Might this be the validation that at least some cryptocurrency enthusiasts and advocates have been awaiting?
Thursday morning (Feb. 14), CNBC reported that JPMorgan Chase will be rolling out the first cryptocurrency on offer from a major bank based in the United States.
The offering will be known as JPM Coin, according to reports, and is geared toward the firm’s wholesale payments business, a segment that moves $6 trillion globally. The digital coin is designed to settle payments instantly between the bank’s customers.
CNBC said the move comes as at least some banking operations across the industry are transformed in part by blockchain, which might change the way everything from debt to cross-border payments gets done, and where speed is of the essence. The use of crypto in international payments will be among the first real-world use cases done with a bank – and will be centered on institutional use (rather than sold to retail customers).
The embrace of crypto may be a bit of a surprise for those watching JPMorgan, which last year, along with some peers, banned credit card purchases of bitcoin, the marquee name of cryptocurrencies. CEO Jamie Dimon has also famously dismissed bitcoin as a fraud. But the JPM Coin seems a bet on blockchain and regulated cryptos, which the executive and other JPMorgan executives have said, according to CNBC, hold promise.
In terms of mechanics, each JPM Coin is redeemable for a U.S. dollar, and will be issued upon institutional clients’ depositing dollars with JPMorgan. Upon using the digital coins in transactions, the coins are destroyed, the financial publication said, and dollars are distributed to clients on the other side of the transaction.
As quoted by CNBC, Umar Farooq, head of JPMorgan‘s blockchain operations, “The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.” Initial applications would include, as mentioned, international payments, securities transactions and treasury services.