2019 so far seems to be the year for stablecoins backed by big corporations. Aside from Facebook’s cryptocurrency project that has been the center of attention for the last couple of weeks, the largest bank in the United States is all set to pilot its stablecoin as well. It is reported that JPM coin will not solely be limited to Quorum, per the officials, it will subsequently be extended to other platforms. In fact, JPM Coin will be operable on all standard blockchain networks.
According to reports, JPMorgan Chase is expecting to pilot its very own cryptocurrency, dubbed the JPM Coin, by the end of this year, that is, if they are successful in acquiring the approval from relevant regulators. The head of digital treasury services and blockchain, Umar Farooq also revealed that the pilot testing of the coin would be with selected clients only.
The JPM Coin was first unveiled earlier this year in February, prior to the social media giant Facebook’s own stablecoin Libra’s launch. The bank’s upcoming stablecoin is said to be pegged to the US dollar and will run on top of Quorum, which is the private version of Ethereum developed by the bank in alliance, but not exclusively, with EthLab.
Furthermore, as per the FAQs, JPM Coin is permissioned, meaning it is an “enterprise grade secure blockchain solutions built by J.P. Morgan and/or partners”. The access to it will be limited and only institutional customers passing J.P. Morgan KYC will be able to transact the coin.
When it comes to the functionality, the JPM Coin will function similarly to other stablecoins. Real cash will be deposited at the bank in exchange for the token through the “permissioned” distributed ledger. The recipient can then redeem the token for cash from JPMorgan.
Moreover, Umar Farooq revealed that the coin would fulfill three main use cases, including wire transfers for international payments by large corporate clients and cutting settlement times from days to just moments.The JPM Coin would also be facilitating bond transactions by allowing traders to deliver securities in exchange for cash instantly.
Farooq explained that the buyer purchases JPM Coins in advance, putting them in their JPMorgan deposit account, while the seller’s bonds are represented by tokens. Computer programs on a blockchain platform then complete the transaction.
JPMorgan’s executive also revealed the banks positive outlook towards tokenized bond securities as he said:
We believe that a lot of securities over time, in five to 20 years, will increasingly become digital or get tokenized.
This serves as reason enough for the company’s crypto endeavor. Another factor prompting the bank towards its native stablecoin is the global interest that they are seeing from clients in the United States, Europe and Japan. The interest is greatly focused on the potential for the prototype digital coin to make the trading of securities such as bonds more efficient.
Some might be surprised by the bank’s involvement in the crypto space, considering its CEO, Jamie Dimon, labeled bitcoin a fraud back in September 2017 during an investors meeting. However, the same bank expressed a starkly different opinion earlier this month, stating that the bitcoin industry has changed considerably since 2017 largely due to institutional investors.
Additionally, the banking giant has several other blockchain and crypto-centric projects running under its wings. JPMorgan is running a blockchain payments trial in alliance with Australia’s ANZ and the Royal Bank of Canada.
Reportedly, the three banks set up the project back in October 2017 with an aim to make interbank payments more cost and time efficient as compared to the traditional methods. The project, dubbed the Interbank Information Network (IIN), has also been built on top of Quorum.
Furthermore, the bank has clarified that the IIN will in no way affect the JPM coin because the former transfers information, not payments, between correspondent banks, while the latter represents fiat currency and is designed to instantaneously transfer value.Will the JPM coin be well received as compared to Facebook’s Libra? We’ll know for sure once the bank pilots it, hopefully by the end of 2019.