JP Morgan To Launch First Bank-backed Cryptocurrency

Andrew Cummings
February 15, 2019

Less than two years ago, Jamie Dimon (above), CEO of JPMorgan Chase, called Bitcoin a "fraud".

In a move that can be considered as a major boost for the cryptocurrency and blockchain industry, the US Investment Bank of J.P Morgan has announced that it will be creating a digital currency to ease the flow of payments by the bank.

Speaking to the news source, Umar Farooq, JPMorgan's blockchain lead, posited three main use cases for the bank token, including replacing wire transfers for worldwide payments by large corporate clients and cutting settlement times from days to just moments.

Each JPM Coin is redeemable for a single U.S. dollar, so its value is unlikely to fluctuate, with business customers provided with the coins after depositing cash at the bank.

Mr Farooq added: "Pretty much every big corporation is our client, and most of the major banks in the world are, too".

Looking further out, the JPM coin could be used for payments on internet-connected devices if that use for blockchain catches on, Farooq said.

One of Wall Street's fiercest bitcoin critics may have been playing us all along. Farooq continued that: "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?"

With the introduction of JPM Coin, there are many possible outcomes pertaining to the effect on crypto as payment.

A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015.

By embracing its own digital asset, the bank is preparing for the future of cross-border payments that has been made more efficient by blockchain technology.

- says Umar FAROOQ, head of head of JP Morgan's blockchain projects. Once a client deposits money at the bank, they will receive the coins to use as payment or security purchase on the blockchain.

Of course, it's also worth noting that JPM Coin will likely only be used for very specific purposes (such as the scenario laid out above) - there are no initial coin offerings planned for it, and the average crypto enthusiast will probably never own even a fraction of one of the coins. In fact, its Blockchain Center of Excellence (BCOE) "leads efforts for applications of distributed ledger technology (DLT) within J.P. Morgan", and they have a product called Quorum, which is an enterprise-focused (read "permissioned") version of Ethereum. Yes there is apparently - and the answer is JPM Coin.

For some, J.P. Morgan's new currency may come as an unexpected development for a technology that rose from the wreckage of the financial crisis and was supposed to disrupt the established banking world.

The bank said in a presentation on its website discussing the new JPM Coin that it was supportive of "cryptocurrencies as long as they are properly controlled and regulated". Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.

Do you believe that JPMorgan's test will succeed and other traditional banks will follow suit?

Welcome to cryptocurrencies J.P. Morgan.

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