JPMorgan said public blockchain ledgers were ‘not fit for purpose’.

According to JPMorgan, public blockchains are still not suitable for executing large volumes of transactions.

Speaking at the BIS Innovation Summit on May 7, Umar Farooq, CEO of JPMorgan’s Onyx blockchain-based payments platform, said:

“I think we almost need something like a (unified ledger). I mean, if you look at public blockchain ledgers, they’re not really suitable for large-scale transaction purposes today, so they’re practically a necessity.”

The CEO’s comments come in response to the Unified Ledger, a concept introduced by the Bank for International Settlements (BIS) last year that aims to support central bank fund flows, tokenized deposits and digital assets on the network.

Farooq also explained that public blockchain validators cannot be held liable if a $100 million transaction fails. Farouk said:

“Who should we sue? … We need to have some kind of accountability in the system and get to a place where people can make trustworthy transactions between financial institutions.”

Despite the CEO’s criticism, JPMorgan’s bank-led Onyx platform is built as a permissioned, private version of Ethereum, the world’s second-largest public blockchain network. Unlike public blockchains, Onyx’s permissioned chain allows institutions to revert transactions.

Moreover, JPMorgan’s Farooq argued that cryptocurrencies issued on public blockchains create perverse incentives to drive more users to the network to drive up the price of the coin. He noted that blockchain, like the internet, should be considered a public good.

“We need to reach a point in our evolution where technology begins to be seen as a public good rather than a means of enrichment.”

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TradFi companies prefer public blockchains, a former Grayscale executive said.

Despite widespread criticism, traditional financial institutions (TradFi) prefer asset tokenization on public blockchains.

Celisa Morin, who served as vice president of platform deployment at Grayscale until mid-2022, told Cointelegraph that BlackRock’s recent initiative could lead to more TradFi institutions tokenizing their assets on public blockchains rather than private blockchains. She said:

“With JPMorgan’s Onyx, there appears to be a preference for private chains. But I think this was a few years ago. Now I think this is a public blockchain.”

Morin was referring to BlackRock’s $100 million tokenized ‘BUIDL’ fund, which launched on the Ethereum network on March 18.

BlackRock’s BUIDL fund is currently the world’s largest tokenization fund, with more than $382 million, according to Dune data.

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