- JPMorgan Chase has launched its own cryptocurrency, JPM coin. They are the first U.S. based Bank to successfully create and test a digital coin that can be used as a cryptocurrency.
- 157 banks are expected to accept the bank-backed cryptocurrency.
- JPMorgan Chase is committed to involving regulators in JMP bitcoin design and decisions.
Here’s What JPMorgan Chase’s Crypto Currency Means for Financial Institutions
JPMorgan Chase is the latest company to join the cryptocurrency craze. Following their predecessors Ripple and Swift, the bank recently announced their plans to launch JPM coin, a digital, bank-backed cryptocurrency token always worth $1. In a calculated power play, JPMorgan Chase ditched their middleman role and chose to take its fate into its own hands concerning cryptocurrency transactions. Known as a stablecoin, the financial institution’s cryptocurrency will run on its own system, JPMorgan Chase’s Quorum blockchain.
With the new stable coin, JPMorgan Chase’s goal is to create a system that allows instantaneous payments, particularly for international transactions, using blockchain technology to be handled with ease. Initially, the rollout will take place with a small number of institutional clients with a pilot planned for late 2019. However, the ripple effect (no pun intended) will inevitably be far-reaching. Case in point, JPMorgan Chase’s CEO Jamie Dimon recently made a statement saying the new bitcoin “could be internal, could be commercial, [and] it could one day be consumer.” Considering the decentralized nature of bitcoin, this could have a significant impact on how bitcoin is managed by consumers moving forward.
International Transactions, Tracking Risk Easier with JPM Bitcoin
One hundred fifty-seven banks are expected to accept JPM Coin, a closed network, primarily for tracking risk in their cross border payments. Interestingly, JPMorgan Chase currently works with 80% of Fortune 500 companies which may lead to other big banks joining JPM coin — or creating their own. Non-domestic banks have followed suit with Dukascopy Bank (Switzerland) and Mizuho Bank (Japan) launching their own cryptocurrency this week. Of course, there is some concern that small banks won’t be able to design their own bank cryptocurrency due to the extreme cost and required technology resources. This could have adverse effects by creating an even larger market gap between big and small financial institutions. Only time will tell who will join JPM coin.
Experts weighing in on the news say the strategic choice for the bank will depend on one key issue: trust. Since there is so much uncertainty in the cryptocurrency world, banks (and the customers they provide service to) will need to put their skepticism aside. One thing banks can find solace in? JPMorgan Chase’s commitment to involving regulators in design and decision.
Regardless of how other banks feel about JPM bitcoin, the potential impacts are clear: In order to maintain competitive in the industry, staying tech-savvy and forward thinking will be key to staying ahead in the consumer-focused banking world.