JP Morgan Chase’s JPM coin makes history as US bank backed cryptocurrency
JPMorgan Chase is launching a trial in the coming months of the first cryptocurrency backed by a major US bank. Dubbed “JPM Coin,” the cryptocurrency will be used by large companies around the world to “instantly settle payments between customers,” according to a CNBC report.
Currently, only large customers of JPMorgan Chase will be able to profit from the new cryptocurrency, so it is out of reach for the average consumer. These large clients typically include large brokers who have successfully passed regulatory checks. JPM Coin will also only be exchangeable for one US dollar, so its value will be tied to the dollar, unlike Bitcoin and many other cryptocurrencies. To receive JPM Coins, a Chase customer will first need to deposit dollars at the institution, and once the transaction is complete, the coins will then be withdrawn and converted back to a corresponding amount of dollars.
âSo whatever is in the world right now, as it goes into blockchain, that would be the payment leg for this transaction,â Umar Farooq, JP Morgan blockchain projects manager told CNBC. . âThe applications are frankly quite endless; anything where you have a distributed ledger that involves companies or institutions can use it.
Farooq then explained to CNBC that JPM Coin can be used in three ways, including for international payments and securities transactions. With international payments, large businesses will no longer have to use wire transfers to move large sums of money. The transfer process can be speeded up and payments can be made immediately, without the need to wait. Second, with securities transactions, JPM Coin can be used by investors to settle transactions immediately, again eliminating the need to use communication services.
JPMorgan Chase may be making a big bet with JPM Coin, but it still holds great potential to scale business across the globe. There is hope that large companies can use JPM Coin in treasury services. “The end use would be for large companies that use JP Morgan’s treasury services business to replace dollars they hold in subsidiaries around the world,” CNBC reports.