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JP Morgan Chase has created the first bank-backed cryptocurrency in the United States. Dubbed the JPM Coin, the new crypto will target the instantaneous transfer of payments between institutions. The bank is one of the biggest wholesale payments processors in the world, moving more than $6 trillion every day. It intends to use the JPM Coin to move a fraction of these in a trial run.

The biggest bank in the U.S, JP Morgan has had a love-hate relationship with the crypto and blockchain industry. Its CEO, Jamie Dimon has been one of the biggest bitcoin critics globally. He has previously labeled bitcoin one of the biggest scams in history. The New York-based bank also joined Wells Fargo in banning the purchase of cryptos through their credit cards.

However, JP Morgan has remained supportive of blockchain technology. It even developed its own blockchain network named Quorum.

Speaking to CNBC, the bank’s head of Digital Treasury Services, Umar Farooq, explained that the bank is preparing itself for a blockchain-powered future. It has been trying to find a way to match the speed of settlement that digital currencies offer. Finally, with the JPM Coin, it can.

Currently, the digital currency is backed by U.S dollars held in reserve by the bank. Over time, the bank promised to extend the capabilities to other currencies globally.

Farooq stated:

So anything that currently 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.

So how does the JPM Coin differ from bitcoin?

For one, unlike bitcoin, the JPM Coin is a stablecoin backed by dollars held in reserve. This puts it in the field of other stablecoins such as Tether and USDC. However, unlike these coins which place their reserves with banking partners, JP Morgan holds the reserves for its coins. The bank’s balance sheet stands at over $2.6 trillion, making it liquid enough to redeem the tokens.

The bank will launch the currency on the Quorum blockchain network, a permissioned network. This is unlike most other cryptos which operate on an open blockchain network. And while miners mint new coins, the bank will only avail the coin to institutional clients.

The JPM Coin will have three primary uses. The first will be to settle international payments for institutional clients. Previously, these transactions have relied on platforms such as SWIFT which can take up to five days.

It will also be used for the bank’s treasury service business, eradicating the need to hold dollars in global subsidiaries. JP Morgan caters to some of the biggest companies globally, handling such operations as salary settlements and supplier payments.

Farooq explained:

Money sloshes back and forth all over the world in a large enterprise. 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 final use will be for securities transactions.

The leap also seemed to soften the bank’s stance on cryptos. When asked about it, Farooq stated:

We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated.

Image(s): Shutterstock.com

The post It’s Happening! JP Morgan Launches the First Crypto Backed by a U.S Bank appeared first on NullTX.

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