JP Morgan moves forward with bold cryptocurrency initiative
Horace C. White
Modern Tokyo Times
The cryptocurrency industry gets a boost as JP Morgan joins the fray
Last Thursday, US banking giant JP Morgan Chase announced that it would launch its cryptocurrency, JPM Coin. By this announcement, the investment and financial institution will become the first major US bank to do so.
According to CNBC, JPM Coin will be a stablecoin that is pegged to the US dollar by the ratio of 1:1. The banking giant disclosed that the virtual coin will launch in the coming months without giving a precise date. When JPM Coin goes into circulation, a small fraction of $6 trillion will be lent to accredited institutions with relevant regulatory approval, reports say.
Functions of JPM Coin
JP Morgan Chase, which rakes in over $100 billion in annual revenue, gave more insight into the functions of the stablecoin. The Head of Blockchain Projects at JP Morgan, Omar Farooq, eulogized distributed ledger technology (DLT), adding that it has endless potentials. Explaining further, Farooq gave shed light on the importance of JPM Coin.
The JP Morgan official pointed out that the stablecoin will be used for real-time cross-border settlements, which will bring to end years of dominance of slow SWIFT network. Moreover, JPM Coin will serve as securities. In addition to those, the Bank says that experimenting with its native coin will help it understand how it can better improve the as-is convoluted wire transfers.
Farooq told Cointelegraph that the multinational lender will kick off the trial of JPM Coin with primary focus on aiding international corporations settle financial transactions. He noted that it will also help the Bank to replace the SWIFT network, which it has used for over a decade.
He disclosed that the Bank will then go ahead to test how best JPM Coin can be used for treasury and security purposes if the first stage becomes successful. According to Farooq, the amount that it intends to release to accredited institutions will just be a small fraction of the minted sum.
JP Morgan’s position on Cryptocurrency
In September 2017, the biggest US bank openly criticized cryptocurrency with CEO Jamie Dimon calling it a “fraud” and “scam.” Bloomberg reported that the chief executive went into a tirade of virtual currency at an investor meeting, adding that “cryptocurrency was worse than tulip bulbs.” CEO Dimon threatened to boot out any JP Morgan staffer caught trading Bitcoin, the most preeminent cryptocurrency. In his criticisms, he added that those trading cryptocurrency are just “stupid.”
To many crypto-asset investors around the world, the planned launch of JPM Coin comes as a surprise given that the Bank CEO uses every opportunity he gets to blast cryptocurrency and its traders.
Cryptocurrency and DLT
Cryptocurrency has dominated the headlines for years since it launched in October 2008. Blockchain technology, which is also known as DLT, is the framework upon which cryptocurrency is developed. Cryptocurrency proponents say that it has all the key features to replace the widely accepted fiat currency, thus laying emphasis on its decentralized functionality. Beyond decentralization, they also say that cryptocurrency is tamperproof and trustless, making it far better than government-issued currencies.
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