JP Morgan launches JPM Coin, the world’s first cryptocurrency to be backed by a major bank
Banking giant, JP Morgan, today announced the launch the world’s first bank-backed cryptocurrency that could change the way we use money forever. The cryptocurrency called JPM Coin, is set to start in a few months. According to the bank, JPM Coin will constitute tiny fraction of the $6 trillion the bank move around the world every day. The digital token created by engineers at the New York-based bank to instantly settle transactions between clients of its wholesale payments business. The JPM Coin is based on blockchain-based technology enabling the instantaneous transfer of payments between institutional accounts.
According to the announcement, JPM Coin is a digital coin designed to make instantaneous payments using blockchain technology. Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin.
The virtual coin forms part of the bank’s plans to use cryptocurrency technology blockchain to underpin all its major transactions in the future. JP Morgan’s blockchain Chief Umar Farooq said: “The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.”
Farooq went on to say that, The JPM Coin isn’t money per se. It is a digital coin representing United States Dollars held in designated accounts at JPMorgan Chase N.A. In short, a JPM Coin always has a value equivalent to one U.S. dollar. When one client sends money to another over the blockchain, JPM Coins are transferred and instantaneously redeemed for the equivalent amount of U.S. dollars, reducing the typical settlement time. Over time, the bank plans to extend JPM Coin to other major currencies.
Talking about the JPM Coin and the payment transfer using blockchain, Umar Farooq, the banks’ blockchain projects says that “its technology capabilities are currency agnostic.” He went on to say that: “So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction,” Umar Farooq said. “The applications are frankly quite endless; anything, where you have a distributed ledger which involves corporations or institutions, can use this.”
JPM Coin Is Not Your Fly-By-Night CryptoCurrency
Unlike thousands of cryptocururencies out there with no collateral, JPM Coin is redeemable 1 to 1 in fiat currency held by J.P. Morgan like US Dollars. In addition, JPM Coin is exclusively for institutional customers (e.g., Banks, Broker Dealers, Corporates). At this point, JPM Coin is still a prototype. The bank plans to actively engage their regulators to explain its design and solicit their feedback and any necessary approvals as it moves towards production.