Major U.S bank and Wall Street giant JP Morgan Chase is launching its own crypto currency to increase settlement efficiency.
Dubbed JPM Coin, the cryptocurrency has a fixed value redeemable for one US dollar. It won’t trade freely like bitcoin and many other cryptocurrencies.
According to CNBC report, the coin is still under development but the bank is set to initiate the real word trials within “a few months.
“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, head of J.P. Morgan’s blockchain projects told CNBC. “The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.”
JPMorgan believes JPM Coin can help lower its clients’ costs and risks, by making money transfers instantaneous and by reducing the amount of capital they need to hold onto..
Moreover, only major institutional clients of the bank with regulatory clearance will be allowed to use the token.
CNBC detailed that JPM Coin will be very similar to the stable coins present in the market as each coin will represent a single dollar. The bank will issue the token once the client makes a deposit and after the use of the token for payment or security purchase on the blockchain, the bank will destroy the coin returning the equivalent dollar value.
The bank sees three areas where the digital coin can be used – in international payments for large corporate clients, in securities transactions, and, finally, for major corporations that use J.P Morgan’s treasury services business.
JP Morgan especially it’s CEO Jamie Dimon has a history with Bitcoin. He publically trashed the digital currency several times calling it a “fraud” “stupid” and “far too dangerous” to people who traded it. He even compared Bitcoin with the infamous “tulip bulbs” bubble and said: “It won’t end well. Someone is going to get killed.”
Dimon said that he supported blockchain technology for tracking payments; his company would fire anyone at the bank that traded in bitcoin “in a second.” He soon after backed off of that harsh assessment, saying that he regretted his comments, adding that he believes cryptocurrencies are real and had to be examined individually.
The bank issued a further clarification Thursday on its position on cryptocurrencies.
“We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated,” said the bank “As a globally regulated bank, we believe we have a unique opportunity to develop the capability in a responsible way with the oversight of our regulators.”
