JP Morgan created a new cryptocurrency called JPM Coin. The digital currency will be used to instantly settle transactions between clients. Although this is just a trial, this is the first time a major bank issues a virtual currency. The information was released in a blog post by the bank on February 14.
JP Morgan Launches the JPM Coin
JP Morgan Chase seems to be entering the cryptocurrency market with a new digital currency. The company is currently moving around $6 trillion of funds every single day for companies and large corporations. The new trial will start in just a few months using the JPM Coin. This virtual currency has been created by engineers at the bank.
JP Morgan seems to be getting prepared for a more competitive market with startups and fintech companies that are starting to enter the financial market. Large banks and institutions such as JP Morgan will have to invest large sums of money to remain as leaders in this competitive market.
According to CNBC, Umar Farooq, the Head of JP Morgan’s blockchain projects commented about it:
“So anything that certainly 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.”
Although there are other crypto and blockchain companies working with financial institutions, this will be one of the first applications of cryptocurrencies for banking. JP Morgan has been very negative about virtual currencies and Bitcoin (BTC). Jamie Dimon, the CEO of the company, claimed that Bitcoin was a fraud and that it will be regulated by governments.
At the moment, the tokens that the bank will be issuing will only be available for corporations, banks and broker-dealers.
One of the companies that could be affected by this pilot if it is able to grow in the future is Ripple. Ripple is working with financial institutions around the world in order to connect them and settle cross-border transactions in a fast and cheap way. If JP Morgan is able to create a digital asset with similar functionalities and with an established presence in the market, Ripple could be in troubles.
Institutions that are already working with JP Morgan and have been doing it for several years might not be attracted to the idea of using XRP. Instead, they could move towards the JPM Coin.
Although Jamie Dimon has been attacking virtual currencies, he has praised blockchain technology on many occasions. The bank has also its own Blockchain network called Quorum that has already been embraced by several companies.
