aside competitive and geopolitical differences, adopt the same digital asset, agree on its rules, and harmoniously govern its usage. Fat chance.”
Garlinghosue says that the second scenario is the one that is more than likely to occur. “Banks not in the issuing group issue their own digital assets with their own sets of rules and governance.”
Speaking on JPM Coin, he was asked:
"Is that similar to a traditional cryptocurrency? Because to me, it doesn't sound like a decentralized product, even though cryptocurrency promotes decentralization. So, what are the differences with what we traditionally consider crypto?"
Responding, Garlinghouse said:
"Well, let me start by saying [that] I think it's great for the blockchain and crypto industry to have players like JPM leaning in. Thumbs up! That's great! That's the only nice thing I'm going to say about this."
But the Ripple CEO isn’t the biggest fan of JPM Coin. explaining why he said, “this guy was from Morgan Stanley who was interviewing me. So, I asked him 'Is Morgan Stanley going to use the JPM Coin?'. He said 'probably not'. Or is Citi going to use the JPM Coin? Is BBVA? Is PNC? And the answer is no. And so does that we're going to have all these different coins, and does that mean we're back to where we are with lack of interoperability? I don't get it."
Going onto explain his second biggest objection to JPM Coin saying “so, let's think about this. JPM Coin, they announced for institutional customers, if you give them a dollar in deposits, they’ll give you a JPM Coin that you then can move within the JPM ledger. Wait a minute, just use the dollar!” he said. “I really don’t understand. If you’re just moving within the JPM ledger, and it has to be dollar-to-dollar, one-to-one backing, I don’t understand what problem that solves.”