Jamie Dimon Steals Bitcoiners’ Hearts as JP Morgan Launches Bank-Backed “JPM Coin” Cryptocurrency
JP Morgan Launches First Major US Bank-Backed Cryptocurrency “JPM Coin” to Settle Payments
The first cryptocurrency by a major US bank that is JP Morgan Chase is finally here. The cryptocurrency called “JPM Coin” is created by the New York-based bank to instantly settle payments between its clients whose trials are set to start in a few months.
“JPM Coin is a digital coin designed to make instantaneous payments using blockchain technology. Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin,” Umar Farooq, head of J.P. Morgan's blockchain projects.
Given the fact that the bank moves more than $6 trillion all over the world every day for corporations, JP Morgan is preparing for a future where cross-border payments and corporate debt issuance is moving to the blockchain.
“So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction,” said Farooq.
“The applications are frankly quite endless; anything, where you have a distributed ledger which involves corporations or institutions, can use this.”
“In step first, a J.P. Morgan client commits deposits to a designated account and receives an equivalent number of JPM Coins. In step two, these JPM Coins are used for transactions over a blockchain network with other J.P. Morgan clients (e.g., money movement, payments in securities transactions). Finally, in step three, holders of JPM Coins redeem them for USD at J.P. Morgan.”
Betting for First-Mover Status
There are three early applications for the JPM Coin where the first one is for international payments for largest corporate clients which currently happens either through wire transfers or Swift. However, with cryptocurrency, the idea is to settle payments in real time, and at any time of day, said Farooq. The second application is for securities transactions.
“Unseen by retail customers, the business handles a significant chunk of the world's regulated money flows for companies from Honeywell International to Facebook, moving dollars for activities like employee and supplier payments. It generated $9 billion in revenue last year for the bank.”
The final use would be for huge corporations that use the treasury services businesses to replace the dollars they hold in subsidiaries across the world.
“Money sloshes back and forth all over the world in a large enterprise,” said Farooq.
“Is there a way to ensure that a subsidiary can represent cash on the balance sheet without having to actually wire it to the unit? That way, they can consolidate their money and probably get better rates for it.”
Farooq further shared that in the future, if the use for blockchain catches on, the JPM Coin could also be used for payments on internet-connected devices.
J.P Morgan banks about 80 percent of the companies in the Fortune 500 and is betting that its first-mover status will give its technology a really good chance of getting adopted, even if other banks go for a similar approach.
“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 said.
J.P. Morgan is launching a stablecoin. Soon every bank will issue one as well.
Closed systems for the world’s elite will always be beaten by open systems built for the common person.
Long Bitcoin, Short the Bankers!
— Pomp 🌪 (@APompliano) February 14, 2019
On a serious note: I think the JP Morgan thing is long term a positive thing for Bitcoin. Let them play around with their stablecoin, once we get more mainstream the "cryptocurrency infrastructure" already sort of exists.
— WhalePanda (@WhalePanda) February 14, 2019