J.P. Morgan Chase to launch its own cryptocurrency

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    Barri Segal

    Staff Reporter
    Covering credit scores, personal finance and breaking news

    JP Morgan Chase becomes first major U.S. bank to launch its own cryptocurrency

    J.P. Morgan Chase has become the first major U.S. bank to roll
    out its own cryptocurrency.

    The bank announced
    on Feb. 14 it will trial-run its digital token, JPM Coin, which will enable
    clients to settle payments immediately. 

    When Chase begins testing these international payments, it will
    mark one of the banking world’s first forays into using cryptocurrency.

    Previously, the banking industry has viewed this asset class as
    too speculative, and as recently as 2018, Chase banned its credit card customers from buying bitcoin.

    Chase’s bitcoin-skeptic CEO is bullish on
    blockchain, cryptocurrency

    Although Chase CEO Jamie Dimon has publicly slammed bitcoin,
    he’s hopeful regarding the usage of blockchain and other regulated digital
    currencies.

    Retailers, however, might never get to use JPM Coin – only
    the bank’s institutional clients, which have gone through regulatory checks, can currently
    use it.

    How it works


    The technology is simple: A client will send someone money over the blockchain,
    and JPM coins “are transferred and instantaneously redeemed for the equivalent
    amount of U.S. dollars.” This process will reduce the average settlement time,
    which can currently take more than a day.

    Each JPM Coin equals one U.S. dollar, and clients can use the coin
    to make payments or buy securities on the blockchain. Once the transaction is
    complete, Chase destroys the coins.

    J.P. Morgan plans to extend its coin to other major currencies
    going forward.

    See related: Blockchain could spur credit card rewards revolution

    JPM Coin’s applications

    Umar Farooq,
    head of digital treasury services and blockchain at J.P. Morgan, told
    CNBC
    the JPM Coin will feature three early applications.

    One will
    execute the bank’s heavy-hitter corporate clients’ international payments in
    real time. Until now, the bank has used wire transfers – which sometimes take
    more than one day to settle due to transaction cut-off times – to handle these
    payments.

    Another will be earmarked for instant securities transactions
    settlements. The third will serve corporations that employ the bank’s treasury
    services business to substitute their global subsidiaries’ dollars, a business
    that made Chase $9 billion in 2018.

    “Money sloshes back and forth all over the world in a large
    enterprise,” Farooq said. “Is there a way to ensure that a subsidiary can
    represent cash on the balance sheet without having to actually wire it to the
    unit? That way, they can consolidate their money and probably get better rates
    for it.”

    The future

    Farooq said clients
    might be able to use the JPM Coin for payments on internet-connected devices if
    blockchain gains traction in that arena.

    J.P Morgan is also banking on this move to get other banks
    adopting cryptocurrency.

    “Pretty much every big corporation is our client, and most of the major banks
    in the world are, too,” Farooq said. “Even if this was limited to JPM clients
    at the institutional level, it shouldn’t hold us back.”



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