JP Morgan, the largest bank in America and sixth largest in the world, is launching its own cryptocurrency. And it will be called JPM coin
This is interesting since the CEO of this same bank, Jamie Dimon, said sometime ago that he doesn’t “really give a shit” about bitcoin.
So it seems the bank has changed its stance on the subject. Its official statement is now as follows, “We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated. As a globally regulated bank, we believe we have a unique opportunity to develop the capability in a responsible way with the oversight of our regulators. Ultimately, we believe that JPM Coin can yield significant benefits for blockchain applications by reducing clients’ counterparty and settlement risk, decreasing capital requirements and enabling instant value transfer.”
The bank states that “The JPM Coin is based on blockchain-based technology enabling the instantaneous transfer of payments between institutional accounts.”
The banks says that this is how it will work diagrammatically:
In step 1, a J.P. Morgan client commits deposits to a designated account and receives an equivalent number of JPM Coins. In step 2, 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 3, holders of JPM Coins redeem them for USD at J.P. Morgan.
According to Umar Farooq, head of Digital Treasury Services and Blockchain, there are 3 early applications for the JPM Coin.
- the settlement of cross-border payments by large corporations;
- the settlement of securities transactions;
- large corporations that hold US dollars in JP Morgan’s treasury services will be able to replace the dollars held in subsidiaries for JPM Coins.
The bank says that it has successfully tested the movement of money between a client account and a J.P. Morgan account using the new technology.
The bank admits that currently the JPM coin cannot be used by individuals for now. This is because it is designed for business-to-business money movement flows. It is currently a prototype that will be tested with a small number of J.P. Morgan’s institutional clients, with plans to expand the pilot program later this year.
For more on this, the “Squawk Box” crew on CNBC discusses the possible implications of this roll out for crypto investors.
