JP Morgan to Launch its Own Dollar-Backed Cryptocurrency JPM Coin
JP Morgan will be launching the JPM coin, a dollar-backed token to be used for international transfers, securities transactions and the replacement of dollars for large firms, CNBC reported on February 14, 2019.
Cryptocurrencies aren’t reserved for crypto firms and individuals anymore and haven’t been for a while. Countries such as Venezuela have their own national currencies and social media platforms like Kik have their own native tokens.
Now, JP Morgan has made history by announcing on February 14, 2019, saying that they will be releasing their own digital token, making them the first major bank to do so. This is huge news because JP Morgan handles over $6 trillion each day across the globe and some of that will now be done via crypto.
For the next few months, the bank will begin testing the use of their JPM coin to settle transactions between their clients. This shows that the largest financial world is paying attention to blockchain and more importantly, its use as an alternative to traditional banking services.
One of these services is international transfer, which is mostly done through the SWIFT protocol. However, such transfers often take long periods of time and have a high transaction cost. Blockchain firms such as Ripple have successful counter-acted that, and are able to send huge sums of money in seconds and with little transaction cost.
Banks such as the Kuwait Finance House have partnered with Ripple to take advantage of this, lest they lose the customer base over time. Even SWIFT, which has been the international standard for global transfers, recently teamed up with R3.
The management of JP Morgan has clearly seen this and wants to capitalize.
Umar Farooq, head of JP Morgan’s blockchain projects said:
“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.”
Details About the Coin
Each JPM coin will be redeemable for a single US Dollar, helping to prevent any adverse effects of the crypto market volatility and will be given to customers after they make dollar deposits at the bank. It will be destroyed once they are used for transfers or the purchasing of securities on the blockchain network.
The JPM coin will see three major uses.
The first will be for intentional payment settlements, which will be done in real time rather than over the course of several hours like the current system. The second will be for securities transactions and the third will be for corporations who make use of J.P Morgan’s treasury services business for the replacement of dollars held in subsidiaries around the world.