JP Morgan is the first major international bank to issue its own cryptocurrency – JPM Coin, CNBC reports today.
The goal is to use the digital coin in the payments business, where the US-based JP Morgan moves around $6 trillion around the globe for its clients every day.
The initial transactions involving the JPM Coin will debut in the next couple of months, CNBC reports. Accordingly, there are three early applications for the JPM Coin.
Logically, the first involves international payments for large corporate clients. The second concerns securities transactions, while the third one targets huge corporations that use the bank’s treasury services to replace the dollars they hold in subsidiaries across the world.
“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,” said Umar Farooq, head of J.P. Morgan’s blockchain projects.
If the first phases go smooth, the bank may use JPM Coin coin for payments on internet-connected devices.
Ironically, the first bank-issued cryptocurrency comes from the JP Morgan, whose CEO Jamie Dimon bashed bitcoin on several different occasions.
Two weeks ago, Newconomy reported a note issued to JP Morgan’s clients, in which the banknotes their skepticism over “cryptocurrencies’ value in most environments other than a dystopian one characterized by a loss of faith in all major reserve assets”.
Previously, Dimon labeled Bitcoin a “fraud” in 2017, while adding that “it won’t end well. Someone is going to get killed.”
Two of the most important pillars of the Western financial system – cross-border payments and corporate debt issuance – are one of the first candidates to move to the blockchain. Thus, it comes as no big surprise that a major bank such as JP Morgan has chosen cross-border payments to debut its new technology.
“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,” added Farooq.
Even though he criticizes Bitcoin on different occasions, Dimon did praise the blockchain technology.
“Blockchain is a real technology — it’s just a database we can all access that’s kept up-to-date,” said Dimon during the World Economic Forum in Davos last month.
JP Morgan is the largest bank in the United States and the world’s biggest by market capitalization. According to S&P Global, the New York-based bank is the sixth largest in the world by total assets. In 2018, its assets were estimated at around $2.534 trillion.
“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,” concludes Farooq.