It is the moment all crypto enthusiasts have been waiting for. JP Morgan Chase, the Wall Street giant, has spilled the beans. Currently, it is testing the JPM coin, a creation of its in-house engineers.
JP Morgan is a peculiar institution. The company which moves around more than $6 trillion worldwide is known for its criticism of cryptocurrencies. Thus Jamie Dimon, JP Morgan’s CEO, once lambasted Bitcoin calling it a fraud. Later on, the company even banned the purchase of bitcoins by credit card customers. And yet (quite ironically) during this time the bank also published a report stating that cryptocurrencies are ‘unlikely to disappear.’
Now, it seems like it is sticking to its word. The company is soon planning to launch the JPM Coin which aims to instantly settle payments between clients. CNBC posits that this way JP Morgan is preparing for a blockchain-powered future. In it, all of the cross-world transactions will be made on one of the most promising technologies to date. The bank needs to keep up with the trends and discard the traditional bank wires. Umar Farooq, head of JP Morgan’s blockchain projects explains:
“So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction. The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.”
CNBC also emphasizes that J.P. Morgan’s undertakings “will be one of the first real-world applications for a cryptocurrency in banking.” However, not the first one. Last year, HSBC alongside ING successfully used blockchain for immediate transactions. Concurrently, American Express is actively embracing XRP-powered operations.
So where do I buy the JPM coin?
Unless you are a big institutional client, frankly speaking, nowhere. CNBC reports that JP Morgan will only issue the fresh-from-the-oven coin to those who have “undergone regulatory checks, like corporations, banks, and broker-dealers.”
The JPM coin will factually be a stablecoin which are trending right now. The bank’s clients will have to first deposit USD and then the bank will issue the coins. CNBC adds: “after using the tokens for a payment or security purchase on the blockchain, the bank destroys the coins and gives clients back a commensurate number of dollars.”
Besides, Farooq outlines three potential applications of the JPM coin. One concerns cross-border payments which are too lengthy at the moment. The JPM coin-powered payments will fix that and help “settle in real time, and at any time of day.”
Likewise, it will enhance the speed of securities transactions. The company has been preoccupied with this issue since April when the bank tested a debt issuance on the blockchain. Back then, it created “creating a virtual simulation of a $150 million certificate of deposit for a Canadian bank.”
Huge corporations can also use it for replacing dollars they hold in subsidiaries across the world. JP Morgan handles a great deal of money used for employee and supplier payments. Facebook is among its clients.
“Money sloshes back and forth all over the world in a large enterprise,” Farooq said. “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.”
Farooq also believes that eventually, the JPM Coin will be applicable for payments on internet-connected devices. That will, however, depend on how blockchain evolves.