J.P. Morgan became the first bank in the US gearing up for the future of modern banking – by creating its own digital currency.
In an announcement made on their official website, the digital coin known as JPM Coin is specifically designed for instantaneous transfer of payments between client accounts. The New York based bank also disclosed that the coin is based on its propriety Quarom Blockchain technology.
Prior to this development, Jamie Dimon, Chief Executive of the investment bank, had publicly criticized Bitcoin—the very first cryptocurrency—on several occasions. With the creation of the JPM Coin, Dimon disclosed that he had always believed in the potential of blockchain technology.
This development is now described as a prototype, therefore it has no regulatory approval. The bank’s Head of Digital Treasury Services and Blockchain, Umar Farooq, has however explained that as production swings into full force, the bank will engage regulators to explain its design, solicit approvals and feedbacks.
From all indications, the JPM Coin will be different from cryptocurrencies. Since it is likely going to be a regulated blockchain, it will not be made for public transactions.
Also, the bank’s institutional customers ranging from broker-dealers, banks, and corporate organizations are the only people permitted to use the coin. It should be noteworthy to mention that while the digital coin is fully backed by JP Morgan’s balance sheet, it is 1:1 redeemable in fiat. Therefore, the digital coin is a value equivalent to the US Dollar.
As an investment bank, JP Morgan moves over $6 trillion around the world every day. With the production of the JPM Coins, additional costs and settlement time will be drastically reduced.
Umar Farooq further disclosed that the coin will be applied in three major areas: International payments for large corporate firms and clients, securities transactions and treasury services to replace the dollars held up in subsidiaries worldwide.
Moving forward, Farooq stated that the coin could be used for payments on smartphone devices if there’s a pressing need from the blockchain.
The bank’s clients will be able to make use of the digital coin after regulation checks have been conducted, and money laundering checks have been passed.