Latest Diar Report Highlights JP Morgan’s Tokenization Party for Commercial Bank Money
The large investment bank JP Morgan has recently announced the intention to create a virtual currency for processing payments among clients. Several discussions started to take place in the cryptocurrency community regarding the effects that this could have on coins such as XRP or Bitcoin (BTC) itself.
Diar explains that the blockchain network launched by JP Morgan could be considered the largest enterprise deployment of distributed ledger technology (DLT). The Interbank Information Network that works on top of the Quorum Blockchain has now more than doubled the participating institutions since the last year.
The INN program tries to minimize the friction related to information sharing for compliance data-related issues. JP Morgan is also working with new blockchain solutions to address value transfer and the tokenization of commercial bank deposits. Using the Quorum network, it is possible to improve Know-Your-Customer (KYC), and Anti-Money Laundering (AML) requirements and processes.
The new virtual currency that is going to be released by JP Morgan is far from being decentralized compared to other virtual currencies in the market, including Bitcoin. The intention is to help clients perform transactions. According to a report released by Diar, the question remains regarding the necessity of using Blockchain technology.
Tim Swanson, the Founder of Advisory Firm Post Oak Labs, explained:
“The only real use for a blockchain is when there is a need for no single entity to be in control of the network.”
In terms of speed and reliability, there are centralized systems that work properly and blockchain technology would not add anything. However, this could mean that the bank is starting to work on a much larger and interoperable banking network.
Although the credit rating service Moody’s has upgraded the bank’s score, there is always a small possibility of default. This is something that regulators would have to evaluate, how to value blockchain dollar representation.
During the last few years, there have been several banks investigating possible use cases of Central Bank Digital Currencies (CBDCs). Sweden, Canada, Ukraine, Uruguay and even the United Kingdom have been discussing the possibility to launch a digital asset.
Sweden is perhaps a good example of how to become a cashless country. The implementation of a CBDC is clearly something possible in the Nordic nation. The Riksbank, the central bank of Sweden, released a report asking whether the society will only have access to commercial bank money.
The JPM Coin is expected to be released later this year and it may play an important role among financial institutions that want to transact funds.