One of the leading investment bank and finance organization in the US, JP Morgan Chase has recently launched its own cryptocurrency – JPM Coin. Reportedly, this digital token will be used to handle transactions between wholesale payments business.
Unlike the famous cryptocurrency bitcoin, JPM Coin is crypto which is meant only for permissioned users within an organization. In short a cryptocurrency operating on the private blockchain available for institutional customers who pass the know-your-customer rules of JP Morgan
Well said that, the value of JPM Coin doesn’t fluctuate when compared to normal BTC or ETH. Which concludes it as stablecoin but its actually not. As clarified by investment bank, “a JPM Coin is redeemable by JPMorgan for 1 dollar, so it’s backed by JPMorgan Chase’s $2.6 trillion balance sheet. Other stablecoins tend to have a less transparent source of reserves“.
Perhaps this might be the first of its kind to be used by major US bank, a real -world use case for blockchain for financial infrastructure. The report from CNBC indicates that the actual trials will be begin in coming “few months”.
JPM Coin for international payments
As stated by Umar Farooq, JPMorgan’s blockchain lead, the digital token can be solution in many use-cases. This includes replacing wire transfers for international payments by large corporate clients and cutting settlement times from days to just moments.
On the similar lines Farooq quoted that,
The applications are frankly quite endless; anything, where you have a distributed ledger which involves corporations or institutions, can use this.
The token can be used settle security issuance almost instantly, as well as to replace U.S. dollars held internationally by subsidiaries of major corporations using JP Morgan’s treasury services
Further he added that,
Money sloshes back and forth all over the world in a large enterprise. 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.
Also, the plans are to roll out JPM Coin for making payments on mobile devices as well.
On the technical side, the firm answered FAQ session which quotes that- “The JPM Coin will be issued on Quorum Blockchain and subsequently extended to other platforms. JPM Coin will be operable on all standard Blockchain networks “
Considering the bigger picture, the firm stated that,
Pretty much every big corporation is our client, and most of the major banks in the world are, too. Even if this was limited to JPM clients at the institutional level, it shouldn’t hold us back.
What do you think of this digital token by JP Morgan? Will the blockchain continue to be a game-changer in banking sector? Let us know your thoughts in comment section below.