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JP Morgan Chase and Co. Enter Crypto-Sphere With Their Own StableCoin

Image Credit: The Wall Street Journal

•    JP Morgan Chase and Co. the American Multi-national Investment Bank has launched a new Stablecoin called ‘JPM’ coin. 
•    The lender earlier been apprehensive of Bitcoin, with its leaders bashing Bitcoin as a ‘fradulent’ scheme.

The first cryptocurrency backed by a non-blockchain based firm such as J.P. Morgan Chase and Co. has entered the crypto-sphere. J.P. Morgan, the financial giant, who has vocally criticized Bitcoin for being in a bubble or a Ponzi scam, have finally accepted part of the solution proposed by Bitcoin – Blockchain Based instantaneous transactions. 

What Purpose Will JPM coin serve?

The FinTech engineers employed at the bank have come up with a ‘stablecoin’ called the ‘JPM coin.’ The international payments using ‘JPM’ coin would be tested soon on the platform. The organization seems to serve three early purposed with the JPM coin.

The first purpose would be to help large corporate clients who have usually relied on the SWIFT payment network to make payments. The SWIFT network not only takes days to validate and process the transactions but also charges a handsome fee as operational charges. The trades made via a cryptocurrency can be made instantaneously during all times of the day. Hence, geological time differences are not an issue. 

Secondly, JP Morgan plans to use the ‘JPM’ coin to execute securities transactions. J.P. Morgan is one of the largest investments banks in the world with operations expanding across the globe. Hence, securities exchange with overseas clients can be time taking and a cumbersome job with the current system. However, with the borderless cryptocurrency stablecoin, instantaneous transactions, confirmation, and delivery of securities can take place, resulting in instant settlement. 

Last but not least, the most important and the highest value proposition use of the ‘JPM’ coin would be for J.P. Morgan’s treasury service business. The multinational custodians have clients like Honeywell International, Facebook, and Infosys. The revenue generated from this service was $9 billion alone last year.

Implications for the Cryptocurrency Fans 

The lender moves more than $6 trillion around the world every day for corporations in its massive wholesale payments business. The American Investment bank which generates revenue of more than $100 billion every year has for the first time exploring the blockchain route to execute payments. 

Umar Farooq, the head of Blockchain Projects at J.P. Morgan Chase and Co. noted that

"So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction," he said. "The applications are frankly quite endless; anything, where you have a distributed ledger which involves corporations or institutions, can use this." 

When the international payments are tested, it will be one of the first real-world applications for a cryptocurrency in banking. The industry has mostly shunned the asset class as too risky. However, the addition of a stable coin will increase liquidity in the cryptocurrency markets if the JPM coins start to trade on cryptocurrency exchanges as well. The cryptocurrency marketcap can expect a major push soon.