The leading investment bank in the United States, JPMorgan Chase (JPM) is set to kickoff pilot tests of its JPM Coin crypto before the end of 2019 starting with corporate clients, Bloomberg reports.
The banking giant, according to the head of digital treasury services and blockchain, Umar Farooq, will start the pilot test for selected clients around the end of the year.
Farooq claims that more of the bank’s clients in the United States, Europe, and Japan have been clamoring for the prototype cryptocurrency to enhance securities trading such as bonds and payments between companies.
JPMorgan hopes that the stablecoin will enable “instant” delivery of bonds through the use of blockchain. The bank also intends to tokenize several stocks while increasing awareness of tokenized and digital securities. Farooq explained further in an interview in Tokyo:
“We believe that a lot of securities over time, in five to 20 years, will increasingly become digital or get tokenized.”
Transfer Payments Instantly
JPM Coin was launched in February 2019 and runs on top of Quorum, a private platform of Ethereum built by the bank and is pegged to the US dollar. JPMorgan became the first major US financial institution to launch its own cryptocurrency.
JPM Coin will work as a stablecoin and has been under trial to help institutions to transmit payments instantly. Each JPM Coin is worth one U.S. dollar and can be swapped for physical currency. However, plans are underway to extend the coin to other fiat monies in time, insisted Farooq.
According to Farooq, JPM Coin will enable clients to deliver securities like bond instantly in exchange for cash. The purchaser buys the JPM Coins using fiat currency and stores them in their JPMorgan deposit account. The tokens can then be transferred through a permissioned distributed ledger (DLT). when received, the seller can then redeem the tokens in exchange for fiat money from JPMorgan.
This will help in time-saving and enhance securities trading. At the moment, it normally takes a person selling Japanese bonds around two days to deliver them electronically to the buyer in exchange of cash. However, using JPM Coins will make the process instant.
Need Regulatory Approvals
Talking about the coin’s development, Farooq was optimistic that JPM Coin’s development was going on well. However, the timeline for JPM Coin's implementation is still fuzzy, because it needs to clear regulatory hurdles. Farooq explained:
“The technology is very good, but it takes time in terms of licensing and approval. As long as you are a bank, you must make sure that it does not violate the regulations of all the countries or regions where you operate in.”
The entry of JPMorgan into the crypto space surprised many crypto enthusiasts and Wall Street experts as the bank’s CEO Jamie Dimon has been a vocal anti-Bitcoin personality. Initially, Dimon came out as one of the ‘blockchain not Bitcoin’ camp members.
Cointelegraph reports that Dimon has previously praised blockchain as innovative while at the same time dismissing Bitcoin as a fraud that only attracts stupid investors.
Will JPM Coin help in revolutionizing the securities market? Let us know in the comments section.