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JP Morgan launches cryptocurrency- good news for the global crypto community




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JP Morgan is rolling out the first cryptocurrency by a US bank to transform payments business Crypto Heroes

JP Morgan Chase has created the first cryptocurrency, JPM Coin, backed by a major bank in the United States. The bank introduced the digital token on Thursday, February 14, stating that it is ready for widespread use. The cryptocurrency was developed by engineers at the New York-based bank to settle payments between clients instantly.

JPM Coin to settle payments between clients

The bank revealed its plans to prepare for the future that involves blockchain technology playing a crucial role in global capitalism. The banking giant added that the blockchain technology and cryptocurrency would allow them to transfer money at speed not previously attainable, as they look to reduce their reliance on old technology such as wire transfers.

Umar Farooq, head of J.P. Morgan’s blockchain projects, praised the blockchain technology, stating that it has numerous applications, chiefly in the financial sector. He explained that each JPM Coin is redeemable for a single US Dollar, so it is protected from the extreme volatility of the crypto market. It is similar to stablecoins, except, in this case, it will be used by the bank’s clients in carrying out transactions.

Clients will be issued the coins after depositing dollars at the bank. The coins will be destroyed after they are used for payment of services or security purchases on the blockchain.

JPM Coin to offer real-time settlement

According to Farooq, there are three early applications for the cryptocurrency. In the first instance, JPM Coin will be used for international payments on behalf of its corporate clients. This process was previously conducted using wire transfers offered by networks like SWIFT. However, using the cryptocurrency, payments between clients will be settled in real-time and at any time of the day.

The second use of the token is for securities transactions. JP Morgan will no longer rely on wire transfers to buy issuance, which usually results in a time gap between settling the transaction and being paid for it. The bank will use the JPM Coin to buy issuance for its clients henceforth, resulting in instant settlements.

The third and final use of the JP Morgan-backed cryptocurrency would be for big corporations that use the bank’s treasury-services business, to replace the dollars they hold in subsidiaries across the world. JP Morgan is known for handling a significant amount of the world’s regulated money flows for companies such as Honeywell, Facebook, and others.

Farooq said the JPM Coin will reduce the cost of transactions for large institutions, as they will get better rates using it compared to the traditional wire transfer methods. He further pointed out that the JPM Coin could also be used for payments on internet-connected devices in the future if they continue to improve their blockchain. The bank is confident that they could help with the global adoption of blockchain as it currently serves 80 percent of the companies in the Fortune 500.

JP Morgan changes stance on crypto, good news for the crypto community

JP Morgan, particularly its CEO Jamie Dimon, has been very critical of Bitcoin and other cryptocurrencies over the past few years. In September 2017, Dimon called Bitcoin a fraud, arguing that it is not a real thing. In October 2017, he pointed out that those who invested in cryptocurrencies will eventually pay the price.

However, he changed his stance a few months later. In January 2018, he told Fox Business that he regretted calling Bitcoin a fraud, as he believes cryptocurrencies backed by fiat currencies, such as the US Dollars and Yen, could be developed.

The bank had already accepted blockchain technology and released a blockchain platform, Quorum, used by several institutions to track financial data. With the announcement of the JPM Coin, the bank is widening its reach in the crypto space, as it feels digital currencies have become more palatable to its typically risk-averse corporate customers.

The launch of the JPM Coin is certainly good news for the crypto sector. Banks all over the world have decried the weakness of cryptocurrencies, with some banks going as far as banning their customers from purchasing cryptos using their credit cards. However, with JP Morgan, one of the largest banks in the world venturing into the crypto space, it shows that the sector has grown tremendously over the past few years, and will offer numerous advantages to the global financial industry.

JPM Coin could affect XRP and its adoption by banks

Ripple’s technologies and XRP have dominated the cross-border and inter-bank settlement space, but the launch of JPM Coin, which will offer similar functions, will jeopardize Ripple’s stance as the leading remittance company in the crypto space.

Joe Weisenthal, co-host of Bloomberg’s What’d You Miss, pointed out that Ripple could be affected by JP Morgan’s entry into the crypto space.

Another market expert, Tushar Jain, a general partner at Multicoin Capital, backed JPM Coin to obliterate XRP.

It is safe to assume that JP Morgan will overshadow Ripple in the remittance space due to its status as one of the leading banks and financial service providers in the world.

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