First US Bank-backed Cryptocurrency From J.P. Morgan Chase

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J.P. Morgan Chase has introduced the first cryptocurrency by any major U.S. bank. Engineers at the lender have designed the “JPM Coin,” a digital token that will be accepted to settle transactions between clients of its wholesale payments business instantly. Only a small part of the payments will originally be transmitted utilizing the cryptocurrency, but the experiment represents the first real-world application of a digital coin by a major U.S. bank.

It is pertinent to mention that J.P. Morgan Chase moves more than $6 Tn around the world every single day for organizations in its extensive wholesale payments market. In a series of trials that are all set to begin in a few months, a small fraction of that will happen over something called “JPM Coin,” the digital token created by engineers at the New York-based bank to instantly settle payments between clients.

J.P. Morgan is planning for a future in which components of the essential foundation of global capitalism, from cross-border payments to corporate debt issuance, will move towards the blockchain technology, which is the database technology made notable by its first application, bitcoin. However, for that future to happen, the bank required a way to transfer money in an unprecedented way and speed that those smart contracts closed, rather than depending on old technology like wire transfers.

For few, J.P. Morgan’s new currency may come as an astonishing development for a technology that emanated from the remnants of the financial crisis and was supposed to obstruct the established banking world. Although the possessors of digital currencies may grab on the news that a major financial institution is dispensing its crypto as bullish for the asset class, however, retail investors will presumably never get to own a JPM Coin. Unlike bitcoin, only large institutional clients of J.P. Morgan that have experienced regulatory checks, like enterprises, banks and broker-dealers can use the tokens.

When the international payments are tested, it will be one of the first real-world applicability for a cryptocurrency in banking. The industry has mostly neglected the asset class as too dangerous. Last year, J.P. Morgan and two additional lenders banned the procurement of bitcoins by credit card customers. And Goldman Sachs reportedly suspended plans to create a bitcoin trading desk after examining the concept.