Famous U.S-based bank JP Morgan Chase has become the first bank in the United States to launch a cryptocurrency according to fresh reports from CNBC.
The new cryptocurrency dubbed “JPM Coin” will undergo a trial in the coming months as a unit for settling fractions of the $6 trillion transactions processed daily by the bank.
In the near future, the bank will enable the use of the cryptocurrency as a means of payment settlement between its clients.
The report reckons that engineers at JP Morgan Chase have realized that the speed of payment settlement in blockchain-based smart contracts is way better than what they could ever attain with technology such as wire transfer.
Speaking about the groundbreaking development, Umar Farooq, head of JP Morgan’s blockchain projects said the cryptocurrency would be a “payment leg” for global transactions and lauded the massive potential locked in blockchain technology.
In his exact words,
The applications are frankly quite endless; anything, where you have a distributed ledger which involves corporations or institutions, can use this.
Applications of JPM Coin
- The JPM cryptocurrency will be stablecoin pegged 1:1 against the U.S dollar.
- JPM coin will be issued to clients after they deposit money with the bank and will be destroyed after it has served its transactional purpose.
- Primarily, the JPM coin would serve big institutional clients of J.P. Morgan that have undergone regulatory checks, like corporations, banks and broker-dealers can use the tokens.
- These clients will use the cryptocurrency to settle payments in real time across borders. It will purportedly reduce transactions times, allow payments to be settled in real time instead of one day or more.
- Clients could also use it for securities transactions as demonstrated by the Bank’s $150 million syndicated loan issuance over blockchain.
- Huge corporations using J.P Morgan treasury services business will use JPM coin to replace the dollars they hold in subsidiaries across the world.
JP Morgan’s decision to launch a cryptocurrency has once again proved that one of the biggest potentials of blockchain technology is in fast and transparent cross border payments.
Should the bank meet success after it’s trial, then its cryptocurrency would likely rival the XRP token which is used by crypto startup Ripple to facilitate cross-border payments among individuals and large banking corporations.