JP Morgan Makes a U-Turn, Launches Own Cryptocurrency
The US multinational bank, JP Morgan has made a u-turn from calling Bitcoin a fraud to launching its own cryptocurrency. Called the JPM Coin, it is based on the concept of stablecoins and associated with the US dollar. The JPM Coin will instantly settle payments between clients. The digital token’s value will not fluctuate as each coin is redeemable for a single US dollar. According to a statement by the bank, clients will be issued the coins after depositing dollars at the bank. “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.”
Umar Farooq, the head of JP Morgan’s blockchain projects, said their clients had prompted them towards blockchain as they wanted to move money onto the blockchain. Farooq said the digital token will be able to move instantaneously on the coin’s ledger. Initially, this will be based on JP Morgan’s Quorum blockchain. Farooq said speed is crucial and the token has this advantage. Normally, banks give the option of wire transfers to their clients who want to move huge amounts of money. And when its an international transfer, it takes time and often results in hefty fees for the clients to pay. “JP Morgan’s offering would be useful for big clients but not for the smaller speculators who have typically taken an interest in cryptocurrencies,” Farooq said. He added that the JP Morgan’s Quorum block is designed specifically for institutional use. “Its not created to be for public investment.”
Farooq highlighted three early applications for the JPM Coin, with the first being for international payments applicable for large corporate clients; the second for securities transactions; and the third and final use applies to huge corporations that use the bank’s treasury services.
Meanwhile, Bloomberg has sounded alarm bells by saying that JPM Coin that JP Morgan plans for its clients to use in cross-border payments may be a direct threat to Ripple. But only time will tell if this will indeed be.