16 Feb J.P. Morgan Chase First U.S. Bank Releasing a Cryptocurrency
Despite Jamie Dimon, Morgan Chase’s JP Morgan CEO, strong critics against Bitcoin in 2017, saying people who bought it were stupid, JP Morgan just became the first US Bank releasing its own cryptocurrency.
The cryptocurrency named “JPM Coin” will be used to their wholesale payment business that moves trillions of dollars daily by processing their clients’ transactions instantly and safely. Only a small part of transactions will be processed initially in a few months. However, this is the first digital coin with real-world use by a major U.S. bank.
There are two reasons J.P. Morgan is on that road with crypto. One is strategic. If cryptocurrencies are risk factors, it’s better to be inside than out, potentially watching someone walk away with your business.
The second is competitive. Wholesale worldwide payments involve the movement of large sums between banks as part of the complex dance of international transactions. Those movements have traditionally used wire transfers that can take a day to complete.
Mr. Dimon now says he recognizes blockchain’s potential in the future of the global financial system. And JPMorgan has already released a blockchain platform, Quorum, that several institutions are using to keep track of financial data.
With the announcement of its coin, JPMorgan is widening its experiment and moving to make the idea of digital currencies more palatable to its typically risk-averse corporate customers.
JPMorgan will control the JPM Coin ledger, and each coin will be backed by a dollar in JPMorgan accounts, giving the coins a stable value. That means JPM Coin will not be subject to the wild price volatility that has drawn speculators to other cryptocurrencies.