The first US Bank Cryptocurrency is here and surprise – it’s from JP Morgan Chase. JP Morgan Chase moves more than $6 trillion around the world every day.
In trials set to start in a few months, a tiny fraction of its massive wholesale payments business will start to happen over “JPM Coin”, a digital token created by engineers at the New York-based bank. JPM Coin will instantly settle payments between clients.
JP Morgan is preparing for the future – global capitalism will move towards blockchain. But in order for this to happen, banks need a way to transfer money at a rapid speed and move away from old technology like wire transfers.
Umar Farooq, head of JP Morgan’s blockchain projects, said this:
“So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction… The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.”
JPM Coin will be one of the first real-world applications for a cryptocurrency in banking. Last year, JP Morgan and two other lenders banned the purchase of cryptocurrency by their credit card customers – this move is being seen as somewhat of a surprise.
Jamie Dimon, JP Morgan’s CEO, has bashed cryptocurrency before, which makes this move even more surprising. However, Dimon and other JP Morgan managers have stressed that they believe that blockchain as well as regulated digital currencies, hold promise.
Each JPM Coin will be redeemable for a single US dollar, so the value shouldn’t fluctuate – this is why JPM Coin is being seen as a stablecoin.
There are 3 applications for the JPM Coin thus far, according to Farooq. The first is international payments for large corporate clients. Payments are typically done via wire transfer on the Swift network. These transactions often have a cut off time and settle at different days due to the cut offs. Blockchain would eliminate that settlement delay.
The second is for securities transactions. Last April, JP Morgan tested a debt issuance on the blockchain, simulating a $150 million CD for a Canadian bank. Instead of using wires to buy the issuance, clients can use the JPM token resulting in instant settlements.
The third and final use would be for huge corporations that use JP Morgan’s treasury services business to replace the dollars they hold in subsidiaries all over the world. Retail customers don’t see much of this side, but the business handles a significant chunk of the world’s regulated money flows for companies like Honeywell International and Facebook. The money flow is to pay for activities like employee and supplier payments. This generated $9 billion in revenue last year for the bank.
JPM Coin is an ambitious coin for an ambitious company. JP Morgan is betting that their stablecoin will be used and adopted, since many Fortune 500 companies use JP Morgan.
“Pretty much every big corporation is our client, and most of the major banks in the world are too. Even if this was limited to JPM clients at the institutional level, it shouldn’t hold us back.”
- Farooq
What do you think? Do you think that the JPM Coin will be a success? Will this help forward mass adoption for cryptocurrency? This is even more proof that cryptocurrency isn’t going anywhere. We’ve known institutional investors would get into this space. Coinbase is even making it simple for everyday users to store crypto! This is tangible evidence of it! Let us know what you think on our Facebook page!
