JPMorgan Chase & Co., the largest bank in America, unfurls the first bank-backed cryptocurrency called the ‘JPM Coin’ in a trial that will begin in a few months. The coin, created by the bank’s engineers for instantaneous settlements, will only be available for institutional clients
JPMorgan is gearing for a move to the blockchain, where money can be transferred lightning speed, away from the slowness of wire transfers. This test run will be the first real-world use of a cryptocurrency issued by a bank.
Umar Farooq, JPMorgan’s chief of blockchain-related projects, tells CNBC that there are unlimited applications for the technology. ‘Anything, where you have a distributed ledger which involves corporations or institutions, can use this,’ he quips.
JPM Coin Works like Stablecoins
After depositing fiat dollars with the bank, institutional clients will be issued the JPM Coin. Each digital coin is equivalent to one US dollar. Once a client uses it to make a security purchase or carries out payment on the blockchain, the bank will burn the coins and reimburse the client with the corresponding amount in dollars.
But in contrast to other stablecoins and cryptocurrencies, the use of the JPM Coin is limited to the bank’s institutional clients who go through regulatory checks.
Instantaneous Settlement for Big-Time Clients
According to Farooq, the JPM Coin satisfies various needs of its big-money clients. Corporations making cross-border payments through SWIFT wire transfers, those who use the bank’s treasury services, and securities transactions can benefit from the system they are testing. Through the crypto coin, international payments can be settled in real-time, any day.