J.P. Morgan Chase is set to become the first major U.S. bank to launch its own cryptocurrency. The bank has created its digital currency dubbed ‘JPM Coin’ that will be used to carry out a few transactions initially.
The engineers at the New York-based bank have leveraged blockchain technology to create digital tokens that will drive a fraction of $6 trillion that bank moves around the world each day. With its digital currency, the bank wants to envision a future where its own cryptocurrency will be used to perform cross-border transactions, corporate debt issuance, etc.
“So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction. The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this,” said Umar Farooq, head of the bank’s head of blockchain projects.
J.P. Morgan is launching its cryptocurrency at a time when popular digital currencies like Bitcoin are slumping and witnessing the biggest fall since their inception.
Farooq said that JPM Coin would be pegged to U.S. Dollar to stop value fluctuation and it will also become a differentiating factor from Bitcoin. To get the digital token, clients will have to deposit dollars at the bank. Once the transaction has been carried out, the bank will destroy the coins, and a commensurate number of dollars will be provided to the clients.
At the moment, JP Morgan’s digital currency will be used for three major applications – international payment for large corporate clients, securities transactions and for corporations that use J.P. Morgan’s treasury services.
Do you think this step could be a piece of good news for the declining cryptocurrency sector? Tell us how J.P. Morgan’s digital currency will bring about a change in the way financial institutions operate?