International investment bank and notorious Bitcoin skeptic JPMorgan Chase will be the first US bank to issue its own cryptocurrency.
The launch of the coin is happening despite the CEO of the bank, Jamie Dimon, being a long-time critic of Bitcoin. In autumn 2018, he stated that the ‘Bitcoin bubble has burst’.
The trial launch of the new bank-issued coin is about to take place in several months. The purpose of the token, as is of many of those previously launched in the market, is making payments that would take instants to reach the recipient.
Apparently, the heavyweight of the banking industry is worried about the impact crypto coins are beginning to have on the financial industry over time, especially Ripple, which has gotten itself quite a few big-name partners — including major global banks — over the course of 2018.
Regular bank transfers take from one to several days to complete compared to virtual coins, which literary take a few minutes.
Currently, JP Morgan has its own blockchain division, and they are admitting that the DLT and cryptocurrencies are much more efficient and must be integrated into the bank’s work.
It is worth noting that in 2018, JP Morgan and a couple of other major banks banned the use of credit card payments for purchasing crypto in order to protect their customers. Goldman Sachs voiced their intention to launch a BTC trading desk, but later on gave up that idea due to the continuous bearish market.
The new token will be based on a similar principle as stablecoins. Each JPM Coin will be backed by a US dollar, which should ensure its stability. Customers will receive coins after they put dollars into their accounts.
After the necessary operations with the bank’s crypto are completed, the lender will destroy electronic coins and let the customers have their dollars back.
JPM Coin will also see implementation in securities transactions and as part of JPMorgan’s treasury services features.
Only a “tiny” amount of the total flows involved in these areas will use the cryptocurrency to begin with, JPM coins acting as a 1:1 dollar substitute similar to a stablecoin.
“Even if this was limited to JPM clients at the institutional level, it shouldn’t hold us back,” Farooq concluded.
Last year also saw the bank’s co-president Daniel Pinto go on record to admit cryptocurrency “will play a role” in the future global economy.
“I think the concept is valid, you have many central banks looking into,” he said speaking to CNBC in May.
“The tokenization of the economy, for me, is real. Cryptocurrencies are real but not in the current form.”
