JPMorgan Chase to create digital coins using blockchain for payments

JPMorgan set to move its in-house cryptocurrency to real-world trials

What makes today's news so surprising is that this is the same bank whose Chairman and CEO Jamie Dimon has up to now been very critical of cryptocurrencies, especially Bitcoin. In other words, you shouldn't expect to see JPM Coin listed on your local cryptocurrency exchange.

Once corporate adoption takes off, Farooq said that the bank might even try to expand its cryptocurrency into device-based payments.

JPM Coin, on the other hand, is "permissioned (i.e., enterprise grade secure blockchain solutions built by J.P. Morgan and/or partners)", the FAQ says (emphasis added here).

What Does JP Morgan Mean by 'Cryptocurrency?'

"We believe it will be crucial for banks to maintain their market position in payments, because payments are often central to the client relationship, generating substantial revenues from credit and debit card fees, deposit account fees, cross-border transaction fees and net internet income", S&P said.

Moreover, Farooq pointed out three main applications for the JPM Coin.

The report relays that the bank backed crypto will be used initially to instantly settle global payments between clients; "expanding further" if it proves successful.

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Each JPM Coin is redeemable for a single US dollar, so its value shouldn't fluctuate, similar in concept to so-called stablecoins. "The applications are frankly quite endless; anything, where you have a distributed ledger which involves corporations or institutions, can use this".

In an attempt to reposition itself after Jamie Dimon's past controversial comments, Farooq tries to convince us this is part of the master plan: "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 the new tokens are initially designed for major "institutional clients" for business-to-business transactions, not individuals, the cost-savings and efficiency benefits "would extend to the end customers of our institutional clients", the company said.

Apparently, the heavyweight of the banking industry is anxious about the impact crypto coins are beginning to have on the financial industry over time, especially Ripple, which has gotten itself quite a few big-name partners - including major global banks - over the course of 2018.

Replacement for dollars held in treasuries - The token could replace dollars held by subsidiaries of huge corporations across the world. JP Morgan caters to some of the biggest companies globally, handling such operations as salary settlements and supplier payments.

Nevertheless, with a financial institution as entrenched as JP Morgan taking the plunge into actual blockchain payments, perhaps skeptics will be more willing to give JPM Coin's decentralized cousins a closer look. Farooq continued that: "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?" And while miners mint new coins, the bank will only avail the coin to institutional clients. "That way, they can consolidate their money and probably get better rates for it".

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