In case you missed it, JP Morgan is rolling out a crypto asset. The “JPM Coin” is a digital currency that will be used to settle transactions between the bank’s institutional clients instantly.
The first-ever bank to create a cryptocurrency moves more than $6 trillion around the world every day for corporations. A small fraction of these transactions will begin testing the JPM Coin in the coming months.
Umar Farooq, head of J.P. Morgan's blockchain projects, said, “The JPM Coin is a digital coin designed to make instantaneous payments using blockchain technology. Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin.”
Changing Their Story
The move for JP Morgan to create a crypto asset may seem odd considering their CEO Jamie Dimon's infamous criticism of Bitcoin. But before you call Dimon a hypocrite, it’s important to note that the JPM Coin is very different from most crypto assets.
For one it’s a stablecoin, which means it’s 1:1 redeemable in fiat currency held by J.P. Morgan (e.g., US$). Bitcoin, for example, has intrinsic value, that is not backed by anything or anyone– it's decentralized. Also, according to the company, the coin will operate on a private blockchain that only JP Morgan and privileged clients have access to, unlike Bitcoin and Ethereum which are on public ledgers.
Even so, the company's feeling towards crypto as a whole seems to have improved. When asked what JP Morgan's official stance on crypto is, Farooq replied,
“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.”
While JP Morgan is the first bank to create a cryptocurrency, we doubt they’ll be the last. More banks will likely use blockchains to increase the speed and lower the price of transactions across the globe. What they wont do is open the financial system.
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The lender moves more than $6 trillion around the world every day for corporations in its massive wholesale payments business. In trials set to start in a few months, a tiny fraction of that will happen over something called "JPM Coin," the digital token created by engineers at the New York-based bank to instantly settle payments between clients. Read more.
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