The first cryptocurrency created by a major US bank is here – and it’s from JP Morgan Chase.
The New York-based bank has taken the much-awaited step of launching its own digital token, CNBC reported Thursday.
“A “tiny fraction” of the bank’s $6 trillion in daily transactions will be conducted by its newly created ‘JPM Coin’ to settle international payments at any time of the day and within seconds”, said Umar Farooq, Head of J.P. Morgan’s blockchain projects. It will also be used for securities transactions and for corporations using the bank’s treasury services, the bank confirmed in a blog post.
As each JPM Coin is redeemable for a single U.S. dollar, it shares the qualities of a stablecoin. CNBC specified that “clients will be issued the coins after depositing dollars at the bank; after using the tokens for a payment or security purchase on the blockchain, the bank destroys the coins and gives clients back a commensurate number of dollars.”
When approached for comment about a rumoured stablecoin announcement in January, the bank’s representative Brian Marchiony told said the firm had no such project in the works. Blockchain lead Christine Moy explained this morning “it wasn’t up for announcement at the time of [our] inquiry.”
The trial will begin in the next few months, when the coin will go live, becoming one of the first real-use applications in banking for a cryptocurrency. JPM Coin will be issued on Quorum and “subsequently extended to other platforms” and “operable on all standard Blockchain networks.”
While CEO Jamie Dimon has previously spoken sceptically of bitcoin, calling it a “fraud” and banning its purchase by credit-card users, the move suggests that the bank is beginning to see potential in crypto assets. The space reacted to the bank’s modified outlook with surprise, with some showing scepticism towards the token trial.
“JP Morgan continues to get it wrong”, said Timo Schlaefer, CEO of Crypto Facilities. “Using blockchain to run a closed network is like wearing a designer suit to wash your car.”