JP Morgan is set to launch a cryptocurrency, the first of such to be issued by any major U.S. bank in the world. The bank’s own cryptocurrency will be known as JPM Coin. It will enable the bank to move huge sums of money to any destinations in the world in real time – without reliance on decades-old traditional technology such as SWIFT for wire transfers.
JP Morgan moves over $6 trillion around the world on a daily basis. This is for large corporations such as banks and international organizations. JPM Coin will be tested in the next few months, and a significant portion of JP Morgan’s global transactions will be tested on the new cryptocurrency. The bank’s engineers have already created the digital token for payment settlement among clients.
With JPM Coin, JP Morgan hopes to move international payments, corporate debt issuance and other major transactions to the new cryptocurrency blockchain.
Considering the establishment and rise of cryptocurrencies as a digital token created to disrupt established banking systems, it might be quite surprising that a foremost U.S. bank is creating and adopting cryptocurrencies. Banks had shunned cryptocurrencies because they are considered risky and unstable. Goldman Sachs and other major banks had initially explored the idea before dropping it.
But when JP Morgan tests it in the coming weeks, it will be the first time a major bank will apply crytocurrency to international transactions. Unlike Bitcoin, only JP Morgan’s corporate clients that had passed regulatory checks will be allowed to utilise the bank’s JPM Coin.
According to JP Morgan CEO Jamie Dimon, each JPM Coin will be purchased for one $1, so there is little chance that that its value will fluctuate. JP Morgan’s organizational clients will be issued the cryptocurrency after depositing its dollar value into the bank. Clients can also have the crypto after making payments or purchases on the blockchain. The bank will then destroy the coins and provide the client with the commensurate dollar amount.
With time, JPM Coin may be usable by customers for payments on internet-connected devices if blockchain technology gains global acceptance. And in the even that other banks decide to create their own cryptocurrencies, JPM Coin may not be threatened because nearly 80% of Fortune 500 companies including major banks rely on the services of JP Morgan, said Umar Farooq, head of J.P. Morgan’s blockchain projects.