JPMorgan launches its own cryptocurrency; the first for a major U.S. bank

Oscar PerryFeb 15, 2019

In trials scheduled to begin in a few months, it plans to handle a small fraction of those payments using a homegrown blockchain.

The biggest bank in the U.S, JP Morgan has had a love-hate relationship with the crypto and blockchain industry.

This week, Maria Bartiromo recaps her interview with JP Morgan Chase Chairman and CEO Jamie Dimon, discussing market volatility, impact of tax cuts, U.S-China trade fight, and a possible slowdown in the US economy.

This news might come as a surprise to those who are familiar with JP Morgan's previous views on Bitcoin. Last year, J.P. Morgan and two other lenders banned the purchase of bitcoins by credit card customers. In April, J.P. Morgan tested a debt issuance on the blockchain, creating a virtual simulation of a $150 million certificate of deposit for a Canadian bank. It even developed its own blockchain network named Quorum.

There are three early applications for the JPM Coin, according to Farooq.

While Jamie Dimon constantly avoiding the growth of Bitcoin, the managers and engineers at NewYork based bank have always been optimistic towards the underlying technology and digital currency at large.

He also claims that over time, JPM Coin will be extended to other major currencies.

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"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", said JPMorgan's Head of digital treasury services and blockchain Umar Farooq. "The applications are frankly quite endless; anything, where you have a distributed ledger which involves corporations or institutions, can use this".

"JPM Coin is now designed for business-to-business money movement flows, and because we are still in a testing phase, we don't have plans to make this available to individuals at this stage". It is a digital coin representing United States Dollars held in designated accounts at JPMorgan Chase N.A. In short, a JPM Coin always has a value equivalent to one U.S. dollar. New types of digital coins (some better than others) pop up regularly, and while nobody can predict the future, it doesn't look like many of them will be going anywhere anytime soon.

How does JPM Coin work? The first of these is worldwide payments for sizable corporate clients. Previously, these transactions have relied on platforms such as SWIFT which can take up to five days.

Replacement for dollars held in treasuries - The token could replace dollars held by subsidiaries of huge corporations across the world.

Mr Farroq said: "Money sloshes back and forth all over the world in a large enterprise". Farooq says: "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."Pretty much every big corporation is our client, and most of the major banks in the world are, too", he concluded".

Secondly, JP Morgan's token may also be used for securities transactions.

The leap also seemed to soften the bank's stance on cryptos.

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