JPMorgan Chase is rolling out a trial in the next few months of the first cryptocurrency backed by a major United States bank. Dubbed “JPM Coin,” the cryptocurrency will be used by big business across the world to “instantly settle payments between clients,” according to a report from CNBC.
Currently, only large clients of JPMorgan Chase will be able to cash in on the new cryptocurrency, so it is out of reach for the average consumer. These big money clients typically include major broker-dealers who have passed regulatory checks. JPM Coin will also only be redeemable for one U.S. dollar, so its value will be linked to the dollar, unlike Bitcoin and many other cryptocurrencies. To receive JPM Coins, a Chase client will first have to deposit dollars at the institution, and once a transaction is completed the coins will then be withdrawn and converted back to a corresponding amount of dollars.
“So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction,” said Umar Farooq, head of J.P. Morgan’s blockchain projects to CNBC. “The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.”
Farooq went on to explain to CNBC that JPM Coin can be used in three methods, including for international payments and securities transactions. With international payments, large corporations will no longer have to use wire transfers when moving big sums of money. The transfer process can be sped up and payments can happen right away, without the need to wait. Secondly, with securities transactions, JPM Coin can be used by investors to settle the transactions right away, again cutting out the need to use wire services.
JPMorgan Chase might be taking a big bet with JPM Coin, but it still holds significant potential in changing business across the world. There’s hope that large corporations can use JPM Coin in treasury services. “The final use would be for huge corporations that use J.P Morgan’s treasury services business to replace the dollars they hold in subsidiaries across the world,” reports CNBC.